1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

REVIEW PETITOIN (C) Nos. 2629- 2630 OF 2018

IN

CIVIL APPEAL NOS.23512- 23513 OF 2017

M/S. EMAAR MGF LAND LIMITED ...APPELLANT(S)

VERSUS

AFTAB SINGH ...RESPONDENT(S)

J U D G M E N T

ASHOK BHUSHAN,J.

These review petitions have been filed seeking

review of the judgment dated 13.02.2018 of this Court

by which civil appeals were dismissed.

2. The Civil Appeal Nos. 23512- 23513 of 2017 had been

filed challenging the order dated 13.07.2017 passed by

Larger Bench of the National Consumer Disputes

Redressal Commission (hereinafter referred to as

“NCDRC”) holding consumer disputes to be non-

arbitrable. Prayer was also made to set aside the

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subsequent order dated 28.08.2017 passed by Single

Member of the NCDRC dismissing the application filed

under Section 8 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as “1996 Act”) by

the appellant.

3. Looking to the nature of the issue raised in these

review petitions, we have heard learned counsel for the

parties on 27.11.2018 in the review petitions after

issuing notice on 17.09.2018. Delay in filing of

review petitions is condoned. Learned counsel for the

parties have made elaborate submissions, which we

proceed to consider in these review petitions.

4. Brief facts giving rise to civil appeals and the

review petitions need to be noted for appreciating the

issues raised herein. The appellant is 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 of a villa

in Sector 106, Mohali. A Buyer’s agreement was entered

dated 06.05.2008 between the appellant and the

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respondent. In the Buyer’s agreement, there was an

arbitration clause providing for settlement of disputes

between parties under the 1996 Act. On 27.07.2015, the

respondent filed a Complaint No. 7 01 of 2015 before the

NCDRC against the appellant praying for following

reliefs in Paragraph No.17 of the complaint, which are

as follows:-

“a. The complainant prays for a direction to

the opposite Parties to deliver the

possession of the built up villa No. 40, At

Sector 106, GMADA, and

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 of clause 8 of the Agreement, after

2011 for 55 months as on date which comes

to Rs.83,500/- and

d. to adjust the final account after making

the above deductions of clause B and C and

to refund the remaining/balance payment

back to the complainant at the earliest

along with interest @ 18% per annum from

6.2.2010 (i.e. 24 months from the date of

the Agreement); and

e. the Hon’ble National Commission M ay be

pleased to grant compensation to the tune

of Rs. 20,00,000 on account of deficiency

in service on the part of the opposite

parties, mental ago ny and harassment

suffered by the complainant, and

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f. the cost of this complaint may be awarded

from the opponent to the complainant, and

g. the Hon’ble National Commission may be

pleased to grant any other relief deemed in

fit just and proper by the Hon’ble National

Commission in the Circumstances of the

case.”

5. Notice was issued to the appellant by the NCDRC on

09.11.2015 asking the appellant to appear on

11.01.2016. The appellant appeared and made an

application for extension of time for filing the

written statement. The appellant also filed an

application under Section 8 of the 1996 Act for

referring the matter to arbitration for and on behalf

of the appellant. In the application, appellant has

referred to Clause 43 of the Buyer’s agreement, which

according to appellant would constitute a valid

arbitration agreement in terms of Section 7(2) of the

1996 Act. The appellant also filed a reply to the

complaint. The application filed under Section 8 of

the 1996 Act was objected by the respondent with the

prayer that the said application be rejected. NCDRC

heard the complaint case of the respondent alongwith

several other similarly situated applications in the

complaint case filed by the respondent and other

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similarly situated applications filed under Section 8

for referring the parties to the arbitration. A

learned Single Member of the Commission proceeded to

consider the said applications and passed an order

dated 31.08.2016. The learned Single Member had taken

the view that considering the vital importance and far

reaching consequence of the legal issue involved in

these applications, it would only be appropriate that

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, a Larger Bench of NCDRC was constituted and

Consumer Complaint No. 701 of 2015 with Interim

Application No. 247 of 2016 as well as interim

applications filed by other complainants were heard and

decided by T hree Members Bench presided by President

of the NCDRC vide its judgment dated 13.07.2017. The

Three Members Bench have considered the submissions of

the parties in detail and arrived at following

conclusions in Paragraph Nos. 55 and 56:-

“55. In view of the afore- going discussion, we

arrive at the following conclusions: (i) the

disputes which are to be adjudicated and

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governed by statutory enactments, established

for specific public purpose to sub- serve a

particular public policy are not arbitrable;

(ii) there are vast domains of the legal

universe that are non- arbitrable and kept at a

distance from private dispute resolution;

(iii) the subject amendment was meant for a

completely different purpose, leaving status

quo ante unaltered and subsequently reaffirmed

and restated by the Hon'ble Supreme Court; (iv)

Section 2(3) of the Arbitration Act recognizes

schemes under 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 8 cannot be construed

as a mandate to the Consumer Forums,

constituted under the Act, to refer the parties

to Arbitration in terms of the Arbitration

Agreement.

56. Consequently, we unhesitatingly reject the

arguments on behalf of the Builder and hold

that an Arbitration Clause in the afore- stated

kind of Agreements between the Complainants and

the Builder cannot circumscribe the

jurisdiction of a Consumer Fora,

notwithstanding the amendments made to Section

8 of the Arbitration Act.”

7. After the reference having been answered by Three

Members Bench, the Consumer Complaint No. 701 of 20156

alongwith other applications was taken by a Single

Member of the Commission and by order dated 28.08.2017,

the applications filed by the appellant under Section

8 of the 1996 Act were rejected. After rejecting the

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application under Section 8, the Commission directed

the parties to proceed further with the complaint. The

appellant filed F.A.O. No. 395 of 2017 in the Delhi

High Court challenging the orders dated 13.07.2017 and

28.08.2017 of NCDRC. The High Court held that appeals

filed by the appellant under Section 37(1)(a) of the

1996 Act have been wrongly brought before the High

Court. The High Court refused to entertain the appeals

and returned to be presented before the appropriate

Appellate Court. A fter the judgment of the Delhi High

Court dated 07.11.2017, the appellant filed Civil

Appeal No. 23512- 23513 of 2017 challenging the judgment

of Larger Bench of NCDRC dated 13.07.2017 as well as

the consequential order dated 28.08.2017 in this Court.

