M/S. EMAAR MGF LAND LIMITED versus AFTAB SINGH
[2018] 14 S.C.R. 791, Supreme Court of India, 2018
Outcome: Dismissed (Dismissed)
Segment: Ratio
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M/S. EMAAR MGF LAND LIMITED
v.
AFTAB SINGH
(Review Petition (C) Nos. 2629-2630 of 2018)
in
(Civil Appeal Nos. 23512-23513 of 2017)
DECEMBER 10, 2018
[UDAY UMESH LALIT AND ASHOK BHUSHAN, JJ.]
Consumer Protection Act, 1986 – Consumer disputes, whether
arbitrable or not – Appellant-company was developing an integrated
township – Respondent submitted an application for allotment of
villa – In Buyer’s agreement, there was an arbitration clause
providing for settlement of disputes between the parties under
Arbitration and Conciliation Act, 1996 – Respondent filed complaint
before the National Consumer Disputes Redressal Commission
(NCDRC) – Appellant filed an application u/s.8 of the 1996 Act for
referring the matter to the Arbitration – NCDRC rejected the
application u/s.8 of the 1996 Act and held that in the light of the
Consumer Act and Court-evolved jurisprudence, amended sub-
section (1) of s.8 cannot be construed as a mandate to the Consumer
Forums, constituted under the Act, to refer the parties to Arbitration
in terms of the Arbitration agreement – Propriety of – Held: Proper
– Amendments u/s.8 of the 1996 Act were aimed to minimize the
scope of judicial authority to refuse reference to arbitration and
only ground on which reference could have been refused was that
it prima facie finds that no valid arbitration agreement exists – But,
amendment in s.8 cannot be given such expansive meaning and
intent so as to inundate entire regime of special
legislations where
disputes were held to be non-arbitrable – However, in the event a
person entitled to seek an additional special remedy provided under
the statutes does not opt for the additional/special remedy and he is
a party to an arbitration agreement, there is no inhibition in disputes
being proceeded in arbitration – It is only the case where specific/
special remedies are provided for and which are opted by an
aggrieved person that judicial authority can refuse to relegate the
[2018] 14 S.C.R. 791
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parties to the arbitration – Thus, complaint under Consumer
Protection Act being a special remedy, despite there being an
arbitration agreement the proceedings before Consumer Forum have
to go on – No error committed by the NCDRC in rejecting application
filed by appellant u/s.8 – Arbitration and Conciliation Act, 1996 –
Amended s.8 by the Arbitration and Conciliation (Amendment) Act,
2015.
Dismissing the review petitions, the Court
HELD:  1.  This Court in the series of judgments considered
the provisions of Consumer Protection Act, 1986 as well as
Arbitration and Conciliation Act, 1996 and laid down that
complaint under Consumer Protection Act being a special remedy,
despite there being an arbitration agreement the proceedings
before Consumer Forum have to go on and no error committed
by Consumer Forum on rejecting the application. There is reason
for not interjecting proceedings under Consumer Protection Act
on the strength of an arbitration agreement by Act, 1996. The
remedy under Consumer Protection Act is a remedy provided to
a consumer when there is a defect in any goods or services. The
complaint means any allegation in writing made by a complainant
has also been explained in Section 2(c) of the Act. The remedy
under the Consumer Protection Act is confined to complaint by
consumer as defined under the Act for defect or deficiencies
caused by a service provider, the cheap and a
quick remedy has
been provided to the consumer which is the object and purpose
of the Act. [Para 25][809-E-H]
National Seeds Corporation Limited v. M. Madhusudan
Reddy and Another (2012) 2 SCC 506 : [2012] 2 SCR
1065 ; Duro Felguera, S.A. v. Gangavaram Port Limited
(2017) 9 SCC 729 : [2017] 10 SCR 285 ; A. Ayyasamy
v. A. Paramasivam and Others (2016) 10 SCC 386 :
[2016] 11 SCR 521 ; Lucknow Development Act v.
M.K. Gupta, (1994) 1 SCC 243 : [1993] 3 Suppl. SCR
615 ; Secretary, Thirumurugan Cooperative Agricultural
Credit Society v. M. Lalitha (dead) Through LRs. And
others, (2004) 1 SCC 395 ; Fair Air Engineering Pvt.
Ltd. and another v. N.K. Modi, (1996) 6 SCC 385 :
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[1996] 4 Suppl. SCR 820 ; Skypak Couriers Ltd. v.
Tata Chemicals, (2000) 5 SCC 294 : [2000] 1 Suppl.
SCR 324 ; Rosedale Developers Private Limited v.
Aghore Bhattacharya And Others (2018) 11 SCC 337
– referred to.
2. Not only the proceedings of Consumer Protection Act,
1986 are special proceedings which were required to be continued
under the Act despite an arbitration agreement, there are large
number of other fields where an arbitration agreement can neither
stop or stultify the proceedings. [Para 26][810-A-B]
Booz Allen and Hamilton Inc. v. SBI Home Finance
Limited and others (2011) 5 SCC 532 : [2011] 7 SCR
310  – relied on.
3. What is the legislative intent and object in bringing the
amendment to Section 8 is the main question to be answered in
this case.   Amendments under Section 8, were aimed to minimise
the scope of judicial authority to refuse reference to arbitration
and only ground on which reference could have been refused
was that it prima facie finds that no valid arbitration agreement
exists.  Notwithstanding any prior judicial precedents referred
to under Section 8(1) relates to those judicial precedents, which
explained the discretion and power of judicial authority to examine
various aspects while exercising power under Section 8. The
Legislative intent and object were confined to only above aspects
and was not on those aspects, where certain disputes were not
required to be referred to arbitration.  Can it be said that after
amendment
under Section 8(1), the law laid down by this Court
in reference to Section 2(3), where large number of categories
have been held to be non-arbitrable has been reversed or set at
naught.  Neither any such Legislature intendment was there nor
any such consequence was contemplated that law laid down by
this Court in context of Section 2(3) has to be ignored or reversed.
[Paras 36, 49 and 50][815-G; 823-G-H; 824-A-C]
4. The amendment in Section 8 cannot be given such
expansive meaning and intent so as to inundate entire regime of
special legislations where such disputes were held to be not
arbitrable. Something which legislation never intended cannot be
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accepted as side wind to override the settled law.  The words
“notwithstanding any judgment, decree or order of the Supreme
Court or any Court” were meant only to those precedents where
it was laid down that the judicial authority while making reference
under Section 8 shall be entitled to look into various facets of the
arbitration agreement, subject matter of the arbitration whether
the claim is alive or dead, whether the arbitration agreement is
null and void. The words added in Section 8 cannot be meant for
any other meaning. [Para 52][824-F-H; 825-A]
P. Anand Gajapathi Raju and Others v. P.V.G. Raju
(Dead) and Others, (2000) 4 SCC 539 : [2000] 2 SCR
684 ; Vimal Kishor Shah and others v. Jayesh Dinesh
Shah and others (2016) 8 SCC 788 : [2016] 7 SCR
102 ; Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya
and Another (2003) 5 SCC 531 : [2003] 3 SCR 558 ;
Ameet Lalchand Shah and Others v. Rishabh Enterprises
and Another, AIR 2018 SC 3041 : [2018] SCR 1001 –
referred to.
5. However, in the event a person entitled to seek an
additional special remedy provided under the statutes does not
opt for the additional/special remedy and he is a party to an
arbitration agreement, there is no inhibition in disputes being
proceeded in arbitration. It is only the case where specific/special
remedies are provided for and which are opted by an aggrieved
person that judicial authority can refuse to relegate
the parties
to the arbitration. Thus, no error has been committed by the
NCDRC in rejecting the application filed by the appellant under
Section 8. [Paras 55, 56][827-A-C]
Case Law Reference
[2012] 2 SCR 1065
referred to
Para 9
[2017] 10 SCR 285
referred to
Para 9
[2016] 11 SCR 521
referred to
Para 9
[1993] 3 Suppl. SCR 615
referred to
Para 15
(2004) 1 SCC 395
referred to
Para 16
[1996] 4 Suppl. SCR 820
referred to
Para 17
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[2000] 1 Suppl. SCR 324
referred to
Para 18
(2018) 11 SCC 337
referred to
Para 21
[2000] 2 SCR 684
referred to
Para 42
[2003] 3 SCR 558
referred to
Para 44
[2018] SCR 1001
referred to
Para 48
[2011] 7 SCR 310
relied on
para 52
[2016] 7 SCR 102
referred to
Para 52
CIVIL APPELLATE JURISDICTION : Review Petition (C) Nos.
2629-2630 of 2018 in Civil Appeal Nos. 23512-23513 of 2017.
