M/S. EMAAR MGF LAND LIMITED versus AFTAB SINGH on 10 December 2018

[2018] 14 S.C.R. 791

M/S. EMAAR MGF LAND LIMITED

v.

AFTAB SINGH

(Review Petition (C) Nos. 2629-2630 of 2018)

in

(Civil Appeal Nos. 23512-23513 of 2017)

DECEMBER 10, 2018

[UDAY UMESH LALIT AND ASHOK BHUSHAN, JJ.]

Consumer Protection Act, 1986 – Consumer disputes, whetherarbitrable or not – Appellant-company was developing an integratedtownship – Respondent submitted an application for allotment ofvilla – In Buyer’s agreement, there was an arbitration clauseproviding for settlement of disputes between the parties underArbitration and Conciliation Act, 1996 – Respondent filed complaintbefore the National Consumer Disputes Redressal Commission(NCDRC) – Appellant filed an application u/s.8 of the 1996 Act forreferring the matter to the Arbitration – NCDRC rejected theapplication u/s.8 of the 1996 Act and held that in the light of theConsumer Act and Court-evolved jurisprudence, amended sub-section (1) of s.8 cannot be construed as a mandate to the ConsumerForums, constituted under the Act, to refer the parties to Arbitrationin terms of the Arbitration agreement – Propriety of – Held: Proper– Amendments u/s.8 of the 1996 Act were aimed to minimize thescope of judicial authority to refuse reference to arbitration andonly ground on which reference could have been refused was thatit prima facie finds that no valid arbitration agreement exists – But,amendment in s.8 cannot be given such expansive meaning andintent so as to inundate entire regime of special legislations wheredisputes were held to be non-arbitrable – However, in the event aperson entitled to seek an additional special remedy provided underthe statutes does not opt for the additional/special remedy and he isa party to an arbitration agreement, there is no inhibition in disputesbeing proceeded in arbitration – It is only the case where specific/special remedies are provided for and which are opted by anaggrieved person that judicial authority can refuse to relegate the

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Aparties to the arbitration – Thus, complaint under ConsumerProtection Act being a special remedy, despite there being anarbitration agreement the proceedings before Consumer Forum haveto go on – No error committed by the NCDRC in rejecting applicationfiled by appellant u/s.8 – Arbitration and Conciliation Act, 1996 –Amended s.8 by the Arbitration and Conciliation (Amendment) Act,B2015.

Dismissing the review petitions, the Court HELD: 1. This Court in the series of judgments consideredthe provisions of Consumer Protection Act, 1986 as well asCArbitration and Conciliation Act, 1996 and laid down thatcomplaint under Consumer Protection Act being a special remedy,despite there being an arbitration agreement the proceedingsbefore Consumer Forum have to go on and no error committedby Consumer Forum on rejecting the application. There is reasonfor not interjecting proceedings under Consumer Protection ActDon the strength of an arbitration agreement by Act, 1996. Theremedy under Consumer Protection Act is a remedy provided toa consumer when there is a defect in any goods or services. Thecomplaint means any allegation in writing made by a complainanthas also been explained in Section 2(c) of the Act. The remedyEunder the Consumer Protection Act is confined to complaint byconsumer as defined under the Act for defect or deficienciescaused by a service provider, the cheap and a quick remedy hasbeen provided to the consumer which is the object and purposeof the Act. [Para 25][809-E-H]

FNational Seeds Corporation Limited v. M. MadhusudanReddy and Another (2012) 2 SCC 506 : [2012] 2 SCR1065 ; Duro Felguera, S.A. v. Gangavaram Port Limited(2017) 9 SCC 729 : [2017] 10 SCR 285 ; A. Ayyasamyv. A. Paramasivam and Others (2016) 10 SCC 386 :[2016] 11 SCR 521 ; Lucknow Development Act v.GM.K. Gupta, (1994) 1 SCC 243 : [1993] 3 Suppl. SCR615 ; Secretary, Thirumurugan Cooperative AgriculturalCredit Society v. M. Lalitha (dead) Through LRs. Andothers, (2004) 1 SCC 395 ; Fair Air Engineering Pvt.Ltd. and another v. N.K. Modi, (1996) 6 SCC 385 :

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[1996] 4 Suppl. SCR 820 ; Skypak Couriers Ltd. v.Tata Chemicals, (2000) 5 SCC 294 : [2000] 1 Suppl.SCR 324 ; Rosedale Developers Private Limited v.Aghore Bhattacharya And Others (2018) 11 SCC 337– referred to.

2. Not only the proceedings of Consumer Protection Act,1986 are special proceedings which were required to be continuedunder the Act despite an arbitration agreement, there are largenumber of other fields where an arbitration agreement can neitherstop or stultify the proceedings. [Para 26][810-A-B]

Booz Allen and Hamilton Inc. v. SBI Home FinanceLimited and others (2011) 5 SCC 532 : [2011] 7 SCR310 – relied on.

3. What is the legislative intent and object in bringing theamendment to Section 8 is the main question to be answered inthis case. Amendments under Section 8, were aimed to minimisethe scope of judicial authority to refuse reference to arbitrationand only ground on which reference could have been refusedwas that it prima facie finds that no valid arbitration agreementexists. Notwithstanding any prior judicial precedents referredto under Section 8(1) relates to those judicial precedents, whichexplained the discretion and power of judicial authority to examinevarious aspects while exercising power under Section 8. TheLegislative intent and object were confined to only above aspectsand was not on those aspects, where certain disputes were notrequired to be referred to arbitration. Can it be said that afteramendment under Section 8(1), the law laid down by this Courtin reference to Section 2(3), where large number of categorieshave been held to be non-arbitrable has been reversed or set atnaught. Neither any such Legislature intendment was there norany such consequence was contemplated that law laid down bythis Court in context of Section 2(3) has to be ignored or reversed.[Paras 36, 49 and 50][815-G; 823-G-H; 824-A-C]

4. The amendment in Section 8 cannot be given suchexpansive meaning and intent so as to inundate entire regime ofspecial legislations where such disputes were held to be notarbitrable. Something which legislation never intended cannot be A

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Aaccepted as side wind to override the settled law. The words“notwithstanding any judgment, decree or order of the SupremeCourt or any Court” were meant only to those precedents whereit was laid down that the judicial authority while making referenceunder Section 8 shall be entitled to look into various facets of thearbitration agreement, subject matter of the arbitration whetherBthe claim is alive or dead, whether the arbitration agreement isnull and void. The words added in Section 8 cannot be meant forany other meaning. [Para 52][824-F-H; 825-A]

P. Anand Gajapathi Raju and Others v. P.V.G. Raju(Dead) and Others, (2000) 4 SCC 539 : [2000] 2 SCRC684 ; Vimal Kishor Shah and others v. Jayesh DineshShah and others (2016) 8 SCC 788 : [2016] 7 SCR102 ; Sukanya Holdings (P) Ltd. v. Jayesh H. Pandyaand Another (2003) 5 SCC 531 : [2003] 3 SCR 558 ;Ameet Lalchand Shah and Others v. Rishabh EnterprisesDand Another, AIR 2018 SC 3041 : [2018] SCR 1001 –referred to.

5. However, in the event a person entitled to seek anadditional special remedy provided under the statutes does notopt for the additional/special remedy and he is a party to anEarbitration agreement, there is no inhibition in disputes beingproceeded in arbitration. It is only the case where specific/specialremedies are provided for and which are opted by an aggrievedperson that judicial authority can refuse to relegate the partiesto the arbitration. Thus, no error has been committed by theNCDRC in rejecting the application filed by the appellant underFSection 8. [Paras 55, 56][827-A-C]

Case Law Reference

CIVIL APPELLATE JURISDICTION : Review Petition (C) Nos.2629-2630 of 2018 in Civil Appeal Nos. 23512-23513 of 2017.

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From the Judgment and Order dated 28.08.2017 and 13.07.2017of the National Consumer Dispute Redressal Commission at New Delhiin Complaint Case No. 701 of 2015

Fali S. Nariman, Sr. Adv., Aditya Narain, Arnav Narain,Ms. Anjana G. Bali, Arjun Jain, Ms. Anushree Narain, Kabir Dixit, MishraRajshekhar, Naeemollahazeem, Waheb Hussaini, Ms. Aasita, SubhashSharma, Advs. for the Appellant.

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Aditya Swarup, Dhruv Pall, Samarth Khanna, Ms. AprajitaMukherjee, Advs., for the Respondent.

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The Judgment of the Court was delivered by ASHOK BHUSHAN, J.

1. These review petitions have been filed seeking review of thejudgment dated 13.02.2018 of this Court by which civil appeals weredismissed.