Both the appeals were called for hearing on 13.02.2018

and were dismissed by this Court. The appellant has

filed the se review petitions to review the judgment of

this Court. In the review petitions, following prayers

have been made by the appellant:-

“(1)Allow the present review petition and

review the Order dated 13.02.2018 passed by

this Hon’ble Court in Civil Appeal No.

23512- 23513 of 2017;

(2)Set aside the Order dated 13.07.2017 passed

by the Larger Bench of the Hon’ble National

Commission in C.C. 701/2015 holding

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consumer disputes to be non- arbitrable

amongst other similar erroneous findings;

(3)Set aside the Order dated 28.08.2017 passed

by the Single Judge of the Hon’ble National

Commission in C.C. 701/2015 dismissing the

Application u/S. 8 of the Arbitration and

Conciliation Act, 1996;

(4)And pass such other or further order or

orders as the Hon’ble Court may deem fit

and proper in the interest of justice.“

8. We have heard Shri Fali S. Nariman, learned senior

counsel appearing for the appellant and Shri Aditya

Swarup, learned counsel appearing for the respondent

No.1.

9. Shri Fali s. Nariman in his imitable style in

support of review petitions submits that substantial

questions of law has been raised in the present review

petitions, which need to be addressed and decided by

this Court. Shri Nariman submits that after amendment

of Section 8 of 1996 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 Court or

any Court” in Section 8 of the Arbitration Act w.e.f.

23.10.2015, the Parliamentary intendment is clear that

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after the said amendment, the judicial authority is

mandated to refer a dispute for arbitration if there

is a valid arbitration agreement and parties apply not

later than the date of submitting his first statement

on the substance of the dispute. He submits that the

above words cannot be treated as redundant while

interpreting the amended Section 8. It is further

submitted that this Court acting as an Appellate Court

under Section 23 of Consumer Protection Act, 1986 read

with Section 37(1)(a) of 1996 Act has duty to go into

every fact and law including the amendment made in

Section 8 of the 1996 Act. It is submitted that

Constitution Bench of this C ourt has already held that

consumer fora are covered by the term “judicial

authority” for the purposes of Section 8 of the 1996

Act, hence, it was obligatory for the Commission to

refer the dispute to arbitration in view of the

arbitration clause between the parties. NCDRC has

wrongly termed consumer disputes as non- arbitrable,

which is contrary to the decision of this Court in

National Seeds Corporation Limited Vs. M. Madhusudan

Reddy and Another, (2012) 2 SCC 506. This Court had

interpreted the words “notwithstanding any judgment,

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decree or order of the Supreme Court or any Court” a s

occurring in newly added Section 11(6A) of the 1996 Act

in Duro Felguera, S.A. Vs. Gangavaram Port Limited,

(2017) 9 SCC 729, which interpretation is equally

applicable to Section 8 as amended by Act 3 of 2016.

NCDRC has erred in relying on judgment of this Court

in A. Ayyasamy Vs. A. Paramasivam and Others, (2016)

10 SCC 386. The amendment in Section 8 of Arbitration

Act by Act 3 of 2016 now makes it obligatory to judicial

authority to refer disputes to arbitration

notwithstanding any judgment, decree or order of the

Supreme Court or any Court. Judgments of this Court

interpreting Section 8 prior to 2016 amendment, thus,

have become wholly irrelevant and have to be

disregarded while deciding the application under

Section 8 filed after 2016 amendment.

10. Referring to Section 2(3) of the 1996 Act, it is

submitted that it cannot be said that by reason of

provision of Consumer Protection Act, consumer disputes

cannot be submitted to arbitration. It is further

submitted that far from the Consumer Protection Act,

1986, providing either expressly or by necessary

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implication that consumer disputes may not be submitted

to arbitration, the law as explained in the National

Seeds Corporation Limited (supra) and in Rosedale

Developers Private Limited (supra) clearly shows that

arbitration of consumer disputes is definitely

envisaged and contemplated in the Consumer Protection

Act, 1986, itself, before the amendment by way of

substitution of 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 provided for

in the arbitration agreement or to file a complaint

under the Consumer Protection Act, 1986. It is

submitted that after the substitution of Section 8(1)

even this option is no longer available, it being

mandatory for the judicial authority (NCDRC) to refer

the parties to arbitration “unless it finds that prima

facie no valid arbitration agreement exists”.

11. Shri Aditya Swarup, learned counsel appearing for

the respondent in his short and impressive submissions

contends that the Consumer Act, 1986 provides for an

additional and beneficial remedy to the consumer to

avail of the speedy, expeditious disposal of his or her

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dispute. The consequences of allowing the present

petition and setting aside the impugned order would,

inter alia, be that every consumer, no matter how small

or big the dispute, would now be forced to adjudicate

his dispute before an arbitral tribunal and not avail

of the beneficial remedy provided to him or her. Under

the 1986 Act. Accepting the interpretation placed by

the appellant on the 1996 Act will mean collapsing of

entire edifice of consumer jurisprudence but also

jurisprudence relating to trusts, tenancy disputes,

industrial disputes, telecom disputes, intellectual

property disputes and other non- arbitral disputes.