From the Judgment and Order dated 28.08.2017 and 13.07.2017
of the National Consumer Dispute Redressal Commission at New Delhi
in Complaint Case No. 701 of 2015
Fali S. Nariman, Sr. Adv., Aditya Narain, Arnav Narain,
Ms. Anjana G. Bali, Arjun Jain, Ms. Anushree Narain, Kabir Dixit, Mishra
Rajshekhar, Naeemollahazeem, Waheb Hussaini, Ms. Aasita, Subhash
Sharma, Advs. for the Appellant.
Aditya Swarup, Dhruv Pall, Samarth Khanna, Ms. Aprajita
Mukherjee, Advs., for the Respondent.
The Judgment of the Court was delivered by
ASHOK BHUSHAN, J.
1. These review petitions have been filed seeking review of the
judgment dated 13.02.2018 of this Court by which civil appeals were
dismissed.
2. The Civil Appeal Nos. 23512-23513 of 2017 had been filed
challenging the order dated 13.07.2017 passed by Larger Bench of the
National Consumer Disputes Redressal Commission (hereinafter referred
to as “NCDRC”) holding consumer disputes to be non-arbitrable.  Prayer
was also made to set aside the subsequent order dated 28.08.2017 passed
by Single Member of the NCDRC dismissing the application filed under
Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as “1996 Act”) by the appellant.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
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3. Looking to the nature of the issue raised in these review
petitions, we have heard learned counsel for the parties on 27.11.2018 in
the review petitions after issuing notice on 17.09.2018.  Delay in filing of
review petitions is condoned.  Learned counsel for the parties have made
elaborate submissions, which we proceed to consider in these review
petitions.
4. Brief facts giving rise to civil appeals and the review petitions
need to be noted for appreciating the issues raised herein.  The appellant
is a company which has acquired and purchased land in District Mohali,
Punjab with a view to set up and develop thereon an integrated township.
The respondent submitted an application to the appellant for allotment of
a villa in Sector 106, Mohali.  A Buyer’s agreement was entered dated
06.05.2008 between the appellant and the respondent.  In the Buyer’s
agreement, there was an arbitration clause providing for settlement of
disputes between parties under the 1996 Act.  On 27.07.2015, the
respondent filed a Complaint No. 701 of 2015 before the NCDRC against
the appellant praying for following reliefs in Paragraph No.17 of the
complaint, which are as follows:-
“a.
The complainant prays for a direction to the opposite Parties
to deliver the possession of the built up villa No. 40, At Sector
106, GMADA, and
b.
to adjust the excess payment in terms of letter dated 2.2.2008,
Annexure C-5, which
comes to Rs.2,63,165/- and
c.
to adjust the penalty @ Rs.1500/- per month in terms of
clause 8 of the Agreement, after 2011 for 55 months as on
date which comes to Rs.83,500/- and
d.
to adjust the final account after making the above deductions
of clause B and C and to refund the remaining/balance
payment back to the complainant at the earliest along with
interest @ 18% per annum from 6.2.2010 (i.e. 24 months
from the date of the Agreement); and
e.
the Hon’ble National Commission May be pleased to grant
compensation to the tune of Rs. 20,00,000 on account of
deficiency in service on the part of the opposite parties,
mental agony and harassment suffered by the complainant,
and
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the cost of this complaint may be awarded from the opponent
to the complainant, and
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the Hon’ble National Commission may be pleased to grant
any other relief deemed in fit just and proper by the Hon’ble
National Commission in the Circumstances of the case.”
5. Notice was issued to the appellant by the NCDRC on 09.11.2015
asking the appellant to appear on 11.01.2016.  The appellant appeared
and made an application for extension of time for filing the written
statement.  The appellant also filed an application under Section 8 of the
1996 Act for referring the matter to arbitration for and on behalf of the
appellant. In the application, appellant has referred to Clause 43 of the
Buyer’s agreement, which according to appellant would constitute a
valid arbitration agreement in terms of Section 7(2) of the 1996 Act.
The appellant also filed a reply to the complaint.  The application filed
under Section 8 of the 1996 Act was objected by the respondent with
the prayer that the said application be rejected. NCDRC heard the
complaint case of the respondent alongwith several other similarly
situated applications in the complaint case filed by the respondent and
other similarly situated applications filed under Section 8 for referring
the parties to the arbitration.  A learned Single Member of the Commission
proceeded to consider the said applications and passed an order dated
31.08.2016.  The learned Single Member had taken the view that
considering the vital
importance and far reaching consequence of the
legal issue involved in these applications, it would only be appropriate
that these applications are considered and decided by a Larger Bench,
consisting of at least Three Members.
6. In pursuance of the order of the learned Single Member, a
Larger Bench of NCDRC was constituted and Consumer Complaint
No. 701 of 2015 with Interim Application No. 247 of 2016 as well as
interim applications filed by other complainants were heard and decided
by Three Members Bench presided by President of the NCDRC vide
its judgment dated 13.07.2017.  The Three Members Bench have
considered the submissions of the parties in detail and arrived at following
conclusions in Paragraph Nos. 55 and 56:-
“55. In view of the afore-going discussion, we arrive at the
following conclusions: (i) the disputes which are to be adjudicated
and governed by statutory enactments, established for specific
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public purpose to sub-serve a particular public policy are not
arbitrable; (ii) there are vast domains of the legal universe that
are non-arbitrable and kept at a distance from private dispute
resolution; (iii) the subject amendment was meant for a completely
different purpose, leaving status quo ante unaltered and
subsequently reaffirmed and restated by the Hon’ble Supreme
Court; (iv) Section 2(3) of the Arbitration Act recognizes schemes
under other legislations that make disputes non-arbitrable and (iv)
in light of the overall architecture of the Consumer Act and Court-
evolved jurisprudence, amended sub-section (1) of Section 8
cannot be construed as a mandate to the Consumer Forums,
constituted under the Act, to refer the parties to Arbitration in
terms of the Arbitration Agreement.
56. Consequently, we unhesitatingly reject the arguments on behalf
of the Builder and hold that an Arbitration Clause in the afore-
stated kind of Agreements between the Complainants and the
Builder cannot circumscribe the jurisdiction of a Consumer Fora,
notwithstanding the amendments made to Section 8 of the
Arbitration Act.”
7. After the reference having been answered by Three  Members
Bench, the Consumer Complaint No. 701 of 20156 alongwith other
applications was taken by a Single Member of the Commission and by
order dated 28.08.2017, the applications filed by the appellant under
Section 8 of the
1996 Act were rejected.  After rejecting the application
under Section 8, the Commission directed the parties to proceed further
with the complaint.  The appellant filed F.A.O. No. 395 of 2017 in the
Delhi High Court challenging the orders dated 13.07.2017 and 28.08.2017
of NCDRC.  The High Court held that appeals filed by the appellant
under Section 37(1)(a) of the 1996 Act have been wrongly brought before
the High Court.  The High Court refused to entertain the appeals and
returned to be presented before the appropriate Appellate Court.  After
the judgment of the Delhi High Court dated 07.11.2017, the appellant
filed Civil Appeal No. 23512-23513 of 2017 challenging the judgment of
Larger Bench of NCDRC dated 13.07.2017 as well as the consequential
order dated 28.08.2017 in this Court.  Both the appeals were called for
hearing on 13.02.2018 and were dismissed by this Court.  The appellant
has filed these review petitions to review the judgment of this Court.  In
the review petitions, following prayers have been made by the appellant:-
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“(1) Allow the present review petition and review the Order dated
13.02.2018 passed by this Hon’ble Court in Civil Appeal
No. 23512-23513 of 2017;
(2)
Set aside the Order dated 13.07.2017 passed by the Larger
Bench of the Hon’ble National Commission in C.C. 701/2015
holding consumer disputes to be non-arbitrable amongst other
similar erroneous findings;
(3)
Set aside the Order dated 28.08.2017 passed by the Single
Judge of the Hon’ble National Commission in C.C. 701/2015
dismissing the Application u/S. 8 of the Arbitration and
Conciliation Act, 1996;
(4)
And pass such other or further order or orders as the Hon’ble
Court may deem fit and proper in the interest of justice.”
8. We have heard Shri Fali S. Nariman, learned senior counsel
appearing for the appellant and Shri Aditya Swarup, learned counsel
appearing for the respondent No.1.
