Case: M/S EMAAR MGF LAND LIMITED Vs. AFTAB SINGH

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 Buyers agreement was entered dated 06.05.2008 between the appellant and the respondent. In the Buyers 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, andb. to adjust the excess payment in terms of letter dated 2.2.2008, Annexurec. to adjust the penalty @ Rs.1500/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 from6.2.2010 (i.e. 24 months from the date of the Agreement); ande. the Honble 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, andf. the cost of this complaint may be awarded from the opponent to the complainant, andg. the Honble National Commission may be pleased to grant any other relief deemed in fit just and proper by the Honble National Commission in the Circumstances of the case5. Notice was issued to the appellant by the NCDRC on11.01.2016. 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 Buyers 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 Members6. 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 theg discussion, we arrive at the following conclusions: (i) the disputes which are to be adjudicated and governed by statutory enactments, established for specific public purpose toe a particular public policy are not arbitrable; (ii) there are vast domains of the legal universe that aree 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 thee Supreme Court; (iv) Section 2(3) of the Arbitration Act recognizes schemes under other legislations that make disputese and (iv) in light of the overall architecture of the Consumer Act andsection (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 Agreement56. Consequently, we unhesitatingly reject the arguments on behalf of the Builder and hold that an Arbitration Clause in thed 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 Act7. 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 and28.08.2017 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.3 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.

Court's reasoning:
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 above26. 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 nonarbitrable. 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, 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, 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 disputesarbitrable 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 andp 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 disputes37. 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 ther 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 Blacks 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 arbitrable27. 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 above32. 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(i) patent, trade marks and copyright;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 arbitrationsubject to the dispute being governed by the arbitration agreementunless 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, para35) 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 ofe disputes such as: (SCC pp.(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;(iv) insolvency and winding up;(v) testamentary matters, such as the grant of probate, letters of administration and succession certificates; and(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 disputeThis 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 sixe categories set out in Booz Allen, namely, disputes relating to trusts, trustees and beneficiaries arising out of a trust deed and the Trust Act35. 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 case46. The law as declared by this Court in the above cases was in existence when the Law Commission submitted its 246 th 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 wordsnotwithstanding any judgment, decree or order of the Supreme Court or anyby 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 arbitrationunless it finds that prima facie no valid arbitration agreement. 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)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 precedents, which explained the discretion and power of judicial authority to examine various aspects while exercising power under Section 850. 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 bee 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 reversed51. 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 authoritys 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 246 th 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 852. 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 wordsnotwithstanding any judgment, decree or order of the Supreme Court or anywere 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 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 53:51. 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. 76364). 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 implication53. 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 merits54. 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.