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2. The Civil Appeal Nos. 23512-23513 of 2017 had been filedchallenging the order dated 13.07.2017 passed by Larger Bench of theNational Consumer Disputes Redressal Commission (hereinafter referredto as “NCDRC”) holding consumer disputes to be non-arbitrable. Prayerwas also made to set aside the subsequent order dated 28.08.2017 passedby Single Member of the NCDRC dismissing the application filed underSection 8 of the Arbitration and Conciliation Act, 1996 (hereinafterreferred to as “1996 Act”) by the appellant.

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A3. Looking to the nature of the issue raised in these reviewpetitions, we have heard learned counsel for the parties on 27.11.2018 inthe review petitions after issuing notice on 17.09.2018. Delay in filing ofreview petitions is condoned. Learned counsel for the parties have madeelaborate submissions, which we proceed to consider in these reviewpetitions.B

4. Brief facts giving rise to civil appeals and the review petitionsneed to be noted for appreciating the issues raised herein. The appellantis a company which has acquired and purchased land in District Mohali,Punjab with a view to set up and develop thereon an integrated township.The respondent submitted an application to the appellant for allotment ofCa villa in Sector 106, Mohali. A Buyer’s agreement was entered dated06.05.2008 between the appellant and the respondent. In the Buyer’sagreement, there was an arbitration clause providing for settlement ofdisputes between parties under the 1996 Act. On 27.07.2015, therespondent filed a Complaint No. 701 of 2015 before the NCDRC againstDthe appellant praying for following reliefs in Paragraph No.17 of thecomplaint, which are as follows:- “a.The complainant prays for a direction to the opposite Partiesto deliver the possession of the built up villa No. 40, At Sector106, GMADA, and E

b.to adjust the excess payment in terms of letter dated 2.2.2008,Annexure C-5, which comes to Rs.2,63,165/- and

c.to adjust the penalty @ Rs.1500/- per month in terms ofclause 8 of the Agreement, after 2011 for 55 months as ondate which comes to Rs.83,500/- and F

d.to adjust the final account after making the above deductionsof clause B and C and to refund the remaining/balancepayment back to the complainant at the earliest along withinterest @ 18% per annum from 6.2.2010 (i.e. 24 monthsfrom the date of the Agreement); and G

e.the Hon’ble National Commission May be pleased to grantcompensation to the tune of Rs. 20,00,000 on account ofdeficiency in service on the part of the opposite parties,mental agony and harassment suffered by the complainant,and H

f.the cost of this complaint may be awarded from the opponentto the complainant, and g.the Hon’ble National Commission may be pleased to grantany other relief deemed in fit just and proper by the Hon’bleNational Commission in the Circumstances of the case.”

5. Notice was issued to the appellant by the NCDRC on 09.11.2015asking the appellant to appear on 11.01.2016. The appellant appearedand made an application for extension of time for filing the writtenstatement. The appellant also filed an application under Section 8 of the1996 Act for referring the matter to arbitration for and on behalf of theappellant. In the application, appellant has referred to Clause 43 of theBuyer’s agreement, which according to appellant would constitute avalid arbitration agreement in terms of Section 7(2) of the 1996 Act.The appellant also filed a reply to the complaint. The application filedunder Section 8 of the 1996 Act was objected by the respondent withthe prayer that the said application be rejected. NCDRC heard thecomplaint case of the respondent alongwith several other similarlysituated applications in the complaint case filed by the respondent andother similarly situated applications filed under Section 8 for referringthe parties to the arbitration. A learned Single Member of the Commissionproceeded to consider the said applications and passed an order dated31.08.2016. The learned Single Member had taken the view thatconsidering the vital importance and far reaching consequence of thelegal issue involved in these applications, it would only be appropriatethat these applications are considered and decided by a Larger Bench,consisting of at least Three Members.

6. In pursuance of the order of the learned Single Member, aLarger Bench of NCDRC was constituted and Consumer ComplaintNo. 701 of 2015 with Interim Application No. 247 of 2016 as well asinterim applications filed by other complainants were heard and decidedby Three Members Bench presided by President of the NCDRC videits judgment dated 13.07.2017. The Three Members Bench haveconsidered the submissions of the parties in detail and arrived at followingconclusions in Paragraph Nos. 55 and 56:- “55. In view of the afore-going discussion, we arrive at thefollowing conclusions: (i) the disputes which are to be adjudicatedand governed by statutory enactments, established for specific A

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Apublic purpose to sub-serve a particular public policy are notarbitrable; (ii) there are vast domains of the legal universe thatare non-arbitrable and kept at a distance from private disputeresolution; (iii) the subject amendment was meant for a completelydifferent purpose, leaving status quo ante unaltered andsubsequently reaffirmed and restated by the Hon’ble SupremeBCourt; (iv) Section 2(3) of the Arbitration Act recognizes schemesunder other legislations that make disputes non-arbitrable and (iv)in light of the overall architecture of the Consumer Act and Court-evolved jurisprudence, amended sub-section (1) of Section 8cannot be construed as a mandate to the Consumer Forums,Cconstituted under the Act, to refer the parties to Arbitration interms of the Arbitration Agreement.

56. Consequently, we unhesitatingly reject the arguments on behalfof the Builder and hold that an Arbitration Clause in the afore-stated kind of Agreements between the Complainants and theDBuilder cannot circumscribe the jurisdiction of a Consumer Fora,notwithstanding the amendments made to Section 8 of theArbitration Act.”

7. After the reference having been answered by Three MembersBench, the Consumer Complaint No. 701 of 20156 alongwith otherEapplications was taken by a Single Member of the Commission and byorder dated 28.08.2017, the applications filed by the appellant underSection 8 of the 1996 Act were rejected. After rejecting the applicationunder Section 8, the Commission directed the parties to proceed furtherwith the complaint. The appellant filed F.A.O. No. 395 of 2017 in theDelhi High Court challenging the orders dated 13.07.2017 and 28.08.2017Fof NCDRC. The High Court held that appeals filed by the appellantunder Section 37(1)(a) of the 1996 Act have been wrongly brought beforethe High Court. The High Court refused to entertain the appeals andreturned to be presented before the appropriate Appellate Court. Afterthe judgment of the Delhi High Court dated 07.11.2017, the appellantGfiled Civil Appeal No. 23512-23513 of 2017 challenging the judgment ofLarger Bench of NCDRC dated 13.07.2017 as well as the consequentialorder dated 28.08.2017 in this Court. Both the appeals were called forhearing on 13.02.2018 and were dismissed by this Court. The appellanthas filed these review petitions to review the judgment of this Court. Inthe review petitions, following prayers have been made by the appellant:-H

“(1) Allow the present review petition and review the Order dated13.02.2018 passed by this Hon’ble Court in Civil AppealNo. 23512-23513 of 2017; A

(2) Set aside the Order dated 13.07.2017 passed by the LargerBench of the Hon’ble National Commission in C.C. 701/2015holding consumer disputes to be non-arbitrable amongst otherBsimilar erroneous findings;

(3) Set aside the Order dated 28.08.2017 passed by the SingleJudge of the Hon’ble National Commission in C.C. 701/2015dismissing the Application u/S. 8 of the Arbitration andConciliation Act, 1996; C

(4) And pass such other or further order or orders as the Hon’bleCourt may deem fit and proper in the interest of justice.”

8. We have heard Shri Fali S. Nariman, learned senior counselappearing for the appellant and Shri Aditya Swarup, learned counselappearing for the respondent No.1.

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9. Shri Fali S. Nariman in his imitable style in support of reviewpetitions submits that substantial questions of law has been raised in thepresent review petitions, which need to be addressed and decided bythis Court. Shri Nariman submits that after amendment of Section 8 of1996 Act by the Arbitration and Conciliation (Amendment) Act, 2015(Act 3 of 2016), by which Parliament had added the words“notwithstanding any judgment, decree or order of the Supreme Courtor any Court” in Section 8 of the Arbitration Act w.e.f. 23.10.2015, theParliamentary intendment is clear that after the said amendment, thejudicial authority is mandated to refer a dispute for arbitration if there isa valid arbitration agreement and parties apply not later than the date ofsubmitting his first statement on the substance of the dispute. He submitsthat the above words cannot be treated as redundant while interpretingthe amended Section 8. It is further submitted that this Court acting asan Appellate Court under Section 23 of Consumer Protection Act, 1986read with Section 37(1)(a) of 1996 Act has duty to go into every factand law including the amendment made in Section 8 of the 1996 Act. Itis submitted that Constitution Bench of this Court has already held thatconsumer fora are covered by the term “judicial authority” for thepurposes of Section 8 of the 1996 Act, hence, it was obligatory for theCommission to refer the dispute to arbitration in view of the arbitration E