9. Shri Fali S. Nariman in his imitable style in support of review
petitions submits that substantial questions of law has been raised in the
present review petitions, which need to be addressed and decided by
this Court.  Shri Nariman submits that after amendment of Section 8 of
1996 Act by the Arbitration and Conciliation (Amendment) Act, 2015
(Act 3 of 2016), by which Parliament had added the words
“notwithstanding any judgment, decree or order of the Supreme Court
or any Court” in Section 8 of the Arbitration Act w.e.f. 23.10.2015, the
Parliamentary intendment is clear that after the said amendment, the
judicial
authority is mandated to refer a dispute for arbitration if there is
a valid arbitration agreement and parties apply not later than the date of
submitting his first statement on the substance of the dispute.  He submits
that the above words cannot be treated as redundant while interpreting
the amended Section 8.  It is further submitted that this Court acting as
an Appellate Court under Section 23 of Consumer Protection Act, 1986
read with Section 37(1)(a) of 1996 Act has duty to go into every fact
and law including the amendment made in Section 8 of the 1996 Act.  It
is submitted that Constitution Bench of this Court has already held that
consumer fora are covered by the term “judicial authority” for the
purposes of Section 8 of the 1996 Act, hence, it was obligatory for the
Commission to refer the dispute to arbitration in view of the arbitration
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clause between the parties.  NCDRC has wrongly termed consumer
disputes as non-arbitrable, which is contrary to the decision of this Court
in National Seeds Corporation Limited Vs. M. Madhusudan Reddy
and Another, (2012) 2 SCC 506.  This Court had interpreted the words
“notwithstanding any judgment, decree or order of the Supreme Court
or any Court” as occurring in newly added Section 11(6A) of the 1996
Act in Duro Felguera, S.A. Vs. Gangavaram Port Limited, (2017)
9 SCC 729, which interpretation is equally applicable to Section 8 as
amended by Act 3 of 2016.  NCDRC has erred in relying on judgment of
this Court in A. Ayyasamy Vs. A. Paramasivam and Others, (2016)
10 SCC 386.  The amendment in Section 8 of Arbitration Act by Act 3
of 2016 now makes it obligatory to judicial authority to refer disputes to
arbitration notwithstanding any judgment, decree or order of the Supreme
Court or any Court.  Judgments of this Court interpreting Section 8 prior
to 2016 amendment, thus, have become wholly irrelevant and have to be
disregarded while deciding the application under Section 8 filed after
2016 amendment.
10. Referring to Section 2(3) of the 1996 Act, it is submitted that
it cannot be said that by reason of provision of Consumer Protection
Act, consumer disputes cannot be submitted to arbitration.  It is further
submitted that far from the Consumer Protection Act, 1986, providing
either
expressly or by necessary implication that consumer disputes may
not be submitted to arbitration, the law as explained in the National
Seeds Corporation Limited (supra) and in Rosedale Developers
Private Limited (supra) clearly shows that arbitration of consumer
disputes is definitely envisaged and contemplated in the Consumer
Protection Act, 1986, itself, before the amendment by way of substitution
of Section 8(1) of the 1996 Act, it was at the option of the complainant
(under Section 8(1) as enacted) to either go to arbitration as provided
for in the arbitration agreement or to file a complaint under the Consumer
Protection Act, 1986.  It is submitted that after the substitution of Section
8(1) even this option is no longer available, it being mandatory for the
judicial authority (NCDRC) to refer the parties to arbitration “unless it
finds that prima facie no valid arbitration agreement exists”.
11. Shri Aditya Swarup, learned counsel appearing for the
respondent in his short and impressive submissions contends that the
Consumer Act, 1986 provides for an additional and beneficial remedy to
the consumer to avail of the speedy, expeditious disposal of his or her
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dispute.  The consequences of allowing the present petition and setting
aside the impugned order would, inter alia, be that every consumer, no
matter how small or big the dispute, would now be forced to adjudicate
his dispute before an arbitral tribunal and not avail of the beneficial remedy
provided to him or her. Under the 1986 Act.  Accepting the interpretation
placed by the appellant on the 1996 Act will mean collapsing of entire
edifice of consumer jurisprudence but also jurisprudence relating to trusts,
tenancy disputes, industrial disputes, telecom disputes, intellectual property
disputes and other non-arbitral disputes.  Repeating the words of
NCDRC, it is submitted that “the ripples of the amendment to Section
8(1) cannot be so large as to inundate the domains of other legislations
and jurisprudence, painstakingly built by the Legislators and Courts,
especially without any engagement, debate and critique with the
foundations of these related laws”.  Section 2(3) of the Arbitration Act
expressly states that Part I of the Arbitration Act “shall not affect any
other law for the time being in force by virtue of which certain disputes
may not be referred to arbitration”.  Under this Section, if any law
provides, either expressly or by necessary implication that specified
disputes may not be submitted to arbitration, then, in spite of the non
obstante provision in Section 5 of the Arbitration Act, the law will be
saved by Section 2(3) of the
Arbitration Act.  Section 2(3) of the
Arbitration Act restricts the overriding effect apparent in Section 5 of
the Arbitration Act.  The Consumer Act being a beneficial legislation
enacted to give an additional remedy for the settlement of disputes, the
same cannot be taken away by Section 8 of the 1996 Act.  This Court in
jurisdiction cases have already held that Arbitration Act does not exclude
the jurisdiction of the Consumer Forum to decide disputes under the
Consumer Act.  The amendment to Section 8(1) of the Arbitration Act
by Act 3 of 2016 was never intended to interfere with the jurisdiction of
Consumer Forum to decide consumer disputes.  He submits that
amendment in Section 8(1) is being read in a manner which was never
the intention of the Parliament.  He submits that the NCDRC has rightly
rejected the application under Section 8 filed by the appellant and no
error has been committed by this Court in dismissing the appeal, hence,
the present petitions are liable to be dismissed.
12. From the submissions of the learned counsel for the parties
and pleadings of the parties following are the principal issues which
arise for consideration in these petitions:
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(i) Whether NCDRC committed error in rejecting the application
of the appellant filed under Section 8 of 1996, Act praying for
reference to the arbitrator as per Arbitration clause in the
builders agreement?
(ii) Whether after the amendments made in Section 8 by the
Arbitration and Conciliation (Amendment)Act, 2015 the
application filed under Section 8 by the appellant could not
have been rejected in view of substantial changes brought in
the statutory scheme by inserting the words “notwithstanding
any judgment, decree or order of the Supreme Court or any
Court” in sub-section (1) of Section 8?
(iii)Whether NCDRC as well as this Court committed error in not
adverting to the above statutory amendment which completely
changed the legal position as was earlier existing prior to the
aforesaid amendment?
(iv)Whether by the insertion of words “notwithstanding any
judgment, decree or order of the Supreme Court or any Court”
under Section 8(1) by the  (Amendment) Act, 2015 legislature
intended to do away with the decision of judgments of Supreme
Court laying down that Consumer Protection Act being special
remedy can be initiated and continued despite there being any
arbitration agreement between the parties?
13. All the issues being interconnected are being taken together.
The main emphasis of Shri Fali S. Nariman, learned senior counsel for
the petitioner is that entire legal regime pertaining
to the 1996, Act in
relation to Consumer Protection Act when seen after the amendment
fully supports the interpretation put by the petitioner which has not at all
adverted by the NCDRC and this Court.
14. Before we come to the amendments made by the 2015, Act
and its real intent and consequences, it is necessary to look into the law
as was existing prior to the said amendment in relation to proceedings
under Consumer Protection Act in reference to arbitration agreement
under 1996 Act.
15. The Consumer Protection Act, 1986 has been enacted to
provide for better protection of the interests of consumers and for the
purpose, to make provision for the establishment of Consumer Councils
and other authorities for the settlement of consumer disputes and for
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matter connected therewith. This Court had occasion to consider the
object and purpose of the Act in Lucknow Development Act vs. M.K.
Gupta, (1994) 1 SCC 243, this Court elaborately noticed the object
and purpose of the Act in the following words:
“To begin with the preamble of the Act, which can afford useful
assistance to ascertain the legislative intention, it was enacted, ‘to
provide for the protection of the interest of consumers’. Use of
the word ‘protection’ furnishes key to the minds of makers of the
Act. Various definitions and provisions which elaborately attempt
to achieve this objective have to be construed in this light without
departing from the settled view that a preamble cannot control
otherwise plain meaning of a provision. In fact the law meets long
felt necessity of protecting the common man from such wrongs
for which the remedy under ordinary law for various reasons has
become illusory. Various legislations and regulations permitting
the State to intervene and protect interest of the consumers have
become a haven for unscrupulous ones as the enforcement
machinery either does not move or it moves ineffectively,
inefficiently and for reasons which are not necessary to be stated.
The importance of the Act lies in promoting welfare of the society
by enabling the consumer to participate directly in the market
economy. It attempts to remove the helplessness of a consumer
which he faces against powerful business, described as, ‘a network
of
rackets’ or a society in which, ‘producers have secured power’
to ‘rob the rest’ and the might of public bodies which are
degenerating into storehouses of inaction where papers do not
move from one desk to another as a matter of duty and responsibility
but for extraneous consideration leaving the common man helpless,
bewildered and shocked. The malady is becoming so rampant,
widespread and deep that the society instead of bothering,
complaining and fighting against it, is accepting it as part of life.
The enactment in these unbelievable yet harsh realities appears
to be a silver lining, which may in course of time succeed in
checking the rot.”