Repeating the words of NCDRC, it is submitted that “the

ripples of the amendment to Section 8(1) cannot be so

large as to inundate the domains of other legislations

and jurisprudence, painstakingly built by the

Legislators and Courts, especially without any

engagement, debate and critique with the foundations

of these related laws”. Section 2(3) of the

Arbitration Act expressly states that Part I of the

Arbitration Act “shall not affect any other law for the

time being in force by virtue of which certain disputes

may not be referred to arbitration”. Under this

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Section, if any law provides, either expressly or by

necessary implication that specified disputes may not

be submitted to arbitration, then, in spite of the non

obstante provision in Section 5 of the Arbitration Act,

the law will be saved by Section 2(3) of the Arbitration

Act. Section 2(3) of the Arbitration Act restricts the

overriding effect apparent in Section 5 of the

Arbitration Act. The Consumer Act being a beneficial

legislation enacted to give an additional remedy for

the settlement of disputes, the same cannot be taken

away by Section 8 of the 1996 Act. This Court in

jurisdiction cases have already held that Arbitration

Act does not exclude the jurisdiction of the Consumer

Forum to decide disputes under the Consumer Act. The

amendment to Section 8(1) of the Arbitration Act by Act

3 of 2016 was never intended to interfere with the

jurisdiction of Consumer Forum to decide consumer

disputes. He submits that amendment in Section 8(1)

is being read in a manner which was never the intention

of the Parliament. He submits that the NCDRC has

rightly rejected the application under Section 8 filed

by the appellant and no error has been committed by

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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 parties and pleadings of the parties following are

the principal issues which arise for consideration in

these petitions:

(i) Whether NCDRC committed error in

rejecting the application of the

appellant filed under Section 8 of 1996,

Act praying for reference to the

arbitrator as per Arbitration clause in

the builders agreement?

(ii) Whether after the amendments made in

Section 8 by the Arbitration and

Conciliation (Amendment)Act, 2015 the

application filed under Section 8 by the

appellant could not have been rejected

in view of substantial changes brought

in the statutory scheme by inserting the

words “notwithstanding any judgment,

decree or order of the Supreme Court or

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any Court” in sub- section (1) of Section

8?

(iii) Whether NCDRC as well as this Court

committed error in not adverting to the

above statutory amendment which

completely changed the legal position as

was earlier existing prior to the

aforesaid amendment?

(iv) Whether by the insertion of words

“notwithstanding any judgment, decree

or order of the Supreme Court or any

Court” under Section 8(1) by the

(Amendment) Act, 2015 legislature

intended to do away with the decision

of judgments of Supreme Court laying

down that C onsumer Protection Act being

special remedy can be initiated and

continued despite there being any

arbitration agreement between the

parties?

13. All the issues being interconnected are being taken

together. The main emphasis of Shri Fali S. Nariman,

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learned senior counsel for the petitioner is that

entire legal regime pertaining to the 1996, Act in

relation to Consumer Protection Act when seen after the

amendment fully supports the interpretation put by the

petitioner which has not at all adverted by the NCDRC

and this Court.

14. Before we come to the amendments made by the 2015,

Act and its real intent and consequences , it is

necessary to look into the law as was existing prior

to the said amendment in relation to proceedings under

Consumer Protection Act in reference to arbitration

agreement under 1996 Act.

15. The Consumer Protection Act, 198 6 has been enacted

to provide for better protection of the interests of

consumers and for the purpose, to make provision for

the establishment of C onsumer Councils and other

authorities for the settlement of consumer disputes and

for matter connected therewith. This Court had occasion

to consider the object and purpose of the Act in Lucknow

Development Act vs. M.K. Gupta, (1994) 1 SCC 243, this

Court elaborately noticed the object and purpose of the

Act in the following words:

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“To begin with the preamble of the Act, which can

afford useful assistance to ascertain the

legislative intention, it was enacted, ‘to provide

for the protection of the interest of consumers’ .

Use of the word ‘protection’ furnishes key to the

minds of makers of the Act. Various definitions and

provisions which elaborately attempt to achieve

this objective have to be construed in this light

without departing from the settled view that a

preamble cannot control otherwise plain meaning of

a provision. In fact the law meets long felt

necessity of protecting the common man from such

wrongs for which the remedy under ordinary law for

various reasons has become illusory. Various

legislations and regulations permitting the State

to intervene and protect interest of the consumers

have become a haven for unscrupulous ones as the

enforcement machinery 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 society

by enabling the consumer to participate directly in

the market economy. It attempts to remove the

helplessness of a consumer which he faces against

powerful business, described as, ‘a network of

rackets’ or a society in which, ‘producers have

secured power’ to ‘rob the rest’ and the might of

public bodies which are degenerating into

storehouses of inaction where papers do not move

from one desk to another as a matter of duty and

responsibility but 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

in checking the rot.”

16. Section 3 of the Act provided that the provisions

of this Act shall be in addition to and not in

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derogation of the provisions of any other law for the

time being in force. Noticing the object and purpose

of the Act as well as Section 3, this Court in

Secretary, Thirumurugan Cooperative Agricultural

Credit Society vs. M. Lalitha (dead) Through LRs. And

others, (2004) 1 SCC 395, laid down following in

paragraph 11 and 12:

“11. From the Statement of Objects and Reasons

and the scheme of the 1986 Act, it is apparent

that the main objective of the Act is to

provide for better protection of the interest

of the consumer and for that purpose to provide

for better redressal, mechanism through which

cheaper, easier, expeditious and effective

redressal is made available to consumers. To

serve the purpose of the Act, various quasi-

judicial forums are set up at the district,

State and national level with wide range of

powers vested in them. These quasi- 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

to impose penalties for non- compliance with

their orders.

12. As per Section 3 of the Act, as already

stated above, the provisions of the Act shall

be in addition to and not in derogation of any

other provisions of any other law for the time

being in force. Having due regard to the scheme

of the Act and purpose sought to be achieved

to protect the interest of the consumers

better, the provisions are to be interpreted

broadly, positively and purposefully in the

context of the present case to give meaning to

additional/extended jurisdiction, particularly

when Section 3 seeks to provide remedy under

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the Act in addition to other remedies provided

under other Acts unless there is a clear bar.”

