The Hon'ble Supreme Court of India, in Emaar MGF Land Limited v. Aftaab Singh1 (Emaar), has laid down that notwithstanding the amendments of 2015, the existence of arbitration clause will be no bar to the jurisdiction of consumer forum. The said judgment deals with the dispute concerning the buyer's agreement. The complainant (who is the respondent in the Emaar case) filed the complaint before the consumer forum alleging the deficiency in service by Emaar as it didn't deliver the possession of the agreed villa. The said agreement contained the arbitral clause for settlement of dispute between the parties. It is pertinent to note that in the year 2015 to restrict the power of the court in determining the scope of enquiry into the arbitration references, the legislature introduced the following amendment in Section 8 of the Arbitration and Conciliation Act, 1996 (Act):
"notwithstanding any judgment, decree or order of the supreme court or any court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists"
Thus, the power under Section 8 was restricted to the 'prima facie' enquiry into the existence of valid Arbitration agreement. The Hon'ble Court in the Emaar case was concerned with the interpretation and effect of said amendment. It has noted that the amendment is restricted to only those judicial precedents, which explained the discretion and power of judicial authority to examine the various aspects while exercising power under Section 8. It does not have any bearing on the power of the court related to 'excluded matters'. Thus, it held that consumer disputes which are governed by the Consumer Protection Act, 1986, which is a welfare legislation are not arbitrable per se. The Hon'ble Court also relied on the separate opinion of Hon'ble Justice D.Y. Chandrachud in A. Ayyasamy v. A. Paramasivam and Others2 (Ayyasamy), in which the Hon'ble judge has held that in general arbitral tribunal has power to determine the disputes which are capable of determination by the civil court. Thus, by necessary implication it excluded all those disputes which cannot be decided by the civil court for e.g. under special statute or special forum.
The 'arbitrability' has been considered in great detail by the Hon'ble Supreme Court in Booz Allen and Hamilton Inc. vs. SBI Home Finance Limited and others3 (Booz Allen). In which the Hon'ble Court has held the following three facets of arbitrability:
a) Whether the disputes are capable of adjudication and settlement by arbitration?
b) Whether the disputes are covered by the arbitration agreement?
c) Whether the parties have referred the disputes to arbitration?
Although in Booz Allen it was held the question no. b and c have to be decided by the Arbitral Tribunal only, while question no. a can be decided by both the court and/ or the arbitral tribunal. It is submitted to restrict or curb the power of the court under Section 8, by restricting to the prima facie analysis as to the existence of valid arbitration agreement (which means that there exists an arbitration agreement as defined under Section 7 of the Act), the amendment of 2015 were introduced. Footnotes
1 Review Petition (C) 2629-2630 of 2018 dated 10.12.2018
2 A. Ayyasamy Vs. A. Paramasivam and Others, (2016) 10 SCC 386.
3 Booz Allen and Hamilton Inc. vs. SBI Home Finance Limited and others, (2011) 5 SCC 532.
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.