Case: M/s. Fair Air Engineers Pvt. Ltd. and another Vs. N.K. Modi

4. The admitted facts are that 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 in New Delhi. Since he has committed breach of the contract, seeking to recover a sum of Rs. 3, 75, 000 as compensation for alleged deficiency in service on the part of the appellant in carrying out the work of installation of the centrally air-conditioned plant, the respondent laid the complaint before the State Commission which in its order dated 30-10-1990 had stayed the proceedings and relegated the parties to arbitration for seeking the remedy. The respondent carried the matter in appeal. By the impugned order the Commission has held that the proceedings before the forums created under the Consumer Protection Act, 1986 (Act 68 of 1986) (for short the Act) is not a legal proceedings nor is the Commission a judicial authority; therefore, Section 34 of the Arbitration Act, 1940 is not available to stay the proceedings. Thus this appeal by special leave

Court's reasoning:
It is true that the respondent had raised before the Commission the dispute in the grounds of appeal about the non-existence of the arbitration agreement and want of consensus ad idem in that behalf; but from a reading of the order of the National Commission it would appear that the question was not argued. The State Commission expressly has gone into the question and held that by operation of clause (12) of the quotation there is an arbitration agreement brought into vogue between the parties. It envisages reference to arbitration and thereby there was consensus ad idem. It is seen that when the quotation was offered with the conditions enumerated thereunder, the respondent merely made a counter-offer giving technical details of a part of the offer as counter-offer and when it was accepted by the appellant, the parties agreed for that offer and the counter-offer. In other words, they became an integral part of the contract of the parties. Thereby, clause (12) of the agreement became an integral part of the contract. Thus, there is an arbitration agreement between the partiesIt is true that in the counter-affidavit filed in this Court the respondent has stated that the appellant had taken five adjournments to file the counter. On the fifth occasion the counter came to be filed with the petition for stay of the proceedings. But, unfortunately, this question was not argued before the National Commission and, therefore, we cannot go into the question whether the appellant acquiesced to the jurisdiction of the State Commission before proceeding further in the matter10. Thus, it would be seen that the District Forums, State Commission and National Commission have all the trappings of a civil court and judicial authority. The proceedings before them are legal proceedingsThus, we have no hesitation to hold that the proceedings before the District Forum, State Commission and the National Commission are legal proceedings. The District Forum, National Commission and the State Commission are judicial authorities falling under Section 34 of the Arbitration Act13. It would thus be clear that by invocation of Section 34, the party to the proceedings does not get an automatic right to have the proceedings pending before the judicial authorities stayed. The said section gives discretion to the authorities to stay the proceedings on their satisfying that there was no sufficient reason why the matter should not be referred in accordance with the agreement between the parties for arbitration when the party seeking stay of the proceedings was and still remains ready and willing to do all things necessary to the proper conduct of the arbitration. In other words, on judicial satisfaction as to the contract between the parties and subject-matter of the dispute as to the nature of the dispute, the judicial authority has been invested with a discretion to stay the proceedings or proceed with the matter pending before it. Similar power is available under Section 8 of the Arbitration and Conciliation Third Ordinance, 1996. The Act was enacted to provide for protection of the interests of consumers and for that purpose the Act has made provision for the establishment of Consumer Councils and other authorities, viz., District Forums, State Commissions and National Commission for the settlement of consumers disputes and for matters connected therewith15. 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 remedy16. 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 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 Act17. Considered from this perspective, we hold that this dispute need not be referred to arbitration under clause (12) of the agreement and the matter could be decided on merits by the State Commission itself