17. This court had occasion to consider the provisions

of Section 34 of Arbitration Act, 1940 in reference to

the Consumer Protection Act, 1986 in Fair Air

Engineering Pvt. Ltd. and another vs. N.K. Modi, (1996)

6 SCC 385. This Court in the said case held that

consumer fora is a judicial authority. In the above

case, the appellant had entered into a contract with

the respondent to carry out installation of a centrally

air-conditioned plant in the residential house of the

respondent. The respondent filed a complaint before the

State Commission under the Consumer Protection At, 1986

which proceedings were stayed by the State Commission

and it relegated the parties to arbitration

proceedings. The NCDRC held that the proceedings before

the Consumer fora is not a legal proceedings and

Commission is not a judicial authority, therefore,

Section 34 of the Arbitration Act, 1940 is not

available to stay the proceedings. The said order of

NCDRC was challenged in this Court. This Court reversed

the order of the State Commission and remitted the

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matter to the State Commission to decide the matter on

merits according to law. This Court held that the

Parliament was well aware of the Arbitration Act, 1940

when the Consumer Protection Act was enacted providing

for additional remedy. In paragraphs 15 and 16

following has been laid down:

“15. Accordingly, it must be held that the

provisions of the Act are to be construed

widely to give effect to the object and purpose

of the Act. It is seen that Section 3 envisages

that the provisions of the Act are in addition

to and are not in derogation of any other law

in force. It is true, as rightly contended by

Shri Suri, that the words “in derogation of the

provisions of any other law for the time being

in force” would be given proper meaning and

effect and if the complaint is not stayed and

the parties are not relegated to the

arbitration, the Act purports to operate in

derogation of the provisions of the Arbitration

Act. Prima facie, the contention appears to be

plausible but on construction and conspectus

of the provisions of the Act we think that the

contention is not well founded. Parliament is

aware of the provisions of the Arbitration Act

and the Contract Act, 1872 and the

consequential remedy available under Section 9

of the Code of Civil Procedure, i.e., to avail

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 to provide a remedy in

addition to the consentient arbitration which

could be enforced under the Arbitration Act or

the civil action in a suit under the provisions

of the Code of Civil Procedure. Thereby, as

seen, Section 34 of the Act does not confer an

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automatic right nor create an automatic embargo

on the exercise of the power by the judicial

authority under the Act. It is a matter of

discretion. Considered from this perspective,

we hold that though the District Forum, State

Commission and National Commission are

judicial authorities, for the purpose of

Section 34 of the Arbitration Act, in view of

the object of the Act and by operation of

Section 3 thereof, we are of the considered

view that it would be appropriate that these

forums created under the Act are at liberty to

proceed with the matters in accordance with the

provisions of the Act rather than relegating

the parties to an arbitration proceedings

pursuant to a contract entered into between the

parties. The reason is that the Act intends to

relieve the consumers of the cumbersome

arbitration proceedings or civil action unless

the forums on their own and on the peculiar

facts and circumstances of a particular case,

come to the conclusion that the appropriate

forum for adjudication of the disputes would

be otherwise those given in the Act.”

18. This Court had occasion to consider the provisions

of Consumer Protection Act as well as the Arbitration

Act, 1996. In Skypak Couriers Ltd. v. Tata Chemicals,

(2000) 5 SCC 294, this Court laid down the following:

“Even if there exists an arbitration clause in

an agreement and a complaint is made by the

consumer, in relation to a certain deficiency

of service, then the existence of an

arbitration clause will not be a bar to the

entertainment of the complaint by the Redressal

Agency, constituted under the Consumer

Protection Act, since the remedy provided under

the Act is in addition to the provisions of

any other law for the time being in force.”

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19. Another judgment which is relevant for the present

issue is National Seeds Corporation Limited vs. M.

Madhusudhan Reddy and another, (2012) 2 SCC 506. In the

above case, the respondent filed a complaint in the

District Consumer Redressal Forum that they had

suffered loss due to failure of the crops/less yield

because the seeds sold/supplied by the appellant were

defective. The compensation was awarded against which

appeal was dismissed. The appellant challenged the

order of the Commission and main contention was that

the District Forum has no jurisdiction to entertain the

complaint , in view of the provisions of Seeds Act, 1966

it was contended that there was arbitration clause

contained in the agreement and the only remedy

available to the respondent is an appropriate

arbitration and the District Forum has no jurisdiction

to entertain the complaint. This Court repelled the

submission and dismissed the appeal. In paragraph 64

this Court had noticed the contention of the appellant

which is to the following effect:

“64. According to the learned counsel for the

appellant, if the growers had applied for

arbitration then in terms of Section 8 of the

Arbitration and Conciliation Act the dispute

arising out of the arbitration clause had to be

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referred to an appropriate arbitrator and the

District Consumer Forums were not entitled to

entertain their complaint. This contention

represents an extension of the main objection

of the appellant that the only remedy available

to the farmers and growers who claim to have

suffered loss on account of use of defective

seeds sold/supplied by the appellant was to file

complaints with the Seed Inspectors concerned

for taking action under Sections 19 and/or 21

of the Seeds Act.”

20. The contention was dealt with in paragraph 66 where

following was laid down:

“66. The remedy of arbitration is not the only

remedy available to a grower. Rather, it is an

optional remedy. He can either seek reference

to an arbitrator or file a complaint under the

Consumer Protection Act. If the grower opts for

the remedy of arbitration, then it may be

possible to say that he cannot, subsequently,

file complaint under the Consumer Protection

Act. However, if he chooses to file a complaint

in the first instance before the competent

Consumer Forum, then he cannot be denied relief

by invoking Section 8 of the Arbitration and

Conciliation Act, 1996. Moreover, the plain

language of Section 3 of the Consumer Protection

Act makes it clear that the remedy available in

that Act is in addition to and not in derogation

of the provisions of any other law for the time

being in force.”

21. Another judgment where this Court reiterated the

position of law is Rosedale Developers Private Limited

Vs Aghore Bhattacharya And Others, (2018) 11 SCC 337

(decided on 06.09.2013). In the above case, a complaint

was filed by the respondent before NCDRC. An

24

application was filed by the appellant praying for

making reference to the arbitrator in view of the

arbitration agreement. The issue has been noticed in

paragraphs 1 and 2 which are to the following 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.338 b)

passed by the National Consumer Disputes

Redressal Commission (for short “the National

Commission”) whereby the appellant’s prayer

for making a reference to the arbitrator was

rejected can appropriately be termed as a

frivolous piece of litigation which merits

nothing but dismissal at the threshold with

exemplary costs.

2. The respondents filed complaint alleging

deficiency in service on the appellant’s part

and claimed compensation to the tune of Rs

17,41,09,000 with costs of Rs 1,00,000. On

being noticed by the National Commission, the

appellant filed a written statement to contest

the complaint. It also filed an application

under Section 8 of the Arbitration and

Conciliation Act, 1996 (for short “the 1996

Act”) for making a reference to the arbitrator.

