India: Arbitration Clauses Cannot Oust The Jurisdiction Of The Consumer Courts

Last Updated: 19 July 2017
Article by Naval Sharma and Aditya Gupte

It is well settled that arbitration agreements do not bar the jurisdiction of the National Consumer Disputes Redressal Commission ('NCDRC') and other consumer forums. The issue was, however, reconsidered at length by a Full Bench of the NCDRC, in Aftab Singh v Emaar MGF Land Limited & Anr [Consumer Case No 701 of 2015]  in view of the amendments to the Arbitration and Conciliation Act 1996 ('the Amended Act'). The Full Bench was constituted pursuant to a referral by the Single Bench on 31 August 2016. In its decision of 13 July 2017, the NCDRC has once again reiterated that since the Consumer Courts are special courts constituted to serve a social purpose, the Amended Act does not apply to them.


The dispute before the NCDRC was between real estate buyers ('Buyers') and a property developer ('Builder').  The grievance of the Buyers was that the Builder failed to deliver possession of the real estate within the time stipulated by the agreement between them. The Builder filed an application under §8 of the Amended Act praying for reference to arbitration as the agreement contained a valid arbitration clause.

Contentions of the Parties: 

The Buyers contended that the remedies provided by the Consumer Protection Act 1986 ('Consumer Act') are in addition to and not in exclusion of other laws in force.  Even under the Amended Act, the intent of the legislature is not to bar the jurisdiction of the Consumer Courts, where an arbitration clause exists. The existing interplay between the Consumer Act and the Amended Act remains unaffected.  The decision of the Supreme Court in National Seeds Corporation Limited v M Madhusudhan Reddy [(2012) 2 SCC 506] where the court had ruled that consumer disputes cannot be referred to arbitration, continued to apply.   It was also argued that the Consumer Act is a beneficial legislation and, therefore, the intention behind its enactment ought to be advanced.

The Builder on the other hand submitted that the Consumer Courts are 'judicial authority' within the meaning of §8 of the Amended Act. Therefore, they are required to refer parties to arbitration if a valid clause exists. Further, under the Amended Act, the judicial authority was required to refer disputes to arbitration, irrespective of any decisions of the High Court or the Supreme Court of India, as such Article 141 of the Constitution would also be of no assistance to the parties. Emphasis was also laid on §5 of the Amended Act, which requires a judicial authority to refer parties to arbitration, irrespective of anything contained in any other law.

Decision of the Court:

While ruling that the Amended Act did not bar the jurisdiction of the Consumer Courts, the Full Bench of the NCDRC, relied on judgments of the Supreme Court which have laid down categories of disputes that are considered non-arbitrable. The court referred to Booz Allen Hamilton Inc v SBI Home Finance Ltd [(2011) 5 SCC 532], where the Supreme Court had laid down 7 categories of non-arbitrable disputes. Reference was also made to Vimal Kishore Shah v Jayesh Dinesh Shah [(2016) 8 SCC 788], which states that cases under the Trust Act 1882 are non-arbitrable.

The NCDRC also relied on the Supreme Court judgment in A. Ayyasamy v A Paramasivam [(2016) 10 SCC 386], where the Supreme Court had observed that if the jurisdiction of the ordinary civil court is excluded by conferring exclusive jurisdiction on a special court or tribunal as a matter of public policy, then the dispute would not be arbitrable. This was exactly the case with Consumer Act.

The Consumer Courts were setup to create a mechanism for disputes between unequal players, namely the consumers and large corporations and, as such, there was public policy involved. The NCDRC noted that disputes are not characterized as non-arbitrable on the whims and fancies of the legislature but based on jurisprudence built by the Supreme Court in harmony with the legislature and keeping in mind the public policy objective. By the Amended Act, particularly §8(1), the legislature could not have intended to undo this entire jurisprudence.

The NCDRC then proceeded to examine the 246th Law Commission Report to establish the objective behind the Amended Act. The NCDRC ruled that the Report was dedicated to curtailing the scope and nature of pre-arbitral judicial intervention. The issue of non-arbitrability of consumer disputes was not considered by the Law Commission while making its report. 

Lastly, the NCDRC also referred to §2(3) of the Amended Act which protects certain categories of disputes from being referred to arbitration. The Full Bench ruled that consumer disputes were protected under this provision. The NCDRC concluded its judgment by stating that if the contention of the Builder is accepted, it would defeat the entire purpose and object of the Consumer Act and no legal amendments can be intended to reduce a harmonized and established legal framework to a dead letter.

Concluding Remarks:

The NCDRC judgment is amongst the first rulings to examine the impact of §8 of the Amended Act. The ruling that certain categories of disputes are not arbitrable based on a public policy framework and further that the Amended Act could not be interpreted to overrule this entire jurisprudence will have an important bearing on cases where parties even under the Amended Act continue to argue that certain categories of disputes are non-arbitrable.  

This is particularly relevant to the question of whether disputes involving serious allegations of fraud continue to be non-arbitrable under the Amended Act. This issue is once again pending before the Supreme Court of India and it will be worth examining how the Supreme Court interprets §8 of the Amended Act, particularly whether the legal reasoning applied by the NCDRC is reiterated.

For further information on this topic please contact Tuli & Co 

Tel T +91 22 6725 5421, fax F +91 22 6725 5422 or email

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Naval Sharma
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.