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Aclause between the parties. NCDRC has wrongly termed consumerdisputes as non-arbitrable, which is contrary to the decision of this Courtin National Seeds Corporation Limited Vs. M. Madhusudan Reddyand Another, (2012) 2 SCC 506. This Court had interpreted the words“notwithstanding any judgment, decree or order of the Supreme Courtor any Court” as occurring in newly added Section 11(6A) of the 1996BAct in Duro Felguera, S.A. Vs. Gangavaram Port Limited, (2017)9 SCC 729, which interpretation is equally applicable to Section 8 asamended by Act 3 of 2016. NCDRC has erred in relying on judgment ofthis Court in A. Ayyasamy Vs. A. Paramasivam and Others, (2016)10 SCC 386. The amendment in Section 8 of Arbitration Act by Act 3Cof 2016 now makes it obligatory to judicial authority to refer disputes toarbitration notwithstanding any judgment, decree or order of the SupremeCourt or any Court. Judgments of this Court interpreting Section 8 priorto 2016 amendment, thus, have become wholly irrelevant and have to bedisregarded while deciding the application under Section 8 filed after2016 amendment.D

10. Referring to Section 2(3) of the 1996 Act, it is submitted thatit cannot be said that by reason of provision of Consumer ProtectionAct, consumer disputes cannot be submitted to arbitration. It is furthersubmitted that far from the Consumer Protection Act, 1986, providingeither expressly or by necessary implication that consumer disputes mayEnot be submitted to arbitration, the law as explained in the NationalSeeds Corporation Limited (supra) and in Rosedale DevelopersPrivate Limited (supra) clearly shows that arbitration of consumerdisputes is definitely envisaged and contemplated in the ConsumerProtection Act, 1986, itself, before the amendment by way of substitutionFof Section 8(1) of the 1996 Act, it was at the option of the complainant(under Section 8(1) as enacted) to either go to arbitration as providedfor in the arbitration agreement or to file a complaint under the ConsumerProtection Act, 1986. It is submitted that after the substitution of Section8(1) even this option is no longer available, it being mandatory for thejudicial authority (NCDRC) to refer the parties to arbitration “unless itGfinds that prima facie no valid arbitration agreement exists”.

11. Shri Aditya Swarup, learned counsel appearing for therespondent in his short and impressive submissions contends that theConsumer Act, 1986 provides for an additional and beneficial remedy tothe consumer to avail of the speedy, expeditious disposal of his or herH

dispute. The consequences of allowing the present petition and settingaside the impugned order would, inter alia, be that every consumer, nomatter how small or big the dispute, would now be forced to adjudicatehis dispute before an arbitral tribunal and not avail of the beneficial remedyprovided to him or her. Under the 1986 Act. Accepting the interpretationplaced by the appellant on the 1996 Act will mean collapsing of entireedifice of consumer jurisprudence but also jurisprudence relating to trusts,tenancy disputes, industrial disputes, telecom disputes, intellectual propertydisputes and other non-arbitral disputes. Repeating the words ofNCDRC, it is submitted that “the ripples of the amendment to Section8(1) cannot be so large as to inundate the domains of other legislationsand jurisprudence, painstakingly built by the Legislators and Courts,especially without any engagement, debate and critique with thefoundations of these related laws”. Section 2(3) of the Arbitration Actexpressly states that Part I of the Arbitration Act “shall not affect anyother law for the time being in force by virtue of which certain disputesmay not be referred to arbitration”. Under this Section, if any lawprovides, either expressly or by necessary implication that specifieddisputes may not be submitted to arbitration, then, in spite of the nonobstante provision in Section 5 of the Arbitration Act, the law will besaved by Section 2(3) of the Arbitration Act. Section 2(3) of theArbitration Act restricts the overriding effect apparent in Section 5 ofthe Arbitration Act. The Consumer Act being a beneficial legislationenacted to give an additional remedy for the settlement of disputes, thesame cannot be taken away by Section 8 of the 1996 Act. This Court injurisdiction cases have already held that Arbitration Act does not excludethe jurisdiction of the Consumer Forum to decide disputes under theConsumer Act. The amendment to Section 8(1) of the Arbitration Actby Act 3 of 2016 was never intended to interfere with the jurisdiction ofConsumer Forum to decide consumer disputes. He submits thatamendment in Section 8(1) is being read in a manner which was neverthe intention of the Parliament. He submits that the NCDRC has rightlyrejected the application under Section 8 filed by the appellant and noerror has been committed by this Court in dismissing the appeal, hence,the present petitions are liable to be dismissed.

12. From the submissions of the learned counsel for the partiesand pleadings of the parties following are the principal issues whicharise for consideration in these petitions:

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A(i) Whether NCDRC committed error in rejecting the applicationof the appellant filed under Section 8 of 1996, Act praying forreference to the arbitrator as per Arbitration clause in thebuilders agreement?

(ii) Whether after the amendments made in Section 8 by theBArbitration and Conciliation (Amendment)Act, 2015 theapplication filed under Section 8 by the appellant could nothave been rejected in view of substantial changes brought inthe statutory scheme by inserting the words “notwithstandingany judgment, decree or order of the Supreme Court or anyCourt” in sub-section (1) of Section 8?C

(iii) Whether NCDRC as well as this Court committed error in notadverting to the above statutory amendment which completelychanged the legal position as was earlier existing prior to theaforesaid amendment?

D(iv)Whether by the insertion of words “notwithstanding anyjudgment, decree or order of the Supreme Court or any Court”under Section 8(1) by the (Amendment) Act, 2015 legislatureintended to do away with the decision of judgments of SupremeCourt laying down that Consumer Protection Act being specialremedy can be initiated and continued despite there being anyEarbitration agreement between the parties?

13. All the issues being interconnected are being taken together.The main emphasis of Shri Fali S. Nariman, learned senior counsel forthe petitioner is that entire legal regime pertaining to the 1996, Act inrelation to Consumer Protection Act when seen after the amendmentFfully supports the interpretation put by the petitioner which has not at alladverted by the NCDRC and this Court.

14. Before we come to the amendments made by the 2015, Actand its real intent and consequences, it is necessary to look into the lawas was existing prior to the said amendment in relation to proceedingsGunder Consumer Protection Act in reference to arbitration agreementunder 1996 Act.

15. The Consumer Protection Act, 1986 has been enacted toprovide for better protection of the interests of consumers and for thepurpose, to make provision for the establishment of Consumer CouncilsHand other authorities for the settlement of consumer disputes and for matter connected therewith. This Court had occasion to consider theobject and purpose of the Act in Lucknow Development Act vs. M.K.Gupta, (1994) 1 SCC 243, this Court elaborately noticed the objectand purpose of the Act in the following words:

“To begin with the preamble of the Act, which can afford usefulassistance to ascertain the legislative intention, it was enacted, ‘toprovide for the protection of the interest of consumers’. Use ofthe word ‘protection’ furnishes key to the minds of makers of theAct. Various definitions and provisions which elaborately attemptto achieve this objective have to be construed in this light withoutdeparting from the settled view that a preamble cannot controlotherwise plain meaning of a provision. In fact the law meets longfelt necessity of protecting the common man from such wrongsfor which the remedy under ordinary law for various reasons hasbecome illusory. Various legislations and regulations permittingthe State to intervene and protect interest of the consumers havebecome a haven for unscrupulous ones as the enforcementmachinery either does not move or it moves ineffectively,inefficiently and for reasons which are not necessary to be stated.The importance of the Act lies in promoting welfare of the societyby enabling the consumer to participate directly in the marketeconomy. It attempts to remove the helplessness of a consumerwhich he faces against powerful business, described as, ‘a networkof rackets’ or a society in which, ‘producers have secured power’to ‘rob the rest’ and the might of public bodies which aredegenerating into storehouses of inaction where papers do notmove from one desk to another as a matter of duty and responsibilitybut for extraneous consideration leaving the common man helpless,bewildered and shocked. The malady is becoming so rampant,widespread and deep that the society instead of bothering,complaining and fighting against it, is accepting it as part of life.The enactment in these unbelievable yet harsh realities appears to be a silver lining, which may in course of time succeed inchecking the rot.”

16. Section 3 of the Act provided that the provisions of this Actshall be in addition to and not in derogation of the provisions of any otherlaw for the time being in force. Noticing the object and purpose of theAct as well as Section 3, this Court in Secretary, Thirumurugan A

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ACooperative Agricultural Credit Society vs. M. Lalitha (dead)Through LRs. And others, (2004) 1 SCC 395, laid down followingin paragraph 11 and 12:

“11. From the Statement of Objects and Reasons and the schemeof the 1986 Act, it is apparent that the main objective of the Act isBto provide for better protection of the interest of the consumerand for that purpose to provide for better redressal, mechanismthrough which cheaper, easier, expeditious and effective redressalis made available to consumers. To serve the purpose of the Act,various quasi-judicial forums are set up at the district, State andnational level with wide range of powers vested in them. TheseCquasi-judicial forums, observing the principles of natural justice,are empowered to give relief of a specific nature and to award,wherever appropriate, compensation to the consumers and toimpose penalties for non-compliance with their orders.

