New Delhi: The Supreme Court of India ruled that consumer disputes are considered non-arbitrable under the Consumer Protection Act, and parties cannot be forced into arbitration solely based on being signatories to an arbitration agreement.
The court asserted that these disputes fall under the realm of public policy, belonging to public forums rather than arbitration, unless both parties willingly choose arbitration over public forums for redressal. The nature of the dispute determines the appropriate redressal forum, giving consumers the option to seek remedies under the Consumer Protection Act or opt for arbitration, a choice not available to builders.
The court also clarified that seeking arbitration under Section 11 of the Arbitration Act does not oust the jurisdiction of Consumer Courts, as the nature of the dispute, legislative intent, and public policy are key factors in deciding the forum. The court cited previous judgments supporting the principle that consumers cannot be deprived of their remedies under the Consumer Protection Act, despite the presence of an arbitration agreement.
The court highlighted that amendments to Sections 8 and 11 of the Arbitration Act were aimed at limiting judicial intervention and not at compelling arbitration in non-arbitrable matters. The court also referenced the case of Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, which upheld the restriction on courts’ examination of arbitration-related matters. Therefore, the High Court’s decision not to appoint an arbitrator in this case was deemed appropriate and was not interfered with by the Supreme Court. (BW)