16. Section 3 of the Act provided that 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. Noticing the object and purpose of the
Act as well as Section 3, this Court in Secretary, Thirumurugan
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]
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Cooperative Agricultural Credit Society vs. M. Lalitha (dead)
Through LRs. And others, (2004) 1 SCC 395, laid down following
in paragraph 11 and 12:
“11. From the Statement of Objects and Reasons and the scheme
of the 1986 Act, it is apparent that the main objective of the Act is
to provide for better protection of the interest of the consumer
and for that purpose to provide for better redressal, mechanism
through which cheaper, easier, expeditious and effective redressal
is made available to consumers. To serve the purpose of the Act,
various quasi-judicial forums are set up at the district, State and
national level with wide range of powers vested in them. These
quasi-judicial forums, observing the principles of natural justice,
are empowered to give relief of a specific nature and to award,
wherever appropriate, compensation to the consumers and to
impose penalties for non-compliance with their orders.
12. As per Section 3 of the Act, as already stated above, the
provisions of the Act shall be in addition to and not in derogation
of any other provisions of any other law for the time being in
force. Having due regard to the scheme of the Act and purpose
sought to be achieved to protect the interest of the consumers
better, the provisions are to be interpreted broadly, positively and
purposefully in the context of the present case to give meaning to
additional/extended jurisdiction,
particularly when Section 3 seeks
to provide remedy under the Act in addition to other remedies
provided under other Acts unless there is a clear bar.”
17. This court had occasion to consider the provisions of Section
34 of Arbitration Act, 1940 in reference to the Consumer Protection
Act, 1986 in Fair Air Engineering Pvt. Ltd. and another vs. N.K.
Modi, (1996) 6 SCC 385. This Court in the said case held that
consumer fora is a judicial authority. In the above case, the appellant
had entered into a contract with the respondent to carry out installation
of a centrally air-conditioned plant in the residential house of the
respondent. The respondent filed a complaint before the State
Commission under the Consumer Protection At, 1986 which proceedings
were stayed by the State Commission and it relegated the parties to
arbitration proceedings. The NCDRC held that the proceedings before
the Consumer fora is not a legal proceedings and Commission is not a
judicial authority, therefore, Section 34 of the Arbitration Act, 1940 is not
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available to stay the proceedings. The said order of NCDRC was
challenged in this Court. This Court reversed the order of the State
Commission and remitted the matter to the State Commission to decide
the matter on merits according to law. This Court held that the Parliament
was well aware of the Arbitration Act, 1940 when the Consumer
Protection Act was enacted providing for additional remedy. In paragraphs
15 and 16 following has been laid down:
“15. Accordingly, it must be held that the provisions of the Act
are to be construed widely to give effect to the object and purpose
of the Act. It is seen that Section 3 envisages that the provisions
of the Act are in addition to and are not in derogation of any other
law in force. It is true, as rightly contended by Shri Suri, that the
words “in derogation of the provisions of any other law for the
time being in force” would be given proper meaning and effect
and if the complaint is not stayed and the parties are not relegated
to the arbitration, the Act purports to operate in derogation of the
provisions of the Arbitration Act. Prima facie, the contention
appears to be plausible but on construction and conspectus of the
provisions of the Act we think that the contention is not well
founded. Parliament is aware of the provisions of the Arbitration
Act and the Contract Act, 1872 and the consequential remedy
available under Section 9 of the Code of Civil Procedure, i.e., to
avail of right of civil action in a
competent court of civil jurisdiction.
Nonetheless, the Act provides the additional remedy.
16. It would, therefore, be clear that the legislature intended to
provide a remedy in addition to the consentient arbitration which
could be enforced under the Arbitration Act or the civil action in a
suit under the provisions of the Code of Civil Procedure. Thereby,
as seen, Section 34 of the Act does not confer an automatic right
nor create an automatic embargo on the exercise of the power by
the judicial authority under the Act. It is a matter of discretion.
Considered from this perspective, we hold 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
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]
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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 a particular
case, come to the conclusion that the appropriate forum for
adjudication of the disputes would be otherwise those given in the
Act.”
18. This Court had occasion to consider the provisions of Consumer
Protection Act as well as the Arbitration Act, 1996. In Skypak Couriers
Ltd. v. Tata Chemicals, (2000) 5 SCC 294, this Court laid down the
following:
“Even if there exists an arbitration clause in an agreement and a
complaint is made by the consumer, in relation to a certain
deficiency of service, then the existence of an arbitration clause
will not be a bar to the entertainment of the complaint by the
Redressal Agency, constituted under the Consumer Protection
Act, since the remedy provided under the Act is in addition to the
provisions of any other law for the time being in force.”
19.  Another judgment which is relevant for the present issue is
National Seeds Corporation Limited vs. M. Madhusudhan Reddy
and another, (2012) 2 SCC 506. In the above case, the respondent
filed a complaint in the District Consumer Redressal Forum that they
had suffered loss due to failure of
the crops/less yield because the seeds
sold/supplied by the appellant were defective. The compensation was
awarded against which appeal was dismissed. The appellant challenged
the order of the Commission and main contention was that the District
Forum has no jurisdiction to entertain the complaint, in view of the
provisions of Seeds Act, 1966 it was contended that there was arbitration
clause contained in the agreement and the only remedy available to the
respondent is an appropriate arbitration and the District Forum has no
jurisdiction to entertain the complaint. This Court repelled the submission
and dismissed the appeal. In paragraph 64 this Court had noticed the
contention of the appellant which is to the following effect:
“64. According to the learned counsel for the appellant, if the
growers had applied for arbitration then in terms of Section 8 of
the Arbitration and Conciliation Act the dispute arising out of the
arbitration clause had to be referred to an appropriate arbitrator
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and the District Consumer Forums were not entitled to entertain
their complaint. This contention represents an extension of the
main objection of the appellant that the only remedy available to
the farmers and growers who claim to have suffered loss on
account of use of defective seeds sold/supplied by the appellant
was to file complaints with the Seed Inspectors concerned for
taking action under Sections 19 and/or 21 of the Seeds Act.”
20. The contention was dealt with in paragraph 66 where following
was laid down:
“66. The remedy of arbitration is not the only remedy available to
a grower. Rather, it is an optional remedy. He can either seek
reference to an arbitrator or file a complaint under the Consumer
Protection Act. If the grower opts for the remedy of arbitration,
then it may be possible to say that he cannot, subsequently, file
complaint under the Consumer Protection 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.
Moreover, the plain language of Section 3 of the Consumer
Protection 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.”
21. Another judgment where this Court reiterated the position of
law is Rosedale Developers Private Limited Vs Aghore
Bhattacharya And Others, (2018)
11 SCC 337 (decided on
06.09.2013). In the above case, a complaint was filed by the respondent
before NCDRC. An application was filed by the appellant praying for
making reference to the arbitrator in view of the arbitration agreement.
The issue has been noticed in paragraphs 1 and 2 which are to the
following effect:
“1. Delay condoned. This appeal filed against order dated 13-5-
2013 (2013 SCC OnLine Ncdrc 486, DLF Ltd. v. Mridul Estate
(P) Ltd.338b) passed by the National Consumer Disputes
Redressal Commission (for short “the National Commission”)
whereby the appellant’s prayer for making a reference to the
arbitrator was rejected can appropriately be termed as a frivolous
piece of litigation which merits nothing but dismissal at the threshold
with exemplary costs.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]
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2. The respondents filed complaint alleging deficiency in service
on the appellant’s part and claimed compensation to the tune of
Rs 17,41,09,000 with costs of Rs 1,00,000. On being noticed by
the National Commission, the appellant filed a written statement
to contest the complaint. It also filed an application under Section
8 of the Arbitration and Conciliation Act, 1996 (for short “the
1996 Act”) for making a reference to the arbitrator. A two-member
Bench of the National Commission referred the matter to the
larger Bench. After considering the relevant statutory provisions
and adverting to several judgments including the judgments in Fair
Air Engineers (P) Ltd. v. N.K. Modi; Skypak Couriers Ltd. v.
Tata Chemicals Ltd.  and National Seeds Corpn. Ltd. v. M.
Madhusudhan Reddy, the larger Bench of the National
Commission held that the consumer forums constituted under the
Consumer Protection Act, 1986 (for short “the 1986 Act”) are
not bound to refer the dispute raised in the complaint to an Arbitral
Tribunal in terms of the arbitration clause contained in the
agreement entered into between the parties.
22. The contention was raised before this Court that once an
application under Section 8 of 1996 Act is filed, Consumer Forum is
duty-bound to make a reference to the arbitrator. The above submission
was noticed in paragraph 3 which is to the following effect:
“3. Shri Sanjay Ghose,
learned counsel for the appellant relied
upon the judgment of the Constitution Bench in SBP & Co. v.