12. As per Section 3 of the Act, as already stated above, theDprovisions of the Act shall be in addition to and not in derogationof any other provisions of any other law for the time being inforce. Having due regard to the scheme of the Act and purposesought to be achieved to protect the interest of the consumersbetter, the provisions are to be interpreted broadly, positively andEpurposefully in the context of the present case to give meaning toadditional/extended jurisdiction, particularly when Section 3 seeksto provide remedy under the Act in addition to other remediesprovided under other Acts unless there is a clear bar.”

17. This court had occasion to consider the provisions of SectionF34 of Arbitration Act, 1940 in reference to the Consumer ProtectionAct, 1986 in Fair Air Engineering Pvt. Ltd. and another vs. N.K.Modi, (1996) 6 SCC 385. This Court in the said case held thatconsumer fora is a judicial authority. In the above case, the appellanthad entered into a contract with the respondent to carry out installationof a centrally air-conditioned plant in the residential house of theGrespondent. The respondent filed a complaint before the StateCommission under the Consumer Protection At, 1986 which proceedingswere stayed by the State Commission and it relegated the parties toarbitration proceedings. The NCDRC held that the proceedings beforethe Consumer fora is not a legal proceedings and Commission is not aHjudicial authority, therefore, Section 34 of the Arbitration Act, 1940 is not available to stay the proceedings. The said order of NCDRC waschallenged in this Court. This Court reversed the order of the StateCommission and remitted the matter to the State Commission to decidethe matter on merits according to law. This Court held that the Parliamentwas well aware of the Arbitration Act, 1940 when the ConsumerProtection Act was enacted providing for additional remedy. In paragraphs15 and 16 following has been laid down:

“15. Accordingly, it must be held that the provisions of the Actare to be construed widely to give effect to the object and purposeof the Act. It is seen that Section 3 envisages that the provisionsof the Act are in addition to and are not in derogation of any otherlaw in force. It is true, as rightly contended by Shri Suri, that thewords “in derogation of the provisions of any other law for thetime being in force” would be given proper meaning and effectand if the complaint is not stayed and the parties are not relegatedto the arbitration, the Act purports to operate in derogation of theprovisions of the Arbitration Act. Prima facie, the contentionappears to be plausible but on construction and conspectus of theprovisions of the Act we think that the contention is not wellfounded. Parliament is aware of the provisions of the ArbitrationAct and the Contract Act, 1872 and the consequential remedyavailable under Section 9 of the Code of Civil Procedure, i.e., toavail of right of civil action in a competent court of civil jurisdiction.Nonetheless, the Act provides the additional remedy.

16. It would, therefore, be clear that the legislature intended toprovide a remedy in addition to the consentient arbitration whichcould be enforced under the Arbitration Act or the civil action in asuit under the provisions of the Code of Civil Procedure. Thereby,as seen, Section 34 of the Act does not confer an automatic rightnor create an automatic embargo on the exercise of the power bythe judicial authority under the Act. It is a matter of discretion.Considered from this perspective, we hold that though the DistrictForum, State Commission and National Commission are judicialauthorities, for the purpose of Section 34 of the Arbitration Act, inview of the object of the Act and by operation of Section 3 thereof,we are of the considered view that it would be appropriate thatthese forums created under the Act are at liberty to proceed withthe matters in accordance with the provisions of the Act rather A

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Athan relegating the parties to an arbitration proceedings pursuantto a contract entered into between the parties. The reason is thatthe Act intends to relieve the consumers of the cumbersomearbitration proceedings or civil action unless the forums on theirown and on the peculiar facts and circumstances of a particularcase, come to the conclusion that the appropriate forum forBadjudication of the disputes would be otherwise those given in theAct.”

18. This Court had occasion to consider the provisions of ConsumerProtection Act as well as the Arbitration Act, 1996. In Skypak CouriersLtd. v. Tata Chemicals, (2000) 5 SCC 294, this Court laid down theCfollowing:

“Even if there exists an arbitration clause in an agreement and acomplaint is made by the consumer, in relation to a certaindeficiency of service, then the existence of an arbitration clausewill not be a bar to the entertainment of the complaint by theDRedressal Agency, constituted under the Consumer ProtectionAct, since the remedy provided under the Act is in addition to theprovisions of any other law for the time being in force.”

19. Another judgment which is relevant for the present issue isNational Seeds Corporation Limited vs. M. Madhusudhan ReddyEand another, (2012) 2 SCC 506. In the above case, the respondentfiled a complaint in the District Consumer Redressal Forum that theyhad suffered loss due to failure of the crops/less yield because the seedssold/supplied by the appellant were defective. The compensation wasawarded against which appeal was dismissed. The appellant challengedthe order of the Commission and main contention was that the DistrictFForum has no jurisdiction to entertain the complaint, in view of theprovisions of Seeds Act, 1966 it was contended that there was arbitrationclause contained in the agreement and the only remedy available to therespondent is an appropriate arbitration and the District Forum has nojurisdiction to entertain the complaint. This Court repelled the submissionGand dismissed the appeal. In paragraph 64 this Court had noticed thecontention of the appellant which is to the following effect:

“64. According to the learned counsel for the appellant, if thegrowers had applied for arbitration then in terms of Section 8 ofthe Arbitration and Conciliation Act the dispute arising out of theHarbitration clause had to be referred to an appropriate arbitrator and the District Consumer Forums were not entitled to entertaintheir complaint. This contention represents an extension of themain objection of the appellant that the only remedy available tothe farmers and growers who claim to have suffered loss onaccount of use of defective seeds sold/supplied by the appellantwas to file complaints with the Seed Inspectors concerned fortaking action under Sections 19 and/or 21 of the Seeds Act.”

20. The contention was dealt with in paragraph 66 where followingwas laid down:

“66. The remedy of arbitration is not the only remedy available toa grower. Rather, it is an optional remedy. He can either seekreference to an arbitrator or file a complaint under the ConsumerProtection Act. If the grower opts for the remedy of arbitration,then it may be possible to say that he cannot, subsequently, filecomplaint under the Consumer Protection Act. However, if hechooses to file a complaint in the first instance before thecompetent Consumer Forum, then he cannot be denied relief byinvoking Section 8 of the Arbitration and Conciliation Act, 1996.Moreover, the plain language of Section 3 of the ConsumerProtection Act makes it clear that the remedy available in thatAct is in addition to and not in derogation of the provisions of anyother law for the time being in force.”

21. Another judgment where this Court reiterated the position oflaw is Rosedale Developers Private Limited Vs AghoreBhattacharya And Others, (2018) 11 SCC 337 (decided on06.09.2013). In the above case, a complaint was filed by the respondentbefore NCDRC. An application was filed by the appellant praying formaking reference to the arbitrator in view of the arbitration agreement.The issue has been noticed in paragraphs 1 and 2 which are to thefollowing effect:

“1. Delay condoned. This appeal filed against order dated 13-5-2013[ (]2013 SCC OnLine Ncdrc 486, DLF Ltd. v. Mridul Estate(P) Ltd.338b) passed by the National Consumer DisputesRedressal Commission (for short “the National Commission”)whereby the appellant’s prayer for making a reference to thearbitrator was rejected can appropriately be termed as a frivolouspiece of litigation which merits nothing but dismissal at the thresholdwith exemplary costs.

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A2. The respondents filed complaint alleging deficiency in serviceon the appellant’s part and claimed compensation to the tune ofRs 17,41,09,000 with costs of Rs 1,00,000. On being noticed bythe National Commission, the appellant filed a written statementto contest the complaint. It also filed an application under Section8 of the Arbitration and Conciliation Act, 1996 (for short “theB1996 Act”) for making a reference to the arbitrator. A two-memberBench of the National Commission referred the matter to thelarger Bench. After considering the relevant statutory provisionsand adverting to several judgments including the judgments in FairAir Engineers (P) Ltd. v. N.K. Modi; Skypak Couriers Ltd. v.CTata Chemicals Ltd. and National Seeds Corpn. Ltd. v. M.Madhusudhan Reddy, the larger Bench of the NationalCommission held that the consumer forums constituted under theConsumer Protection Act, 1986 (for short “the 1986 Act”) arenot bound to refer the dispute raised in the complaint to an ArbitralTribunal in terms of the arbitration clause contained in theDagreement entered into between the parties.