A two- member Bench of the National Commission

referred the matter to the larger Bench. After

considering the relevant statutory provisions

and adverting to several judgments including

the judgments in Fair Air Engineers (P) Ltd.

v. N.K. Modi; Skypak Couriers Ltd. v. Tata

Chemicals Ltd. and National Seeds Corpn. Ltd.

v. M. Madhusudhan Reddy, the larger Bench of

the National Commission held that the consumer

forums constituted under the Consumer

Protection Act, 1986 (for short “the 1986 Act”)

are not bound to refer the dispute raised in

the complaint to an Arbitral Tribunal in terms

of the arbitration clause contained in the

agreement entered into between the parties.

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22. The contention was raised before this Court that

once an application under Section 8 of 1996 Act is

filed, Consumer Forum is duty- bound to make a reference

to the arbitrator. The above submission was noticed in

paragraph 3 which is to the following effect:

“3. Shri Sanjay Ghose, learned counsel for the

appellant relied upon 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 and Finance Ltd. v. Potluri Madhavilata

and argued that once an application is filed

under Section 8 of the 1996 Act, the consumer

forum is duty- bound to make a reference to the

arbitrator because that section is mandatory

in character.”

23. This Court rejected the above submission and laid

down in paragraph 4:

“4. In our opinion, there is no merit in the

submission of the learned counsel. The question

whether the existence of an arbitration clause

contained in the agreement executed between the

parties excludes the jurisdiction of the

consumer forum and on an application made by

either party, the consumer forum is duty- bound

to make a reference to the arbitrator was

extensively considered in National Seeds

Corpn. Ltd. v. M. Madhusudhan Reddy and it was

observed: (SCC pp. 534- 35, paras 64- 66.)”

24. This Court held that there is no merit in the above

submission of the counsel. This Court referred to

26

judgments of this Court in National Seeds 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 any bearing on the issue raised in

this appeal. In neither of those cases, has

this Court interpreted the provisions of the

1996 Act in the light of the provisions

contained in the 1986 Act. Therefore, the

propositions laid down in those judgments that

Section 8 of the 1996 Act is mandatory cannot

lead to an inference that the consumer forum

is bound to make a reference to the Arbitral

Tribunal.

7. In view of the abovestated legal position,

the National Commission did not commit any

error by holding that the remedy of arbitration

available to the complainant does not bar the

jurisdiction of the consumer forums and the

consumer forums are not 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

above considered the provisions of Consumer Protection

Act, 1986 as well as Arbitration Act, 1996 and laid

down that complaint under Consumer Protection Act being

a special remedy, despite there being an arbitration

agreement the proceedings before Consumer Forum have

to go on and no error committed by Consumer Forum on

rejecting the application. There is reason for not

27

interjecting proceedings under Consumer Protection Act

on the strength an arbitration agreement b y Act, 1996.

The remedy under Consumer Protection Act is a remedy

provided to a consumer when there is a defect in any

goods or services. The complaint means any allegation

in writing made by a complainant has also been

explained in Section 2(c) of the Act. The remedy under

the Consumer Protection Act is confined to complaint

by consumer as defined under the Act for defect or

deficiencies caused by a service provider, the cheap

and a quick remedy has been provided to the consumer

which is the object and purpose of the Act as noticed

above.

26. Not only the proceedings of Consumer Protection

Act, 1986 are special proceedings which were required

to be continued under the Act despite an arbitration

agreement, there are large number of other fields where

an arbitration agreement can neither stop or stultify

the proceedings. For example, any action of a party,

omission or commission of a person which amounts to an

offence has to be examined by a criminal court and no

amount of agreement between the parties shall be

relevant for the said case. For example, there may be

28

a commercial agreement between two parties that all

issues pertaining to transaction are to be decided by

arbitration as per arbitration clause in the agreement.

In case where a cheque is dishonoured by one party in

transaction, despite the arbitration agreement party

aggrieved has to approach the criminal court.

Similarly, there are several issues which are non-

arbitrable. There can be prohibition both express or

implied for not deciding a dispute on the basis of an

arbitration agreement. This Court had occasion to

consider the above aspect and has noticed various

disputes which are non- arbitrable, reference is made

to the judgment of this Court in Booz Allen and Hamilton

Inc. vs. SBI Home Finance Limited and others, (2011) 5

SCC 532. In paragraphs 35 to 38 following has been laid

down:

“35. The Arbitral Tribunals are private fora

chosen voluntarily by the parties to the

dispute, to adjudicate their disputes in place

of courts and tribunals which are public fora

constituted under the laws of the country.

Every civil or commercial dispute, either

contractual or non- contractual, which can be

decided by a court, is in principle capable of

being adjudicated and resolved by arbitration

unless the jurisdiction of the Arbitral

Tribunals is excluded either expressly or by

necessary implication. Adjudication of certain

categories of proceedings are reserved by the

29

legislature exclusively for public fora as a

matter of public policy. Certain other

categories of cases, though not expressly

reserved for adjudication by public fora

(courts and tribunals), may by necessary

implication stand excluded from the purview of

private fora. Consequently, where the

cause/dispute is inarbitrable, the court where

a suit is pending, will refuse to refer the

parties to arbitration, under Section 8 of the

Act, even if the parties might have agreed upon

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

or arise out of criminal offences; ( ii)

matrimonial disputes relating to divorce,

judicial separation, restitution of conjugal

rights, child custody; (iii) guardianship

matters; (iv) insolvency and winding- up

matters; (v ) testamentary matters (grant of

probate, letters of administration and

succession certificate); and (vi) eviction or

tenancy matters governed by special statutes

where the tenant enjoys statutory protection

against eviction and only the specified courts

are conferred jurisdiction to grant eviction

or decide the disputes.

