Arbitration agreements cannot oust the jurisdiction of consumer forums

In a recent judgement, the Supreme Court affirmed that arbitration agreements cannot oust the jurisdiction of consumer forums. The order will benefit homebuyers who usually have an arbitration clause in their agreements with the real estate companies. Such clauses lay down that in cases of disputes, aggrieved consumers will have to resort to arbitration before moving to civil courts.

Emphasising upon consumers’ rights, a bench of justices Adarsh K Goel and Uday U Lalit has upheld the National Consumer Commission’s judegment that had maintained that despite an arbitration clause in the agreements, consumers could still knock on the doors of consumer forums to seek quick redressal. The apex court passed this order while dismissing several appeals that were filed by Emaar MGF Land Ltd. “In terms of the signed order, the appeals are dismissed. Pending applications, if any, shall also stand disposed of,” stated the order.

Emaar MGF had challenged the National Commission’s full-bench verdict of July 2017 wherein the apex consumer forum ruled that authority and jurisdiction of consumer forum could not be circumscribed by any arbitration clause. According to the Commission, consumer disputes are not capable of being settled by arbitration and that the jurisdiction of the consumer fora to adjudicate upon consumer disputes is not affected by Section 8 (as amended) of the Arbitration and Conciliation Act, 1996, that mandates reference to arbitration.