Patel Engg. Ltd. as also the judgments in Agri Gold Exims Ltd.
v. Sri Lakshmi Knits and Wovens and Magma Leasing and
Finance Ltd. v. Potluri Madhavilata and argued that once an
application is filed under Section 8 of the 1996 Act, the consumer
forum is duty-bound to make a reference to the arbitrator because
that section is mandatory in character.”
23. This Court rejected the above submission and laid down in
paragraph 4:
“4. In our opinion, there is no merit in the submission of the learned
counsel. The question whether the existence of an arbitration clause
contained in the agreement executed between the parties excludes
the jurisdiction of the consumer forum and on an application made
by either party, the consumer forum is duty-bound to make a
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reference to the arbitrator was extensively considered in National
Seeds Corpn. Ltd. v. M. Madhusudhan Reddy and it was
observed: (SCC pp. 534-35, paras 64-66.)”
24. This Court held that there is no merit in the above submission
of the counsel. This Court referred to judgments of this Court in National
Seeds Corporation Ltd. (supra) and Fair Air Engineers Pvt.
Ltd.(supra) and laid down following in paragraph 6 and 7:
“6. The judgments relied upon by Shri Ghose do not have any
bearing on the issue raised in this appeal. In neither of those cases,
has this Court interpreted the provisions of the 1996 Act in the
light of the provisions contained in the 1986 Act. Therefore, the
propositions laid down in those judgments that Section 8 of the
1996 Act is mandatory cannot lead to an inference that the
consumer forum is bound to make a reference to the Arbitral
Tribunal.
7. In view of the abovestated legal position, the National
Commission did not commit any error by holding that the remedy
of arbitration available to the complainant does not bar the
jurisdiction of the consumer forums and the consumer forums are
not under an obligation to refer the matter to the Arbitral Tribunal.
With the above observation, the appeal is dismissed.”
25. This Court in the series of judgments as noticed above
considered the provisions of Consumer Protection Act, 1986 as well as
Arbitration Act, 1996 and laid down that complaint under Consumer
Protection Act being a special
remedy, despite there being an arbitration
agreement the proceedings before Consumer Forum have to go on and
no error committed by Consumer Forum on rejecting the application.
There is reason for not interjecting proceedings under Consumer
Protection Act on the strength an arbitration agreement by Act, 1996.
The remedy under Consumer Protection Act is a remedy provided to a
consumer when there is a defect in any goods or services. The complaint
means any allegation in writing made by a complainant has also been
explained in Section 2(c) of the Act. The remedy under the Consumer
Protection Act is confined to complaint by consumer as defined under
the Act for defect or deficiencies caused by a service provider, the cheap
and a quick remedy has been provided to the consumer which is the
object and purpose of the Act as noticed above.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]
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26. Not only the proceedings of Consumer Protection Act, 1986
are special proceedings which were required to be continued under the
Act despite an arbitration agreement, there are large number of other
fields where an arbitration agreement can neither stop or stultify the
proceedings. For example, any action of a party, omission or commission
of a person which amounts to an offence has to be examined by a criminal
court and no amount of agreement between the parties shall be relevant
for the said case. For example, there may be a commercial agreement
between two parties that all issues pertaining to transaction are to be
decided by arbitration as per arbitration clause in the agreement. In case
where a cheque is dishonoured by one party in transaction, despite the
arbitration agreement party aggrieved has to approach the criminal court.
Similarly, there are several issues which are non-arbitrable. There can
be prohibition both express or implied for not deciding a dispute on the
basis of an arbitration agreement. This Court had occasion to consider
the above aspect and has noticed various disputes which are non-
arbitrable, reference is made to the judgment of this Court in Booz Allen
and Hamilton Inc. vs. SBI Home Finance Limited and others,
(2011) 5 SCC 532. In paragraphs 35 to 38 following has been laid
down:
“35. The Arbitral Tribunals are private fora chosen voluntarily by
the
parties to the dispute, to adjudicate their disputes in place of
courts and tribunals which are public fora constituted under the
laws of the country. Every civil or commercial dispute, either
contractual or non-contractual, which can be decided by a court,
is in principle capable of being adjudicated and resolved by
arbitration unless the jurisdiction of the Arbitral Tribunals is
excluded either expressly or by necessary implication. Adjudication
of certain categories of proceedings are reserved by the legislature
exclusively for public fora as a matter of public policy. Certain
other categories of cases, though not expressly reserved for
adjudication by public fora (courts and tribunals), may by necessary
implication stand excluded from the purview of private fora.
Consequently, where the cause/dispute is inarbitrable, the court
where a suit is pending, will refuse to refer the parties to arbitration,
under Section 8 of the Act, even if the parties might have agreed
upon arbitration as the forum for settlement of such disputes.
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36. The well-recognised examples of non-arbitrable disputes are:
(i) disputes relating to rights and liabilities which give rise to or
arise out of criminal offences; (ii) matrimonial disputes relating to
divorce, judicial separation, restitution of conjugal rights, child
custody; (iii) guardianship matters; (iv) insolvency and winding-
up matters; (v) testamentary matters (grant of probate, letters of
administration and succession certificate); and (vi) eviction or
tenancy matters governed by special statutes where the tenant
enjoys statutory protection against eviction and only the specified
courts are conferred jurisdiction to grant eviction or decide the
disputes.
37. It may be noticed that the cases referred to above relate to
actions in rem. A right in rem is a right exercisable against the
world at large, as contrasted from a right in personam which is an
interest protected solely against specific individuals. Actions in
personam refer to actions determining the rights and interests of
the parties themselves in the subject-matter of the case, whereas
actions in rem refer to actions determining the title to property
and the rights of the parties, not merely among themselves but
also against all persons at any time claiming an interest in that
property. Correspondingly, a judgment in personam refers to a
judgment against a person as distinguished from a judgment against
a thing, right or status and a judgment in rem refers to a judgment
that
determines the status or condition of property which operates
directly on the property itself. (Vide Black’s Law Dictionary.)
38. Generally and traditionally all disputes relating to rights in
personam are considered to be amenable to arbitration; and all
disputes relating to rights in rem are required to be adjudicated by
courts and public tribunals, being unsuited for private arbitration.
This is not however a rigid or inflexible rule. Disputes relating to
subordinate rights in personam arising from rights in rem have
always been considered to be arbitrable.”
27. The complaints filed under the Consumer Protection Act can
also be proceeded with despite there being any arbitration agreement
between the parties which have been well settled by the catena of
decisions as noticed above.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
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28. Now, the issue to be addressed is effect and consequences of
the above stated position of law consequent to the Arbitration and
Conciliation (Amendment) Act, 2015 amending Section 8. Section 8(1)
and 8(2) of Act, 1996 (as existed prior to amendment of the Act, 1996)
are as follows:
“8. Power to refer parties to arbitration where there is an
arbitration agreement.-  (1) A judicial authority before which an
action is brought in a matter which is the subject of an arbitration
agreement shall, if a party so applies not later than when submitting
his first statement on the substance of the dispute, refer the parties
to arbitration.
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration
agreement or a duly certified copy thereof.”
29. Section 8(1) and 8(2) after Amendment by Act, 2015 are as
follows:
“Section 8(1) A judicial authority, before which an action is brought
in a matter which is the subject of an arbitration agreement shall,
if a party to the arbitration agreement or any person claiming
through or under him, so applies not later than the date of
submitting his first statement on the substance of the dispute, then,
notwithstanding any judgment, decree or order of the Supreme
Court or any Court, refer the parties to arbitration unless it finds
that prima facie no valid arbitration agreement exists.
(2) the
following proviso shall be inserted, namely:— “Provided
that where the original arbitration agreement or a certified copy
thereof is not available with the party applying for reference to
arbitration under sub-section (1), and the said agreement or
certified copy is retained by the other party to that agreement,
then, the party so applying shall file such application along with a
copy of the arbitration agreement and a petition praying the Court
to call upon the other party to produce the original arbitration
agreement or its duly certified copy before that Court.”.”
30. Two more provisions of the 1996 Act need to be noted before
we proceed further to consider the issues. The 1996 Act contains two
Parts – Part I and Part II.  Part I contains heading “Arbitration” and
Part II contains heading “Enforcement of certain Foreign Awards”.
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Chapter I of Part I is “General Provisions”, in which Section 2 deals
with definitions.  Section 2(1) begins with the words “In this Part, unless
the context otherwise requires”.  Section 2(1) contains definitions.  Section
2(3) provides:-
“Section 2(3) This Part shall not affect any other law for the time
being in force by virtue of which certain disputes may not be
submitted to arbitration.”
31. There are two aspects to be noticed in the Scheme of Section
2, firstly, Section 2 contains a heading “Definitions” but it is covered by
general heading of Chapter I “General Provisions”.  Section 2(3) does
not contain any definition but contain a general provision which clarifies
that “This Part shall not affect any other law for the time being in force
by virtue of which certain disputes may not be submitted to arbitration”.