37. It may be noticed that the cases referred

to above relate to actions in rem. A right in

rem is a right exercisable against the world

at large, as contrasted from a right in

personam which is an interest protected solely

against specific individuals. Actions in

personam refer to actions determining the

rights and interests of the parties themselves

in the subject- matter of the case, whereas

actions in rem refer to actions determining the

title to property and the rights of the

parties, not merely among themselves but also

against all persons at any time claiming an

interest in that property. Correspondingly, a

30

judgment in personam refers to a judgment

against a person as distinguished from a

judgment against a thing, right or status and

a judgment in rem refers to a judgment that

determines the status or condition of property

which operates directly on the property itself.

(Vide Black’s Law Dictionary.)

38. Generally and traditionally all disputes

relating to rights in personam are considered

to be amenable to arbitration; and all disputes

relating to rights in rem are required to be

adjudicated by courts and public tribunals,

being unsuited for private arbitration. This

is not however a rigid or inflexible rule.

Disputes relating to subordinate rights in

personam arising from rights in rem have always

been considered to be arbitrable.”

27. The complaints filed under the Consumer Protection

Act can also be proceeded with despite there being any

arbitration agreement between the parties which have

been well settled by the catena of decisions as noticed

above.

28. Now, the issue to be addressed is effect and

consequences of the above stated position of law

consequent to the Arbitration and Conciliation

(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 an arbitration agreement.-

(1) A judicial authority before which an

31

action is brought in a matter which is the

subject of an arbitration agreement shall,

if a party so applies not later than when

submitting his first statement on the

substance of the dispute, refer the parties

to arbitration.

(2) The application referred to in sub-

section (1) shall not be entertained unless

it is accompanied by the original arbitration

agreement or a duly certified copy thereof.”

29. Section 8(1) and 8(2) after Amendment by Act, 2015

are as follows:

“Section 8(1) A judicial authority, before

which an action is brought in a matter which

is the subject of an arbitration agreement

shall, if a party to the arbitration agreement

or any person claiming through or under him,

so applies not later than the date of

submitting his first statement on the substance

of the dispute, then, 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.

(2) the following proviso shall be inserted,

namely:— “Provided that where the original

arbitration agreement or a certified copy

thereof is not available with the party

applying for reference to arbitration under

sub-section (1), and the said agreement or

certified copy is retained by the other party

to that agreement, then, the party so applying

shall file such application along with a copy

of the arbitration agreement and a petition

praying the Court to call upon the other party

to produce the original arbitration agreement

or its duly certified copy before that

Court.”.”

32

30. Two more provisions of the 1996 Act need to be

noted before we proceed further to consider the issues.

The 1996 Act contains two Parts – Part I and Part II.

Part I contains heading “Arbitration” and Part II

contains heading “Enforcement of certain Foreign

Awards”. Chapter I of Part I is “General Provisions”,

in which Section 2 deals with definitions. Section

2(1) begins with the words “In this Part, unless the

context otherwise requires”. Section 2(1) contains

definitions. Section 2(3) provides:-

“Section 2(3) This Part shall not affect any

other law for the time being in force by virtue

of which certain disputes may not be submitted

to arbitration.”

31. There are two aspects to be noticed in the Scheme

of Section 2, firstly, Section 2 contains a heading

“Definitions” but it is covered by general heading of

Chapter I “General Provisions”. Section 2(3) does not

contain any definition but contain a general provision

which clarifies that “This Part shall not affect any

other law for the time being in force by virtue of

which certain disputes may not be submitted to

arbitration”. Section 2(3) gives predominance of any

other law for the time being in force by virtue of

33

which certain disputes may not be submitted to

arbitration.

32. We have already noted several categories of cases,

which are not arbitrable. While referring to judgment

of this Court in Booz Allen and Hamilton Inc. (supra),

those principles have again been reiterated by this

Court in A. Ayyasamy (supra), Dr. A.K. Sikri, J.

delivering the judgment in that case has noticed

certain cases, which are not arbitrable in paragraph

No.14, which is as follows:-

“14. In the instant case, there is no dispute

about the arbitration agreement inasmuch as

there is a specific arbitration clause in the

partnership deed. However, the question is as

to whether the dispute raised by the respondent

in the suit is incapable of settlement through

arbitration. As pointed out above, the Act does

not make any provision excluding any category

of disputes treating them as non- arbitrable.

Notwithstanding the above, the courts have held

that certain kinds of disputes may not be

capable of adjudication through the means of

arbitration. The courts have held that certain

disputes like criminal offences of a public

nature, disputes arising out of illegal

agreements and disputes relating to status,

such as divorce, cannot be referred to

arbitration. The following categories of

disputes are generally treated as non-

arbitrable:

(i) patent, trade marks and copyright;

(ii) anti- trust/competition laws;

(iii) insolvency/winding up;

34

(iv) bribery/corruption;

(v) fraud;

(vi) criminal matters.

Fraud is one such category spelled out by the

decisions of this Court where disputes would

be considered as non- arbitrable.”

33. Dr. Justice D.Y. Chandrachud, J. in his concurring

opinion has referred to Booz Allen and Hamilton Inc.

(supra) and noticed the categories of cases, which are

not arbitrable. Paragraph No. 35 of the judgment is

quoted as below:-

“35. Ordinarily every civil or commercial

dispute whether based on contract or otherwise

which is capable of being decided by a civil

court is in principle capable of being

adjudicated upon and resolved by arbitration

“subject to the dispute being governed by the

arbitration agreement” unless the jurisdiction

of the Arbitral Tribunal is excluded either

expressly or by necessary implication. In Booz

Allen and Hamilton Inc. v. SBI Home Finance

Ltd., this Court held that (at SCC p. 546, para

35) adjudication of certain categories of

proceedings is reserved by the legislature

exclusively for public fora as a matter of

public policy. Certain other categories of

cases, though not exclusively reserved for

adjudication by courts and tribunals may by

necessary implication stand excluded from the

purview of private fora. This Court set down

certain examples of non- arbitrable disputes

such as: (SCC pp. 546- 47, para 36)

(i) disputes relating to rights and liabilities

which give rise to or arise out of criminal

offences;

35

(ii) matrimonial disputes relating to divorce,

judicial separation, restitution 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 of administration and

succession certificates; and

(vi) eviction or tenancy matters governed by

special statutes where a tenant enjoys special

protection against eviction and specific

courts are conferred with the exclusive

jurisdiction to deal with the dispute.