22. The contention was raised before this Court that once anapplication under Section 8 of 1996 Act is filed, Consumer Forum isduty-bound to make a reference to the arbitrator. The above submissionwas noticed in paragraph 3 which is to the following effect:E

“3. Shri Sanjay Ghose, learned counsel for the appellant reliedupon the judgment of the Constitution Bench in SBP & Co. v.Patel Engg. Ltd. as also the judgments in Agri Gold Exims Ltd.v. Sri Lakshmi Knits and Wovens and Magma Leasing andFinance Ltd. v. Potluri Madhavilata and argued that once anFapplication is filed under Section 8 of the 1996 Act, the consumerforum is duty-bound to make a reference to the arbitrator becausethat section is mandatory in character.”

23. This Court rejected the above submission and laid down inparagraph 4:G

“4. In our opinion, there is no merit in the submission of the learnedcounsel. The question whether the existence of an arbitration clausecontained in the agreement executed between the parties excludesthe jurisdiction of the consumer forum and on an application madeby either party, the consumer forum is duty-bound to make a H

reference to the arbitrator was extensively considered in NationalSeeds Corpn. Ltd. v. M. Madhusudhan Reddy and it wasobserved: (SCC pp. 534-35, paras 64-66.)”

24. This Court held that there is no merit in the above submissionof the counsel. This Court referred to judgments of this Court in NationalSeeds Corporation Ltd. (supra) and Fair Air Engineers Pvt.Ltd.(supra) and laid down following in paragraph 6 and 7:

“6. The judgments relied upon by Shri Ghose do not have anybearing on the issue raised in this appeal. In neither of those cases,has this Court interpreted the provisions of the 1996 Act in thelight of the provisions contained in the 1986 Act. Therefore, thepropositions laid down in those judgments that Section 8 of the1996 Act is mandatory cannot lead to an inference that theconsumer forum is bound to make a reference to the ArbitralTribunal.

7. In view of the abovestated legal position, the NationalCommission did not commit any error by holding that the remedyof arbitration available to the complainant does not bar thejurisdiction of the consumer forums and the consumer forums arenot under an obligation to refer the matter to the Arbitral Tribunal.With the above observation, the appeal is dismissed.”

25. This Court in the series of judgments as noticed aboveconsidered the provisions of Consumer Protection Act, 1986 as well asArbitration Act, 1996 and laid down that complaint under ConsumerProtection Act being a special remedy, despite there being an arbitrationagreement the proceedings before Consumer Forum have to go on andno error committed by Consumer Forum on rejecting the application.There is reason for not interjecting proceedings under ConsumerProtection Act on the strength an arbitration agreement by Act, 1996.The remedy under Consumer Protection Act is a remedy provided to aconsumer when there is a defect in any goods or services. The complaintmeans any allegation in writing made by a complainant has also beenexplained in Section 2(c) of the Act. The remedy under the ConsumerProtection Act is confined to complaint by consumer as defined underthe Act for defect or deficiencies caused by a service provider, the cheapand a quick remedy has been provided to the consumer which is theobject and purpose of the Act as noticed above.

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A26. Not only the proceedings of Consumer Protection Act, 1986are special proceedings which were required to be continued under theAct despite an arbitration agreement, there are large number of otherfields where an arbitration agreement can neither stop or stultify theproceedings. For example, any action of a party, omission or commissionof a person which amounts to an offence has to be examined by a criminalBcourt and no amount of agreement between the parties shall be relevantfor the said case. For example, there may be a commercial agreementbetween two parties that all issues pertaining to transaction are to bedecided by arbitration as per arbitration clause in the agreement. In casewhere a cheque is dishonoured by one party in transaction, despite theCarbitration agreement party aggrieved has to approach the criminal court.Similarly, there are several issues which are non-arbitrable. There canbe prohibition both express or implied for not deciding a dispute on thebasis of an arbitration agreement. This Court had occasion to considerthe above aspect and has noticed various disputes which are non-arbitrable, reference is made to the judgment of this Court in Booz AllenDand Hamilton Inc. vs. SBI Home Finance Limited and others,(2011) 5 SCC 532. In paragraphs 35 to 38 following has been laiddown:

“35. The Arbitral Tribunals are private fora chosen voluntarily bythe parties to the dispute, to adjudicate their disputes in place ofEcourts and tribunals which are public fora constituted under thelaws of the country. Every civil or commercial dispute, eithercontractual or non-contractual, which can be decided by a court,is in principle capable of being adjudicated and resolved byarbitration unless the jurisdiction of the Arbitral Tribunals isFexcluded either expressly or by necessary implication. Adjudicationof certain categories of proceedings are reserved by the legislatureexclusively for public fora as a matter of public policy. Certainother categories of cases, though not expressly reserved foradjudication by public fora (courts and tribunals), may by necessaryimplication stand excluded from the purview of private fora.GConsequently, where the cause/dispute is inarbitrable, the courtwhere a suit is pending, will refuse to refer the parties to arbitration,under Section 8 of the Act, even if the parties might have agreedupon arbitration as the forum for settlement of such disputes.

36. The well-recognised examples of non-arbitrable disputes are:(i) disputes relating to rights and liabilities which give rise to orarise out of criminal offences; (ii) matrimonial disputes relating todivorce, judicial separation, restitution of conjugal rights, childcustody; (iii) guardianship matters; (iv) insolvency and winding-up matters; (v) testamentary matters (grant of probate, letters ofadministration and succession certificate); and (vi) eviction ortenancy matters governed by special statutes where the tenantenjoys statutory protection against eviction and only the specifiedcourts are conferred jurisdiction to grant eviction or decide thedisputes.

37. It may be noticed that the cases referred to above relate toactions in rem. A right in rem is a right exercisable against theworld at large, as contrasted from a right in personam which is aninterest protected solely against specific individuals. Actions inpersonam refer to actions determining the rights and interests ofthe parties themselves in the subject-matter of the case, whereasactions in rem refer to actions determining the title to propertyand the rights of the parties, not merely among themselves butalso against all persons at any time claiming an interest in thatproperty. Correspondingly, a judgment in personam refers to ajudgment against a person as distinguished from a judgment againsta thing, right or status and a judgment in rem refers to a judgmentthat determines the status or condition of property which operatesdirectly on the property itself. (Vide Black’s Law Dictionary.)

38. Generally and traditionally all disputes relating to rights inpersonam are considered to be amenable to arbitration; and alldisputes relating to rights in rem are required to be adjudicated bycourts and public tribunals, being unsuited for private arbitration.This is not however a rigid or inflexible rule. Disputes relating tosubordinate rights in personam arising from rights in rem havealways been considered to be arbitrable.”

27. The complaints filed under the Consumer Protection Act canalso be proceeded with despite there being any arbitration agreementbetween the parties which have been well settled by the catena ofdecisions as noticed above.

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28. Now, the issue to be addressed is effect and consequences ofthe above stated position of law consequent to the Arbitration andConciliation (Amendment) Act, 2015 amending Section 8. Section 8(1)and 8(2) of Act, 1996 (as existed prior to amendment of the Act, 1996)are as follows:

“8. Power to refer parties to arbitration where there is anarbitration agreement.- (1) A judicial authority before which anaction is brought in a matter which is the subject of an arbitrationagreement shall, if a party so applies not later than when submittinghis first statement on the substance of the dispute, refer the partiesto arbitration.

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(2) The application referred to in sub-section (1) shall not beentertained unless it is accompanied by the original arbitrationagreement or a duly certified copy thereof.”

29. Section 8(1) and 8(2) after Amendment by Act, 2015 are asfollows:D

“Section 8(1) A judicial authority, before which an action is broughtin a matter which is the subject of an arbitration agreement shall,if a party to the arbitration agreement or any person claimingthrough or under him, so applies not later than the date ofEsubmitting his first statement on the substance of the dispute, then,notwithstanding any judgment, decree or order of the SupremeCourt or any Court, refer the parties to arbitration unless it findsthat prima facie no valid arbitration agreement exists.

(2) the following proviso shall be inserted, namely:— “Providedthat where the original arbitration agreement or a certified copyFthereof is not available with the party applying for reference toarbitration under sub-section (1), and the said agreement orcertified copy is retained by the other party to that agreement,then, the party so applying shall file such application along with acopy of the arbitration agreement and a petition praying the CourtGto call upon the other party to produce the original arbitrationagreement or its duly certified copy before that Court.”.”

30. Two more provisions of the 1996 Act need to be noted beforewe proceed further to consider the issues. The 1996 Act contains twoParts – Part I and Part II. Part I contains heading “Arbitration” andHPart II contains heading “Enforcement of certain Foreign Awards”.

Chapter I of Part I is “General Provisions”, in which Section 2 dealswith definitions. Section 2(1) begins with the words “In this Part, unlessthe context otherwise requires”. Section 2(1) contains definitions. Section2(3) provides:- “Section 2(3) This Part shall not affect any other law for the timebeing in force by virtue of which certain disputes may not besubmitted to arbitration.”