Section 2(3) gives predominance of any other law for the time being in
force by virtue of which certain disputes may not be submitted to
arbitration.
32. We have already noted several categories of cases, which
are not arbitrable.  While referring to judgment of this Court in Booz
Allen and Hamilton Inc. (supra), those principles have again been
reiterated by this Court in A. Ayyasamy (supra), Dr. A.K. Sikri, J.
delivering the judgment in that case has noticed certain cases, which are
not arbitrable in paragraph No.14, which is as follows:-
“14. In the instant case, there is no dispute about the arbitration
agreement inasmuch as there is a
specific arbitration clause in
the partnership deed. However, the question is as to whether the
dispute raised by the respondent in the suit is incapable of
settlement through arbitration. As pointed out above, the Act does
not make any provision excluding any category of disputes treating
them as non-arbitrable. Notwithstanding the above, the courts have
held that certain kinds of disputes may not be capable of
adjudication through the means of arbitration. The courts have
held that certain disputes like criminal offences of a public nature,
disputes arising out of illegal agreements and disputes relating to
status, such as divorce, cannot be referred to arbitration. The
following categories of disputes are generally treated as non-
arbitrable:
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(i) patent, trade marks and copyright;
(ii) anti-trust/competition laws;
(iii) insolvency/winding up;
(iv) bribery/corruption;
(v) fraud;
(vi) criminal matters.
Fraud is one such category spelled out by the decisions of this
Court where disputes would be considered as non-arbitrable.”
33. Dr. Justice D.Y. Chandrachud, J. in his concurring opinion
has referred to Booz Allen and Hamilton Inc. (supra) and noticed
the categories of cases, which are not arbitrable.  Paragraph No. 35 of
the judgment is quoted as below:-
“35. Ordinarily every civil or commercial dispute whether based
on contract or otherwise which is capable of being decided by a
civil court is in principle capable of being adjudicated upon and
resolved by arbitration “subject to the dispute being governed by
the arbitration agreement” unless the jurisdiction of the Arbitral
Tribunal is excluded either expressly or by necessary implication.
In Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd.,
this Court held that (at SCC p. 546, para 35) adjudication of certain
categories of proceedings is reserved by the legislature exclusively
for public fora as a matter of public policy. Certain other categories
of cases, though not exclusively reserved for adjudication by courts
and tribunals may by necessary implication stand excluded from
the purview of private fora. This Court set down certain examples
of non-arbitrable disputes
such as: (SCC pp. 546-47, para 36)
(i) disputes relating to rights and liabilities which give rise to or
arise out of criminal offences;
(ii) matrimonial disputes relating to divorce, judicial separation,
restitution of conjugal rights and child custody;
(iii) matters of guardianship;
(iv) insolvency and winding up;
(v) testamentary matters, such as the grant of probate, letters of
administration and succession certificates; and
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(vi) eviction or tenancy matters governed by special statutes where
a tenant enjoys special protection against eviction and specific
courts are conferred with the exclusive jurisdiction to deal with
the dispute.
This Court held that this class of actions operates in rem, which is
a right exercisable against the world at large as contrasted with a
right in personam which is an interest protected against specified
individuals. All disputes relating to rights in personam are
considered to be amenable to arbitration while rights in rem are
required to be adjudicated by courts and public tribunals. The
enforcement of a mortgage has been held to be a right in rem for
which proceedings in arbitration would not be maintainable. In
Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788
this Court added a seventh category of cases to the six non-
arbitrable categories set out in Booz Allen, namely, disputes relating
to trusts, trustees and beneficiaries arising out of a trust deed and
the Trust Act.”
34. Another Section, which needs to be noted is Section 5, which
is as follows:-
“Section 5. Extent of judicial intervention.—Notwithstanding
anything contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall intervene
except where so provided in this Part.”
35. Section 5 contains an injunction to judicial authority from
intervening except where so provided in this Part.  Section 2(3), Section
8, Section 11
and Section 34 are some of the provisions, which provides
for judicial intervention in matters.  Here, we are concerned with power
of judicial authority under Section 8, hence Section 5 is not much relevant
in the present case.
36. Now, we come back to the interpretation of Section 8 as
amended by Act No. 3 of 2016.  What is the legislative intent and object
in bringing the amendment to Section 8 is the main question to be answered
in this case.  Amendment under Section 8 has been undertaken by the
Parliament after taking into consideration the 246th Law Commission
Report (2014).  Taking into consideration the working of the 1996 Act,
there was an earlier attempt to carry out certain amendments in the
1996 Act.  176th Report of the Law Commission on the “Arbitration and
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]
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Conciliation (Amendment) Bill, 2001” was submitted by the Commission,
although, the Government decided to accept the recommendations and
introduced a bill namely “Arbitration and Conciliation (Amendment) Bill,
2003, the bill was referred to Department relating Standing Committee
on Personnel, Public Grievances, Law and Justice for a further analysis,
which opined that many provisions of the bill were insufficient hence the
bill was withdrawn.  The Ministry of Law and Justice issued a consultation
paper and asked the Law Commission to take a study of the amendments
proposed to the 1996 Act.  The Law Commission submitted 246th Report
“Amendments to the Arbitration and Conciliation Act, 1996 in August,
2014.  The Commission in its Report has observed “judicial intervention
in arbitration proceedings adds significantly to the delays in the arbitration
process and ultimately negates the benefits of arbitration”.  Commission
referring to amendments, which were recommended in Section 8 and 11
in paragraph No. 33 stated following:-
“33. It is in this context, the Commission has recommended
amendments to sections 8 and 11 of the Arbitration and Conciliation
Act, 1996. The scope of the judicial intervention is only restricted
to situations where the Court/Judicial Authority finds that the
arbitration agreement does not exist or is null and void. In so far
as the nature of intervention is
concerned, it is recommended that
in the event the Court/Judicial Authority is prima facie satisfied
against the argument challenging the arbitration agreement, it shall
appoint the arbitrator and/or refer the parties to arbitration, as the
case may be. The amendment envisages that the judicial authority
shall not refer the parties to arbitration only if it finds that there
does not exist an arbitration agreement or that it is null and void.
If the judicial authority is of the opinion that prima facie the
arbitration agreement exists, then it shall refer the dispute to
arbitration, and leave the existence of the arbitration agreement
to be finally determined by the arbitral tribunal. However, if the
judicial authority concludes that the agreement does not exist, then
the conclusion will be final and not prima facie……….”
37. The Report of the Commission on amendment to Section 8 as
well as Note thereon contains a Note, which is to the following effect:-
“[NOTE: The words “such of the parties… to the arbitration
agreement” and proviso (i) of the amendment have been proposed
in the context of the decision of the Supreme Court in Sukanya
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Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr., (2003) 5
SCC 531, – in cases where all the parties to the dispute are not
parties to the arbitration agreement, the reference is to be rejected
only where such parties are necessary parties to the action – and
not if they are only proper parties, or are otherwise legal strangers
to the action and have been added only to circumvent the arbitration
agreement. Proviso (ii) of the amendment contemplates a two-
step process to be adopted by a judicial authority when considering
an application seeking the reference of a pending action to
arbitration. The amendment envisages that the judicial authority
shall not refer the parties to arbitration only if it finds that there
does not exist an arbitration agreement or that it is null and void.
If the judicial authority is of the opinion that prima facie the
arbitration agreement exists, then it shall refer the dispute to
arbitration, and leave the existence of the arbitration agreement
to be finally determined by the arbitral tribunal. However, if the
judicial authority concludes that the agreement does not exist, then
the conclusion will be final and not prima facie. The amendment
also envisages that there shall be a conclusive determination as to
whether the arbitration agreement is null and void.]”
(iii) In sub-section (2), after the words “duly certified copy thereof”
add “or a copy accompanied by an affidavit calling upon the other
party to produce the original
arbitration agreement or duly certified
copy thereof in a circumstance where the original arbitration
agreement or duly certified copy is retained only by the other
party.”
[NOTE: In many transactions involving Government bodies and
smaller market players, the original/ duly certified copy of the
arbitration agreement is only retained by the former. This
amendment would ensure that the latter class is not prejudiced in
any manner by virtue of the same.]”
38. The Commission proposed amendment in Section 11 by adding
sub-section (6A).  In its Report, following Note was submitted in the
above context:-
“[NOTE: The proposed section 11 (6A) envisages the same
process of determination as is reflected in the proposed
amendment to section 8. Explanation 2 envisages that reference
by the High Court to any person or institution designated by it
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
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shall not be regarded as a delegation of judicial power. Explanation
3 has been inserted with the hope and expectation that High Courts
would encourage the parties to refer the disputes to institutionalize
arbitration by a professional Indian or international arbitral
institute.]”
