Saturday, 28 February 2015

Arbitration Act Vs Consumer Protection Act

Arbitration Act Vs Consumer Protection Act

Section 3 - Consumer Protection Act
"Act not in derogation of any other law. The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force".

Important Judgements :

1.Hon'ble Supreme Court has held that the remedy of arbitration is not the only remedy available. Rather, it is an optional remedy. Consumer can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the consumer opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996 Act. Moreover, the plain language of Section 3 of the Consumer Act makes it
clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force. National Seeds Corporation Ltd. Vs. M. Madhusudhan Reddy & Anr. (2012 ) 2 SCC 506

2.National Consumer Disputes Redressal Commission (NCDRC) has held that the Consumer Fora constituted under the Consumer Protection Act are not bound to refer the dispute raised in the complaint on an application filed u/s 8 of the Arbitration Act of 1996 seeking reference of the dispute to an Arbitral Tribunal in terms of valid arbitration clause in the agreement entered into between the parties. 
DLF Ltd Vs Mridul Estates (Revision Petition No. 412 of 2011) decided on 13.05.2013  

3. Also, once the matter is taken through the National Consumer Forum route, one might lose any further options for arbitration. "Once the matter has been decided finally by the National Forum and thereafter by the Hon'ble Supreme Court of India, neither an arbitrator can be allowed to sit over or adjudicate the dispute a fresh nor he is empowered under the law to re-appreciate the matter by reopening the dispute diminishing the value of judicial system. No party can be allowed to drag other in litigation once the matter has been resolved by the highest forum else no dispute ever can reach to its finality." 
New India Assurance Co. Ltd. Vs R.K. Industries 2005 (3) ARBLR 412 NULL (Chhattisgarh High Court 25.01.2005) 


4. Hon'ble Supreme Court has held that "Though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act. Considered from this perspective, we hold that this dispute need not be referred to arbitration .....
M/s Fair Air Engineers Pvt Ltd & Vs N K Modi, (1996) 6 SCC 385


5. It is authoritatively settled that the arbitration clause is not a bar to the entertainment of the complaint by the Redressal Agency  constituted under the Act, even if the arbitration provision has been laid down in a statute; Ram Nath v. Improvement Trust, Bathinda, 1994 (I) CPR 357.


PS: We do not accept any liability arising out of use of above information. Users are advised to apply their own thoughts and experience in above case.


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