31. There are two aspects to be noticed in the Scheme of Section2, firstly, Section 2 contains a heading “Definitions” but it is covered bygeneral heading of Chapter I “General Provisions”. Section 2(3) doesnot contain any definition but contain a general provision which clarifiesthat “This Part shall not affect any other law for the time being in forceby virtue of which certain disputes may not be submitted to arbitration”.Section 2(3) gives predominance of any other law for the time being inforce by virtue of which certain disputes may not be submitted toarbitration.

32. We have already noted several categories of cases, whichare not arbitrable. While referring to judgment of this Court in BoozAllen and Hamilton Inc. (supra), those principles have again beenreiterated by this Court in A. Ayyasamy (supra), Dr. A.K. Sikri, J.delivering the judgment in that case has noticed certain cases, which arenot arbitrable in paragraph No.14, which is as follows:-

“14. In the instant case, there is no dispute about the arbitrationagreement inasmuch as there is a specific arbitration clause inthe partnership deed. However, the question is as to whether thedispute raised by the respondent in the suit is incapable ofsettlement through arbitration. As pointed out above, the Act doesnot make any provision excluding any category of disputes treatingthem as non-arbitrable. Notwithstanding the above, the courts haveheld that certain kinds of disputes may not be capable ofadjudication through the means of arbitration. The courts haveheld that certain disputes like criminal offences of a public nature,disputes arising out of illegal agreements and disputes relating tostatus, such as divorce, cannot be referred to arbitration. Thefollowing categories of disputes are generally treated as non-arbitrable:

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A(i) patent, trade marks and copyright;

(ii) anti-trust/competition laws;

(iii) insolvency/winding up;

(iv) bribery/corruption;

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(v) fraud;

(vi) criminal matters.

Fraud is one such category spelled out by the decisions of thisCourt where disputes would be considered as non-arbitrable.”

C33. Dr. Justice D.Y. Chandrachud, J. in his concurring opinionhas referred to Booz Allen and Hamilton Inc. (supra) and noticedthe categories of cases, which are not arbitrable. Paragraph No. 35 ofthe judgment is quoted as below:- “35. Ordinarily every civil or commercial dispute whether basedDon contract or otherwise which is capable of being decided by acivil court is in principle capable of being adjudicated upon andresolved by arbitration “subject to the dispute being governed bythe arbitration agreement” unless the jurisdiction of the ArbitralTribunal is excluded either expressly or by necessary implication.EIn Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd.,this Court held that (at SCC p. 546, para 35) adjudication of certaincategories of proceedings is reserved by the legislature exclusivelyfor public fora as a matter of public policy. Certain other categoriesof cases, though not exclusively reserved for adjudication by courtsand tribunals may by necessary implication stand excluded fromFthe purview of private fora. This Court set down certain examplesof non-arbitrable disputes such as: (SCC pp. 546-47, para 36)

(i) disputes relating to rights and liabilities which give rise to orarise out of criminal offences;

(ii) matrimonial disputes relating to divorce, judicial separation,Grestitution of conjugal rights and child custody;

(iii) matters of guardianship;

(iv) insolvency and winding up;

(v) testamentary matters, such as the grant of probate, letters ofHadministration and succession certificates; and

(vi) eviction or tenancy matters governed by special statutes wherea tenant enjoys special protection against eviction and specificcourts are conferred with the exclusive jurisdiction to deal withthe dispute.

This Court held that this class of actions operates in rem, which isa right exercisable against the world at large as contrasted with aright in personam which is an interest protected against specifiedindividuals. All disputes relating to rights in personam areconsidered to be amenable to arbitration while rights in rem arerequired to be adjudicated by courts and public tribunals. Theenforcement of a mortgage has been held to be a right in rem forwhich proceedings in arbitration would not be maintainable. InVimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788this Court added a seventh category of cases to the six non-arbitrable categories set out in Booz Allen, namely, disputes relatingto trusts, trustees and beneficiaries arising out of a trust deed andthe Trust Act.”

34. Another Section, which needs to be noted is Section 5, whichis as follows:- “Section 5. Extent of judicial intervention.—Notwithstandinganything contained in any other law for the time being in force, inmatters governed by this Part, no judicial authority shall interveneexcept where so provided in this Part.”

35. Section 5 contains an injunction to judicial authority fromintervening except where so provided in this Part. Section 2(3), Section8, Section 11 and Section 34 are some of the provisions, which providesfor judicial intervention in matters. Here, we are concerned with powerof judicial authority under Section 8, hence Section 5 is not much relevantin the present case.

36. Now, we come back to the interpretation of Section 8 asamended by Act No. 3 of 2016. What is the legislative intent and objectin bringing the amendment to Section 8 is the main question to be answeredin this case. Amendment under Section 8 has been undertaken by theParliament after taking into consideration the 246[th] Law CommissionReport (2014). Taking into consideration the working of the 1996 Act,there was an earlier attempt to carry out certain amendments in the1996 Act. 176[th] Report of the Law Commission on the “Arbitration and A

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AConciliation (Amendment) Bill, 2001” was submitted by the Commission,although, the Government decided to accept the recommendations andintroduced a bill namely “Arbitration and Conciliation (Amendment) Bill,2003, the bill was referred to Department relating Standing Committeeon Personnel, Public Grievances, Law and Justice for a further analysis,which opined that many provisions of the bill were insufficient hence theBbill was withdrawn. The Ministry of Law and Justice issued a consultationpaper and asked the Law Commission to take a study of the amendmentsproposed to the 1996 Act. The Law Commission submitted 246[th] Report“Amendments to the Arbitration and Conciliation Act, 1996 in August,2014. The Commission in its Report has observed “judicial interventionCin arbitration proceedings adds significantly to the delays in the arbitrationprocess and ultimately negates the benefits of arbitration”. Commissionreferring to amendments, which were recommended in Section 8 and 11in paragraph No. 33 stated following:-

“33. It is in this context, the Commission has recommendedDamendments to sections 8 and 11 of the Arbitration and ConciliationAct, 1996. The scope of the judicial intervention is only restrictedto situations where the Court/Judicial Authority finds that thearbitration agreement does not exist or is null and void.In so faras the nature of intervention is concerned, it is recommended thatin the event the Court/Judicial Authority is prima facie satisfiedEagainst the argument challenging the arbitration agreement, it shallappoint the arbitrator and/or refer the parties to arbitration, as thecase may be. The amendment envisages that the judicial authorityshall not refer the parties to arbitration only if it finds that theredoes not exist an arbitration agreement or that it is null and void.FIf the judicial authority is of the opinion that prima facie thearbitration agreement exists, then it shall refer the dispute toarbitration, and leave the existence of the arbitration agreementto be finally determined by the arbitral tribunal. However, if thejudicial authority concludes that the agreement does not exist, thenthe conclusion will be final and not prima facie……….”G

37. The Report of the Commission on amendment to Section 8 aswell as Note thereon contains a Note, which is to the following effect:- “[NOTE: The words “such of the parties… to the arbitrationagreement” and proviso (i) of the amendment have been proposedHin the context of the decision of the Supreme Court in Sukanya Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr., (2003) 5SCC 531, – in cases where all the parties to the dispute are notparties to the arbitration agreement, the reference is to be rejectedonly where such parties are necessary parties to the action – andnot if they are only proper parties, or are otherwise legal strangersto the action and have been added only to circumvent the arbitrationagreement. Proviso (ii) of the amendment contemplates a two-step process to be adopted by a judicial authority when consideringan application seeking the reference of a pending action toarbitration. The amendment envisages that the judicial authorityshall not refer the parties to arbitration only if it finds that theredoes not exist an arbitration agreement or that it is null and void.If the judicial authority is of the opinion that prima facie thearbitration agreement exists, then it shall refer the dispute toarbitration, and leave the existence of the arbitration agreementto be finally determined by the arbitral tribunal. However, if thejudicial authority concludes that the agreement does not exist, thenthe conclusion will be final and not prima facie. The amendmentalso envisages that there shall be a conclusive determination as towhether the arbitration agreement is null and void.]”

(iii) In sub-section (2), after the words “duly certified copy thereof”add “or a copy accompanied by an affidavit calling upon the otherparty to produce the original arbitration agreement or duly certifiedcopy thereof in a circumstance where the original arbitrationagreement or duly certified copy is retained only by the otherparty.”

[NOTE: In many transactions involving Government bodies andsmaller market players, the original/ duly certified copy of thearbitration agreement is only retained by the former. Thisamendment would ensure that the latter class is not prejudiced inany manner by virtue of the same.]”