39. After taking into consideration the Report of the Law
Commission, a Bill namely “The Arbitration and Conciliation
(Amendment) Bill, 2015” was submitted.  The Statement of Objects
and Reasons of the Bill throws considerable light on the Objects and
Reasons of the amendments.  Relevant part of the Statement of Objects
and Reasons is as follows:-
“2. The Act was enacted to provide for speedy disposal of cases
relating to arbitration with least court intervention. With the passage
of time, some difficulties in the applicability of the Act have been
noticed. Interpretation of the provisions of the Act by courts in
some cases have resulted in delay of disposal of arbitration
proceedings and increase in interference of courts in arbitration
matters, which tend to defeat the object of the
Act……………………..”
6. xxxxxxxxxxxxxxxxxxxxxxx
(iv) to provide that while considering any application for
appointment of arbitrator, the High Court or the Supreme Court
shall examine the existence of a prima facie arbitration agreement
and not other issues;
xxxxxxxxxxxxxxxxxxxxx”
40. Notes on the Clauses on amendment in Section 8 reads
as
follows:-
“Clause 4 of the Bill seeks to amend section 8 of the principal
Act to specify that the judicial authority shall refer the parties to
arbitration unless it finds that prima facie no valid arbitration
agreement exits. A proviso below sub-section (2) is inserted to
provide that where the original arbitration agreement or certified
copy thereof is not available with the party who apply under sub-
section (1), and is retained by the other party, such party shall file
a copy of the arbitration agreement along with application under
sub-section (1) praying the Court to call upon the other party to
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produce the original arbitration agreement or its duly certified copy
before the Court.”
41. On amendment to Section 11 by inserting sub-section (6A),
following was stated:-
“Clause 6 of the Bill seeks to amend section 11 of the principal
Act to provide that appointment of arbitrator shall be made by the
Supreme Court or the High Court, as the case may be, instead of
the Chief Justice of India or the Chief Justice of the High Court.
Subsection (6A) is inserted to provide that the Supreme Court or
the High Court while considering application under sub-section
(4) to (6) shall confine to the examination of an arbitration
agreement………………..”
42. Prior to above amendment, this Court in several cases has
interpreted Section 8.  Several conditions for exercising power under
Section 8 were laid down by this Court.  In P. Anand Gajapathi Raju
and Others Vs. P.V.G. Raju (Dead) and Others, (2000) 4 SCC
539, several conditions were noticed by this Court, which are to be
satisfied before Court can exercise its power under Section 8.  In
paragraph No.5, following has been stated:-
“5. The conditions which are required to be satisfied under sub-
sections (1) and (2) of Section 8 before the court can exercise its
powers are:
(1) there is an arbitration agreement;
(2) a party to the agreement brings an action in the court against
the other party;
(3) subject-matter of the action is the same as the subject-matter
of the arbitration agreement;
(4) the other party moves the
court for referring the parties to
arbitration before it submits his first statement on the substance
of the dispute.
Xxxxxxxxxxxxxxxxxx”
43. In Paragraph No. 8 of the judgment, it was further stated that
the language of Section 8 is peremptory and it is, therefore, obligatory
for the Court to refer the parties to arbitration in terms of their arbitration
agreement.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
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44. In Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya and
Another, (2003) 5 SCC 531, this Court had occasion to consider the
ingredients of Section 8.  This Court noticed certain circumstances, where
matter was not required to be referred to the Arbitral Tribunal.  In
Paragraph No. 12, 13 and 15, following has been held:-
“12. …………… Further, the matter is not required to be referred
to the Arbitral Tribunal, if: (1) the parties to the arbitration
agreement have not filed any such application for referring the
dispute to the arbitrator; (2) in a pending suit, such application is
not filed before submitting first statement on the substance of the
dispute; or (3) such application is not accompanied by the original
arbitration 
agreement 
or 
duly 
certified 
copy
thereof………………………………..
13. Secondly, there is no provision in the Act that when the subject-
matter of the suit includes subject-matter of the arbitration
agreement as well as other disputes, the matter is required to be
referred to arbitration. There is also no provision for splitting the
cause or parties and referring the subject-matter of the suit to the
arbitrators.
15. The relevant language used in Section 8 is: “in a matter which
is the subject of an arbitration agreement”. The court is
required to refer the parties to arbitration. Therefore, the suit should
be in respect of “a matter” which the parties have agreed to
refer
and which comes within the ambit of arbitration agreement.
Where, however, a suit is commenced — “as to a matter” which
lies outside the arbitration agreement and is also between some
of the parties who are not parties to the arbitration agreement,
there is no question of application of Section 8. The words “a
matter” indicate that the entire subject-matter of the suit should
be subject to arbitration agreement.”
45. Court further held that Section 8 does not admit interpretation
to partly referring the disputes to arbitration.  In Paragraph No.16,
following was laid down:-
“16. The next question which requires consideration is — even if
there is no provision for partly referring the dispute to arbitration,
whether such a course is possible under Section 8 of the Act. In
our view, it would be difficult to give an interpretation to Section 8
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under which bifurcation of the cause of action, that is to say, the
subject-matter of the suit or in some cases bifurcation of the suit
between parties who are parties to the arbitration agreement and
others is possible. This would be laying down a totally new
procedure not contemplated under the Act. If bifurcation of the
subject-matter of a suit was contemplated, the legislature would
have used appropriate language to permit such a course. Since
there is no such indication in the language, it follows that bifurcation
of the subject-matter of an action brought before a judicial authority
is not allowed.”
46. The law as declared by this Court in the above cases was in
existence when the Law Commission submitted its 246th Report and
Parliament considered the Bill, 2015 for Amendment Act, 2016.  The
Law Commission itself in its Report has referred to amendment in Section
8 in context of decision of this Court in Sukanya Holdings (P) Ltd.
(supra), which was clearly noticed in the Note to Section 8 as extracted
above.  The words “notwithstanding any judgment, decree or order of
the Supreme Court or any Court” added by amendment in Section 8
were with intent to minimise the intervention of judicial authority in context
of arbitration agreement.  As per the amended Section 8(1), the judicial
authority has only to consider the question whether the parties have a
valid arbitration agreement?  The Court cannot refuse to refer the parties
to arbitration “unless it
finds that prima facie no valid arbitration
agreement exists”.  The amended provision, thus, limits the intervention
by judicial authority to only one aspect, i.e. refusal by judicial authority
to refer is confined to only one aspect, when it finds that prima facie no
valid arbitration agreement exists.  Other several conditions, which were
noticed by this court in various pronouncements made prior to amendment
were not to be adhered to and the Legislative intendment was clear
departure from fulfilling various conditions as noticed in the judgment of
P. Anand Gajapathi Raju (supra) and Sukanya Holdings (P) Ltd.
(supra). Same Legislative intendment is decipherable by amendment of
Section 11 by adding sub-section (6A).  Section 11(6A) is as follows:-
11. Appointment of arbitrators.—
xxxxxxxxxxxxxxxxxxxxxxxx
 [(6A) The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-
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section (5) or sub-section (6), shall, notwithstanding any judgment,
decree or order of any Court, confine to the examination of the
existence of an arbitration agreement.
47. The same words “notwithstanding any judgment, decree or
order of any Court” finds place in sub-section (6A) of Section 11 and
Supreme Court and High Court is confined to the examination of the
existence of an arbitration agreement.  This Court had occasion to
consider the amendment made in Section 11(6A) in Duro Felguera,
S.A. (supra).  Justice Kurian Joseph in his concurring opinion in
Paragraph No. 48 has laid down following:-
“48. Section 11(6-A) added by the 2015 Amendment, reads as
follows:
“11. (6-A) The Supreme Court or, as the case may be, the
High Court, while considering any application under sub-section
(4) or sub-section (5) or sub-section (6), shall, notwithstanding
any judgment, decree or order of any court, confine to the
examination of the existence of an arbitration agreement.”
(emphasis supplied)
From a reading of Section 11(6-A), the intention of the legislature
is crystal clear i.e. the court should and need only look into one
aspect—the existence of an arbitration agreement. What are the
factors for deciding as to whether there is an arbitration agreement
is the next question. The resolution to that is simple—it needs to
be seen if the agreement contains a clause which provides for
arbitration
pertaining to the disputes which have arisen between
the parties to the agreement.”