This Court held that this class of actions

operates in rem, which is a right exercisable

against the world at large as contrasted with

a right in personam which is an interest

protected against specified individuals. All

disputes relating to rights in personam are

considered to be amenable to arbitration while

rights in rem are required to be adjudicated

by courts and public tribunals. The enforcement

of a mortgage has been held to be a right in

rem for which proceedings in arbitration would

not be maintainable. In Vimal Kishor Shah v.

Jayesh Dinesh Shah, (2016) 8 SCC 788 this Court

added a seventh category of cases to the six

non-arbitrable categories set out in Booz

Allen, namely, disputes relating to trusts,

trustees and beneficiaries arising out of a

trust deed and the Trust Act. ”

34. Another Section, which needs to be noted is Section

5, which is as follows:-

“Section 5. Extent of judicial intervention.—

Notwithstanding anything contained in any

other law for the time being in force, in

matters governed by this Part, no judicial

authority shall intervene except where so

provided in this Part.”

36

35. Section 5 contains an injunction to judicial

authority from intervening except where so provided in

this Part. Section 2(3), Section 8, Section 11 and

Section 34 are some of the provisions, which provides

for judicial intervention in matters. Here, we are

concerned with power of judicial authority under

Section 8, hence Section 5 is not much relevant in the

present case.

36. Now, we come back to the interpretation of Section

8 as amended by Act No. 3 of 2016. What is the

legislative intent and object in bringing the amendment

to Section 8 is the main question to be answered in

this case. Amendment under Section 8 has been

undertaken by the Parliament after taking into

consideration the 246

th

Law Commission Report (2014).

Taking into consideration the working of the 1996 Act,

there was an earlier attempt to carry out certain

amendments in the 1996 Act. 176

th

Report of the Law

Commission on the “Arbitration and Conciliation

(Amendment) Bill, 2001” was submitted by the

Commission, although, the Government decided to accept

37

the recommendations and introduced a bill namely

“Arbitration and Conciliation (Amendment) Bill, 2003,

the bill was referred to Department relating Standing

Committee on Personnel, Public Grievances, Law and

Justice for a further analysis, which opined that many

provisions of the bill were insufficient hence the bill

was withdrawn. The Ministry of Law and Justice issued

a consultation paper and asked the Law Commission to

take a study of the amendments proposed 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 intervention in arbitration

proceedings adds significantly to the delays in the

arbitration process and ultimately negates the benefits

of arbitration”. Commission referring to amendments,

which were recommended in Section 8 and 11 in paragraph

No. 33 stated following:-

“33. It is in this context, the Commission has

recommended amendments to sections 8 and 11 of

the Arbitration and Conciliation Act, 1996. The

scope of the judicial intervention is only

restricted to situations where the

Court/Judicial Authority finds that the

arbitration agreement does not exist or is null

and void. In so far as the nature of

intervention is concerned, it is recommended

38

that in the event the Court/Judicial Authority

is prima facie satisfied against the argument

challenging the arbitration agreement, it

shall appoint the arbitrator and/or refer the

parties to arbitration, as the case may be. The

amendment envisages that the judicial

authority shall not refer the parties to

arbitration only if it finds that there does

not exist an arbitration agreement or that it

is null and void. If the judicial authority is

of the opinion that prima facie the arbitration

agreement exists, then it shall refer the

dispute to arbitration, and leave the existence

of the arbitration agreement to be finally

determined by the arbitral tribunal. However,

if the judicial authority concludes that the

agreement does not exist, then the conclusion

will be final and not prima facie……….”

37. The Report of the Commission on amendment to

Section 8 as well as Note thereon contains a Note,

which is to the following effect:-

“[NOTE: The words “such of the parties… to the

arbitration agreement” and proviso (i) of the

amendment have been proposed in the context of

the decision of the Supreme Court in Sukanya

Holdings Pvt. Ltd. v. Jayesh H. Pandya and

Anr., (2003) 5 SCC 531, – in cases where all

the parties to the dispute are not parties to

the arbitration agreement, the reference is to

be rejected only where such parties are

necessary parties to the action – and not if

they are only proper parties, or are otherwise

legal strangers to the action and have been

added only to circumvent the arbitration

agreement. Proviso (ii) of the amendment

contemplates a two- step process to be adopted

by a judicial authority when considering an

application seeking the reference of a pending

action to arbitration. The amendment envisages

that the judicial authority shall not refer the

39

parties to arbitration only if it finds that

there does not exist an arbitration agreement

or that it is null and void. If the judicial

authority is of the opinion that prima f acie

the arbitration agreement exists, then it shall

refer the dispute to arbitration, and leave the

existence of the arbitration agreement to be

finally determined by the arbitral tribunal.

However, if the judicial authority concludes

that the agreement does not exist, then the

conclusion will be final and not prima facie.

The amendment also envisages that there shall

be a conclusive determination as to whether 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

other party to produce the original arbitration

agreement or duly certified copy thereof in a

circumstance where the original arbitration

agreement or duly certified copy is retained

only by the other party.”

[NOTE: In many transactions involving

Government bodies and smaller market players,

the original/ duly certified copy of the

arbitration agreement is only retained by the

former. This amendment would ensure that the

latter class is not prejudiced in any manner

by virtue of the same.]”

38. The Commission proposed amendment in Section 11 by

adding sub- section (6A). In its Report, following Note

was submitted in the above context:-

“[NOTE: The proposed section 11 (6A) envisages

the same process of determination as is

reflected in the proposed amendment to section

8. Explanation 2 envisages that reference by

the High Court to any person or institution

designated by it shall not be regarded as a

40

delegation of judicial power. Explanation 3 has

been inserted with the hope and expectation

that High Courts would encourage the parties

to refer the disputes to institutionalize

arbitration by a professional Indian or

international arbitral institute.]”

39. After taking into consideration the Report of the

Law Commission, a Bill namely “The Arbitration and

Conciliation (Amendment) Bill, 2015” was submitted.