38. The Commission proposed amendment in Section 11 by addingsub-section (6A). In its Report, following Note was submitted in theabove context:- “[NOTE: The proposed section 11 (6A) envisages the sameprocess of determination as is reflected in the proposedamendment to section 8. Explanation 2 envisages that referenceby the High Court to any person or institution designated by it AB

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Ashall not be regarded as a delegation of judicial power. Explanation3 has been inserted with the hope and expectation that High Courtswould encourage the parties to refer the disputes to institutionalizearbitration by a professional Indian or international arbitralinstitute.]”

B39. After taking into consideration the Report of the LawCommission, a Bill namely “The Arbitration and Conciliation(Amendment) Bill, 2015” was submitted. The Statement of Objectsand Reasons of the Bill throws considerable light on the Objects andReasons of the amendments. Relevant part of the Statement of Objectsand Reasons is as follows:-C

“2. The Act was enacted to provide for speedy disposal of casesrelating to arbitration with least court intervention. With the passageof time, some difficulties in the applicability of the Act have beennoticed. Interpretation of the provisions of the Act by courts insome cases have resulted in delay of disposal of arbitrationDproceedings and increase in interference of courts in arbitrationmatters, which tend to defeat the object of theAct……………………..”

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(iv) to provide that while considering any application forappointment of arbitrator, the High Court or the Supreme Courtshall examine the existence of a prima facie arbitration agreementand not other issues; E

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F40. Notes on the Clauses on amendment in Section 8 reads asfollows:- “Clause 4 of the Bill seeks to amend section 8 of the principalAct to specify that the judicial authority shall refer the parties toarbitration unless it finds that prima facie no valid arbitrationGagreement exits. A proviso below sub-section (2) is inserted toprovide that where the original arbitration agreement or certifiedcopy thereof is not available with the party who apply under sub-section (1), and is retained by the other party, such party shall filea copy of the arbitration agreement along with application undersub-section (1) praying the Court to call upon the other party to H

produce the original arbitration agreement or its duly certified copybefore the Court.”

41. On amendment to Section 11 by inserting sub-section (6A),following was stated:- “Clause 6 of the Bill seeks to amend section 11 of the principalAct to provide that appointment of arbitrator shall be made by theSupreme Court or the High Court, as the case may be, instead ofthe Chief Justice of India or the Chief Justice of the High Court.Subsection (6A) is inserted to provide that the Supreme Court orthe High Court while considering application under sub-section(4) to (6) shall confine to the examination of an arbitrationagreement………………..”

42. Prior to above amendment, this Court in several cases hasinterpreted Section 8. Several conditions for exercising power underSection 8 were laid down by this Court. In P. Anand Gajapathi Rajuand Others Vs. P.V.G. Raju (Dead) and Others, (2000) 4 SCC539, several conditions were noticed by this Court, which are to besatisfied before Court can exercise its power under Section 8. Inparagraph No.5, following has been stated:- “5. The conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the court can exercise itspowers are:

(1) there is an arbitration agreement;

(2) a party to the agreement brings an action in the court againstthe other party;

(3) subject-matter of the action is the same as the subject-matterof the arbitration agreement;

(4) the other party moves the court for referring the parties toarbitration before it submits his first statement on the substanceof the dispute.

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43. In Paragraph No. 8 of the judgment, it was further stated thatthe language of Section 8 is peremptory and it is, therefore, obligatoryfor the Court to refer the parties to arbitration in terms of their arbitrationagreement.

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44. In Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya andAnother, (2003) 5 SCC 531, this Court had occasion to consider theingredients of Section 8. This Court noticed certain circumstances, wherematter was not required to be referred to the Arbitral Tribunal. InParagraph No. 12, 13 and 15, following has been held:- “12. …………… Further, the matter is not required to be referredto the Arbitral Tribunal, if: (1) the parties to the arbitrationagreement have not filed any such application for referring thedispute to the arbitrator; (2) in a pending suit, such application isnot filed before submitting first statement on the substance of thedispute; or (3) such application is not accompanied by the originalarbitration agreement or duly certified copythereof………………………………..

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13. Secondly, there is no provision in the Act that when the subject-matter of the suit includes subject-matter of the arbitrationagreement as well as other disputes, the matter is required to bereferred to arbitration. There is also no provision for splitting thecause or parties and referring the subject-matter of the suit to thearbitrators.

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15. The relevant language used in Section 8 is: “in a matter whichis the subject of an arbitration agreement”. The court isrequired to refer the parties to arbitration. Therefore, the suit shouldbe in respect of “a matter” which the parties have agreed torefer and which comes within the ambit of arbitration agreement.Where, however, a suit is commenced — “as to a matter” whichlies outside the arbitration agreement and is also between someof the parties who are not parties to the arbitration agreement,there is no question of application of Section 8. The words “amatter” indicate that the entire subject-matter of the suit shouldbe subject to arbitration agreement.”

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45. Court further held that Section 8 does not admit interpretationGto partly referring the disputes to arbitration. In Paragraph No.16,following was laid down:- “16. The next question which requires consideration is — even ifthere is no provision for partly referring the dispute to arbitration,whether such a course is possible under Section 8 of the Act. Inour view, it would be difficult to give an interpretation to Section 8

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under which bifurcation of the cause of action, that is to say, thesubject-matter of the suit or in some cases bifurcation of the suitbetween parties who are parties to the arbitration agreement andothers is possible. This would be laying down a totally newprocedure not contemplated under the Act. If bifurcation of thesubject-matter of a suit was contemplated, the legislature wouldhave used appropriate language to permit such a course. Sincethere is no such indication in the language, it follows that bifurcationof the subject-matter of an action brought before a judicial authorityis not allowed.”

46. The law as declared by this Court in the above cases was inexistence when the Law Commission submitted its 246[th] Report andParliament considered the Bill, 2015 for Amendment Act, 2016. TheLaw Commission itself in its Report has referred to amendment in Section8 in context of decision of this Court in Sukanya Holdings (P) Ltd.(supra), which was clearly noticed in the Note to Section 8 as extractedabove. The words “notwithstanding any judgment, decree or order ofthe Supreme Court or any Court” added by amendment in Section 8were with intent to minimise the intervention of judicial authority in contextof arbitration agreement. As per the amended Section 8(1), the judicialauthority has only to consider the question whether the parties have avalid arbitration agreement? The Court cannot refuse to refer the partiesto arbitration “unless it finds that prima facie no valid arbitrationagreement exists”. The amended provision, thus, limits the interventionby judicial authority to only one aspect, i.e. refusal by judicial authorityto refer is confined to only one aspect, when it finds that prima facie novalid arbitration agreement exists. Other several conditions, which werenoticed by this court in various pronouncements made prior to amendmentwere not to be adhered to and the Legislative intendment was cleardeparture from fulfilling various conditions as noticed in the judgment ofP. Anand Gajapathi Raju (supra) and Sukanya Holdings (P) Ltd.(supra). Same Legislative intendment is decipherable by amendment ofSection 11 by adding sub-section (6A). Section 11(6A) is as follows:- —11. Appointment of arbitrators.

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[(6A) The Supreme Court or, as the case may be, the High Court,while considering any application under sub-section (4) or sub- AB

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Asection (5) or sub-section (6), shall, notwithstanding any judgment,decree or order of any Court, confine to the examination of theexistence of an arbitration agreement.

47. The same words “notwithstanding any judgment, decree ororder of any Court” finds place in sub-section (6A) of Section 11 andBSupreme Court and High Court is confined to the examination of theexistence of an arbitration agreement. This Court had occasion toconsider the amendment made in Section 11(6A) in Duro Felguera,S.A. (supra). Justice Kurian Joseph in his concurring opinion inParagraph No. 48 has laid down following:- “48. Section 11(6-A) added by the 2015 Amendment, reads asfollows:

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“11. (6-A) The Supreme Court or, as the case may be, theHigh Court, while considering any application under sub-section(4) or sub-section (5) or sub-section (6), shall, notwithstandingDany judgment, decree or order of any court, confine to theexamination of the existence of an arbitration agreement.”