48. Section 8 of the 1996 Act as amended also came for
consideration in Ameet Lalchand Shah and Others Vs. Rishabh
Enterprises and Another, AIR 2018 SC 3041: (2018) 6 SCALE
621: 2018 SCC Online SC 487.  This Court noticed the object and
purpose of amended Section 8.  In Paragraph No. 29 to 31, following
has been laid down:-
“29. “Principally four amendments to Section 8(1) have been
introduced by the 2015 Amendments-(i) the relevant “party” that
is entitled to apply seeking reference to arbitration has been
clarified/amplified to include persons claiming “through or under”
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such a party to the arbitration agreement; (ii) scope of examination
by the judicial authority is restricted to a finding whether “no valid
arbitration agreement exists” and the nature of examination by
the judicial authority is clarified to be on a “prima facie” basis; (iii)
the cut-off date by which an application Under Section 8 is to be
presented has been defined to mean “the date of” submitting the
first statement on the substance of the dispute; and (iv) the
amendments are expressed to apply notwithstanding any prior
judicial precedent. The proviso to Section 8(2) has been added to
allow a party that does not possess the original or certified copy
of the arbitration agreement on account of it being retained by the
other party, to nevertheless apply under Section 8 seeking
reference, and call upon the other party to produce the same.”
(Ref: Justice R.S. Bachawat’s Law of Arbitration and
Conciliation, Sixth Edition, Vol. I (Sections 1 to 34) at page 695
published by LexisNexis).
31. The language of amendment to Section 8 of the Act is clear
that the amendment to Section 8(1) of the Act would apply
notwithstanding any prayer, judgment, decree or order of the
Supreme Court or any other Court. The High Court laid emphasis
upon the word “.....unless it finds that prima-facie no valid
agreement exists”. The High Court observed that there is no
arbitration agreement between Astonfield and Rishabh. After
referring to Sukanya Holdings and the amended Section
8 and
Section 45 of the Act, the High Court pointed out the difference in
language of Section 8 and Section 45 of the Act. The High Court
distinguished between Sukanya Holdings and Chloro Controls, and
observed that Sukanya Holdings was not overruled by Chloro
Controls….”
49. This Court, thus, in the above cases has noticed that
amendments  are expressed to apply notwithstanding any prior judicial
precedents, but the scope of amendment under Section 8(1) was confined
to three categories as has been noted in Paragraph No.29.  Amendments
under Section 8, thus, were aimed to minimise the scope of judicial
authority to refuse reference to arbitration and only ground on which
reference could have been refused was that it prima facie finds that no
valid arbitration agreement exists.  Notwithstanding any prior judicial
precedents referred to under Section 8(1) relates to those judicial
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precedents, which explained the discretion and power of judicial authority
to examine various aspects while exercising power under Section 8.
50. The Legislative intent and object were confined to only above
aspects and was not on those aspects, where certain disputes were not
required to be referred to arbitration.  Can it be said that after
amendment under Section 8(1), the law laid down by this Court
in reference to Section 2(3), where large number of categories
have been held to be non-arbitrable has been reversed or set at
naught.  Neither any such Legislature intendment was there nor
any such consequence was contemplated that law laid down by
this Court in context of Section 2(3) has to be ignored or reversed.
51. While carrying out amendment under Section 8(1) of Act,
1996, the statutes providing additional remedies/special remedies were
not in contemplation. The legislative intent is clear that judicial authority’s
discretion to refuse arbitration was minimise in respect of jurisdiction
exercise by judicial authority in reference to Section 8. The amendment
was also aimed to do away with special or additional remedies is not
decipherable from any material. The Law Commission 246th Report, the
Statement and Objects of Bill and the notes on clauses do not indicate
that amendments were made for overriding special/additional remedies
provided under different statutes. In the event,
the interpretation as put
by the learned counsel for the petitioner is accepted, Section 8 has to be
read to override the law laid down by this Court in reference to various
special/additional jurisdictions as has been adverted to and noted in
judgment of this Court in Booz Allen and Hamilton Inc.(supra) which
was never the intent of amendment in Section 8.
52. The amendment in Section 8 cannot be given such expansive
meaning and intent so as to inundate entire regime of special legislations
where such disputes were held to be not arbitrable. Something which
legislation never intended cannot be accepted as side wind to override
the settled law. The submission of the petitioner that after the amendment
the law as laid down by this Court in National Seeds Corporation
Limited(supra) is no more a good law cannot be accepted. The words
“notwithstanding any judgment, decree or order of the Supreme Court
or any Court” were meant only to those precedents where it was laid
down that the judicial authority while making reference under Section 8
shall entitle to look into various facets of the arbitration agreement, subject
matter of the arbitration whether the claim is alive or dead, whether the
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arbitration agreement is null and void. The words added in Section 8
cannot be meant for any other meaning. Reference is also made to the
judgment of this Court in Vimal Kishor Shah and others vs. Jayesh
Dinesh Shah and others, (2016) 8 SCC 788. This Court in the above
case had occasion to consider the provisions of Section 8 of the Act,
1996 in reference to special remedy provided under Trusts Act, 1882.
This Court noticed the judgment of this Court in Booz Allen and
Hamilton Inc.(supra) with approval in paragraphs 40 and 42 which is
to the following effect:
“40. Before we examine the scheme of the Trusts Act, 1882, we
consider it apposite to take note of the case law, which has a
bearing on this issue. The question came up for consideration
before this Court in Booz Allen & Hamilton Inc. v. SBI Home
Finance Ltd. as to what is the meaning of the term “arbitrability”
and secondly, which type of disputes are capable of settlement by
arbitration under the Act. Their Lordships framed three questions
to answer the question viz.: (SCC p. 546, para 34)
(1)
Whether the disputes having regard to their nature could
be resolved by a private forum chosen by the parties
(Arbitral Tribunal) or whether such disputes exclusively
fall within the domain of public fora (courts)?;
(2)
Whether the disputes are covered by the arbitration
agreement?; and
(3)
Whether the parties have referred the disputes to
arbitrator?”
42. The question to be considered in this appeal is
whether the
disputes relating to affairs and management of the Trust including
the disputes arising inter se trustees, beneficiaries in relation to
their appointment, powers, duties, obligations, removal, etc. are
capable of being settled through arbitration by taking recourse to
the provisions of the Act, if there is a clause in the trust deed to
that effect or such disputes have to be decided under the Trusts
Act, 1882 with the aid of forum prescribed under the said Act?”
53. After noticing the issues which have arisen in the above case
this Court laid down following in paragraphs 51 and 53:
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“51. The principle of interpretation that where a specific remedy
is given, it thereby deprives the person who insists upon a remedy
of any other form of remedy than that given by the statute, is one
which is very familiar, and which runs through the law, was adopted
by this Court in Premier Automobiles Ltd. v. Kamlekar
Shantaram Wadke while examining the question of bar in filing
civil suit in the context of remedies provided under the Industrial
Disputes Act (see G.P. Singh, Principles of Statutory
Interpretation, 12th Edn., pp. 763-64). We apply this principle
here because, as held above, the Trusts Act, 1882 creates an
obligation and further specifies the rights and duties of the settlor,
trustees and the beneficiaries apart from several conditions
specified in the trust deed and further provides a specific remedy
for its enforcement by filing applications in civil court. It is for this
reason, we are of the view that since sufficient and adequate
remedy is provided under the Trusts Act, 1882 for deciding the
disputes in relation to trust deed, trustees and beneficiaries, the
remedy provided under the Arbitration Act for deciding such
disputes is barred by implication.
53. We, accordingly, hold that the disputes relating to trust, trustees
and beneficiaries arising out of the trust deed and the Trusts Act,
1882 are not capable of being decided by the arbitrator despite
existence of
arbitration agreement to that effect between the
parties. A fortiori, we hold that the application filed by the
respondents under Section 11 of the Act is not maintainable on
the ground that firstly, it is not based on an “arbitration agreement”
within the meaning of Sections 2(1)(b) and 2(1)(h) read with
Section 7 of the Act and secondly, assuming that there exists an
arbitration agreement (Clause 20 of the trust deed) yet the disputes
specified therein are not capable of being referred to private
arbitration for their adjudication on merits.”
54. This Court held that disputes within the trust, trustees and
beneficiaries are not capable of being decided by the arbitrator despite
existence of arbitration agreement to that effect between the parties.
This Court held that the remedy provided under the Arbitration Act for
deciding such disputes is barred by implication. The ratio laid down in
the above case is fully applicable with regard to disputes raised in
consumer fora.
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55. We may, however, hasten to add that in the event a person
entitled to seek an additional special remedy provided under the statutes
does not opt for the additional/special remedy and he is a party to an
arbitration agreement, there is no inhibition in disputes being proceeded
in arbitration. It is only the case where specific/special remedies are
provided for and which are opted by an aggrieved person that judicial
authority can refuse to relegate the parties to the arbitration.
56. We, thus, do not find that any error has been committed by the
NCDRC in rejecting the application filed by the appellant under Section
8. No exception can be taken to the dismissal of the appeals by this
Court against the judgment of NCDRC. No ground is made out to review
the order dated 13.02.2018. The review petitions are dismissed.
Ankit Gyan
Review Petitions dismissed.
M/S. EMAAR MGF LAND LIMITED v. AFTAB SINGH
[ASHOK BHUSHAN, J.]