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From a reading of Section 11(6-A), the intention of the legislatureis crystal clear i.e. the court should and need only look into oneEaspect—the existence of an arbitration agreement. What are thefactors for deciding as to whether there is an arbitration agreementis the next question. The resolution to that is simple—it needs tobe seen if the agreement contains a clause which provides forarbitration pertaining to the disputes which have arisen betweenthe parties to the agreement.”F

48. Section 8 of the 1996 Act as amended also came forconsideration in Ameet Lalchand Shah and Others Vs. RishabhEnterprises and Another, AIR 2018 SC 3041: (2018) 6 SCALE621: 2018 SCC Online SC 487. This Court noticed the object andpurpose of amended Section 8. In Paragraph No. 29 to 31, followingGhas been laid down:- “29. “Principally four amendments to Section 8(1) have beenintroduced by the 2015 Amendments-(i) the relevant “party” thatis entitled to apply seeking reference to arbitration has beenclarified/amplified to include persons claiming “through or under”

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such a party to the arbitration agreement; (ii) scope of examinationby the judicial authority is restricted to a finding whether “no validarbitration agreement exists” and the nature of examination bythe judicial authority is clarified to be on a “prima facie” basis; (iii)the cut-off date by which an application Under Section 8 is to bepresented has been defined to mean “the date of” submitting thefirst statement on the substance of the dispute; and (iv) theamendments are expressed to apply notwithstanding any priorjudicial precedent. The proviso to Section 8(2) has been added toallow a party that does not possess the original or certified copyof the arbitration agreement on account of it being retained by theother party, to nevertheless apply under Section 8 seekingreference, and call upon the other party to produce the same.”(Ref: Justice R.S. Bachawat’s Law of Arbitration andConciliation, Sixth Edition, Vol. I (Sections 1 to 34) at page 695published by LexisNexis).

31. The language of amendment to Section 8 of the Act is clearthat the amendment to Section 8(1) of the Act would applynotwithstanding any prayer, judgment, decree or order of theSupreme Court or any other Court. The High Court laid emphasisupon the word “.....unless it finds that prima-facie no validagreement exists”. The High Court observed that there is noarbitration agreement between Astonfield and Rishabh. Afterreferring to Sukanya Holdings and the amended Section 8 andSection 45 of the Act, the High Court pointed out the difference inlanguage of Section 8 and Section 45 of the Act. The High Courtdistinguished between Sukanya Holdings and Chloro Controls, andobserved that Sukanya Holdings was not overruled by ChloroControls….”

49. This Court, thus, in the above cases has noticed thatamendments are expressed to apply notwithstanding any prior judicialprecedents, but the scope of amendment under Section 8(1) was confinedto three categories as has been noted in Paragraph No.29. Amendmentsunder Section 8, thus, were aimed to minimise the scope of judicialauthority to refuse reference to arbitration and only ground on whichreference could have been refused was that it prima facie finds that novalid arbitration agreement exists. Notwithstanding any prior judicialprecedents referred to under Section 8(1) relates to those judicial AB

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Aprecedents, which explained the discretion and power of judicial authorityto examine various aspects while exercising power under Section 8.

50. The Legislative intent and object were confined to only aboveaspects and was not on those aspects, where certain disputes were notrequired to be referred to arbitration. Can it be said that afterBamendment under Section 8(1), the law laid down by this Courtin reference to Section 2(3), where large number of categorieshave been held to be non-arbitrable has been reversed or set atnaught. Neither any such Legislature intendment was there norany such consequence was contemplated that law laid down bythis Court in context of Section 2(3) has to be ignored or reversed.C

51. While carrying out amendment under Section 8(1) of Act,1996, the statutes providing additional remedies/special remedies werenot in contemplation. The legislative intent is clear that judicial authority’sdiscretion to refuse arbitration was minimise in respect of jurisdictionexercise by judicial authority in reference to Section 8. The amendmentDwas also aimed to do away with special or additional remedies is notdecipherable from any material. The Law Commission 246[th] Report, theStatement and Objects of Bill and the notes on clauses do not indicatethat amendments were made for overriding special/additional remediesprovided under different statutes. In the event, the interpretation as putEby the learned counsel for the petitioner is accepted, Section 8 has to beread to override the law laid down by this Court in reference to variousspecial/additional jurisdictions as has been adverted to and noted injudgment of this Court in Booz Allen and Hamilton Inc.(supra) whichwas never the intent of amendment in Section 8.

F52. The amendment in Section 8 cannot be given such expansivemeaning and intent so as to inundate entire regime of special legislationswhere such disputes were held to be not arbitrable. Something whichlegislation never intended cannot be accepted as side wind to overridethe settled law. The submission of the petitioner that after the amendmentthe law as laid down by this Court in National Seeds CorporationGLimited(supra) is no more a good law cannot be accepted. The words“notwithstanding any judgment, decree or order of the Supreme Courtor any Court” were meant only to those precedents where it was laiddown that the judicial authority while making reference under Section 8shall entitle to look into various facets of the arbitration agreement, subjectHmatter of the arbitration whether the claim is alive or dead, whether the arbitration agreement is null and void. The words added in Section 8cannot be meant for any other meaning. Reference is also made to thejudgment of this Court in Vimal Kishor Shah and others vs. JayeshDinesh Shah and others, (2016) 8 SCC 788. This Court in the abovecase had occasion to consider the provisions of Section 8 of the Act,1996 in reference to special remedy provided under Trusts Act, 1882.This Court noticed the judgment of this Court in Booz Allen andHamilton Inc.(supra) with approval in paragraphs 40 and 42 which isto the following effect:

“40. Before we examine the scheme of the Trusts Act, 1882, weconsider it apposite to take note of the case law, which has abearing on this issue. The question came up for considerationbefore this Court in Booz Allen & Hamilton Inc. v. SBI HomeFinance Ltd. as to what is the meaning of the term “arbitrability”and secondly, which type of disputes are capable of settlement byarbitration under the Act. Their Lordships framed three questionsto answer the question viz.: (SCC p. 546, para 34)

(1) Whether the disputes having regard to their nature couldbe resolved by a private forum chosen by the parties(Arbitral Tribunal) or whether such disputes exclusivelyfall within the domain of public fora (courts)?;

(2) Whether the disputes are covered by the arbitrationagreement?; and

(3) Whether the parties have referred the disputes toarbitrator?”

42. The question to be considered in this appeal is whether thedisputes relating to affairs and management of the Trust includingthe disputes arising inter se trustees, beneficiaries in relation totheir appointment, powers, duties, obligations, removal, etc. arecapable of being settled through arbitration by taking recourse tothe provisions of the Act, if there is a clause in the trust deed tothat effect or such disputes have to be decided under the TrustsAct, 1882 with the aid of forum prescribed under the said Act?”

53. After noticing the issues which have arisen in the above casethis Court laid down following in paragraphs 51 and 53:

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A“51. The principle of interpretation that where a specific remedyis given, it thereby deprives the person who insists upon a remedyof any other form of remedy than that given by the statute, is onewhich is very familiar, and which runs through the law, was adoptedby this Court in Premier Automobiles Ltd. v. KamlekarShantaram Wadke while examining the question of bar in filingBcivil suit in the context of remedies provided under the IndustrialDisputes Act (see G.P. Singh, Principles of StatutoryInterpretation, 12th Edn., pp. 763-64). We apply this principlehere because, as held above, the Trusts Act, 1882 creates anobligation and further specifies the rights and duties of the settlor,Ctrustees and the beneficiaries apart from several conditionsspecified in the trust deed and further provides a specific remedyfor its enforcement by filing applications in civil court. It is for thisreason, we are of the view that since sufficient and adequateremedy is provided under the Trusts Act, 1882 for deciding thedisputes in relation to trust deed, trustees and beneficiaries, theDremedy provided under the Arbitration Act for deciding suchdisputes is barred by implication.

53. We, accordingly, hold that the disputes relating to trust, trusteesand beneficiaries arising out of the trust deed and the Trusts Act,1882 are not capable of being decided by the arbitrator despiteexistence of arbitration agreement to that effect between theparties. A fortiori, we hold that the application filed by therespondents under Section 11 of the Act is not maintainable onthe ground that firstly, it is not based on an “arbitration agreement”within the meaning of Sections 2(1)(b) and 2(1)(h) read withSection 7 of the Act and secondly, assuming that there exists anarbitration agreement (Clause 20 of the trust deed) yet the disputesspecified therein are not capable of being referred to privatearbitration for their adjudication on merits.”

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54. This Court held that disputes within the trust, trustees andGbeneficiaries are not capable of being decided by the arbitrator despiteexistence of arbitration agreement to that effect between the parties.This Court held that the remedy provided under the Arbitration Act fordeciding such disputes is barred by implication. The ratio laid down inthe above case is fully applicable with regard to disputes raised inconsumer fora.H

55. We may, however, hasten to add that in the event a personentitled to seek an additional special remedy provided under the statutesdoes not opt for the additional/special remedy and he is a party to anarbitration agreement, there is no inhibition in disputes being proceededin arbitration. It is only the case where specific/special remedies areprovided for and which are opted by an aggrieved person that judicialauthority can refuse to relegate the parties to the arbitration.

56. We, thus, do not find that any error has been committed by theNCDRC in rejecting the application filed by the appellant under Section8. No exception can be taken to the dismissal of the appeals by thisCourt against the judgment of NCDRC. No ground is made out to reviewthe order dated 13.02.2018. The review petitions are dismissed.

Ankit Gyan

Review Petitions dismissed.

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