The Statement of Objects and Reasons of the Bill throws

considerable light on the Objects and Reasons of the

amendments. Relevant part of the Statement of Objects

and Reasons is as follows:-

“2. The Act was enacted to provide for speedy

disposal of cases relating to arbitration with

least court intervention. With the passage of

time, some difficulties in the applicability

of the Act have been noticed. Interpretation

of the provisions of the Act by courts in some

cases have resulted in delay of disposal of

arbitration proceedings and increase in

interference of courts in arbitration matters,

which tend to defeat the object of the

Act……………………..”

6. xxxxxxxxxxxxxxxxxxxxxxx

(iv) to provide that while considering any

application for appointment of arbitrator, the

High Court or the Supreme Court shall examine

the existence of a prima facie arbitration

agreement and not other issues;

xxxxxxxxxxxxxxxxxxxxx”

41

40. Notes on the Clauses on amendment in Section 8

reads as follows:-

“Clause 4 of the Bill seeks to amend section 8

of the principal Act to specify that the

judicial authority shall refer the parties to

arbitration unless it finds that prima facie

no valid arbitration agreement exits. A proviso

below sub- section (2 ) is inserted to provide

that where the original arbitration agreement

or certified copy thereof is not available with

the party who apply under sub- section (1 ), and

is retained by the other party, such party

shall file a copy of the arbitration agreement

along with application under sub- section (1 )

praying the Court to call upon the other party

to produce the original arbitration agreement

or its duly certified copy before 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 principal Act to provide that

appointment of arbitrator shall be made by the

Supreme Court or the High Court, as the case

may be, instead of the Chief Justice of India

or the Chief Justice of the High Court.

Subsection (6A) is inserted to provide that the

Supreme Court or the High Court while

considering application under sub- section (4 )

to (6 ) shall confine to the examination of an

arbitration agreement………………..”

42. Prior to above amendment, this Court in several

cases has interpreted Section 8. Several conditions

for exercising power under Section 8 were laid down by

this Court. In P. Anand Gajapathi Raju and Others Vs.

42

P.V.G. Raju (Dead) and Others, (2000) 4 SCC 539,

several conditions were noticed by this Court, which

are to be satisfied before Court can exercise its power

under Section 8. In paragraph 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 its

powers are:

(1) there is an arbitration agreement;

(2) a party to the agreement brings an action

in the court against the other party;

(3) subject- matter of the action is the same

as the subject- matter of the arbitration

agreement;

(4) the other party moves the court for

referring the parties to arbitration before it

submits his first statement on the substance

of the dispute.

Xxxxxxxxxxxxxxxxxx”

43. In Paragraph No. 8 of the judgment, it was further

stated that the language of Section 8 is peremptory and

it is, therefore, obligatory for the Court to refer the

parties to arbitration in terms of their arbitration

agreement.

43

44. In Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya

and Another, (2003) 5 SCC 531, this Court had occasion

to consider the ingredients of Section 8. This Court

noticed certain circumstances, where matter was not

required to be referred to the Arbitral Tribunal. In

Paragraph No. 12, 13 and 15, following has been held:-

“12. …………… Further, the matter is not required

to be referred to the Arbitral Tribunal, if:

(1) the parties to the arbitration agreement

have not filed any such application for

referring the dispute to the arbitrator; ( 2)

in a pending suit, such application is not

filed before submitting first statement on the

substance of the dispute; or (3 ) such

application is not accompanied by the original

arbitration agreement or duly certified copy

thereof………………………………..

13. Secondly, there is no provision in the Act

that when the subject- matter of the suit

includes subject- matter of the arbitration

agreement as well as other disputes, the matter

is required to be referred to arbitration.

There is also no provision for splitting the

cause or parties and referring the subject-

matter of the suit to the arbitrators.

15. The relevant language used in Section 8 is:

“in a matter which is the subject of an

arbitration agreement”. The court is required

to refer the parties to arbitration. Therefore,

the suit should be in respect of “a matter”

which the parties have agreed to refer and

which comes within the ambit of arbitration

agreement. Where, however, a suit is commenced

— “as to a matter” which lies outside the

arbitration agreement and is also between some

of the parties who are not parties to the

arbitration agreement, there is no question of

44

application of Section 8. The words “a matter”

indicate that the entire subject- matter of the

suit should be subject to arbitration

agreement. ”

45. Court further held that Section 8 does not admit

interpretation to partly referring the disputes to

arbitration. In Paragraph No.16, following was laid

down:-

“16. The next question which requires

consideration is — even if there is no

provision for partly referring the dispute to

arbitration, whether such a course is possible

under Section 8 of the Act. In our view, it

would be difficult to give an interpretation

to Section 8 under which bifurcation of the

cause of action, that is to say, the subject-

matter of the suit or in some cases bifurcation

of the suit between parties who are parties to

the arbitration agreement and others is

possible. This would be laying down a totally

new procedure not contemplated under the Act.

If bifurcation of the subject- matter of a suit

was contemplated, the legislature would have

used appropriate language to permit such a

course. Since there is no such indication in

the language, it follows that bifurcation of

the subject- matter of an action brought before

a judicial authority is not allowed.”

46. The law as declared by this Court in the above

cases was in existence when the Law Commission

submitted its 246

th

Report and Parliament considered

the Bill, 2015 for Amendment Act, 2016. The Law

Commission itself in its Report has referred to

45

amendment in Section 8 in context of decision of this

Court in Sukanya Holdings (P) Ltd. (supra) , which was

clearly noticed in the Note to Section 8 as extracted

above. The words “notwithstanding any judgment, decree

or order of the Supreme Court or any Court” added by

amendment in Section 8 were with intent to minimise the

intervention of judicial authority in context of

arbitration agreement. As per the amended Section

8(1), the judicial authority has only to consider the

question whether the parties have a valid arbitration

agreement? The Court cannot refuse to refer the

parties to arbitration “unless it finds that prima

facie no valid arbitration agreement exists” . The

amended provision, thus, limits the intervention by

judicial authority to only one aspect, i.e. refusal by

judicial authority to refer is confined to only one

aspect, when it finds that prima facie no valid

arbitration agreement exists. Other several

conditions, which were noticed by this court in various

pronouncements made prior to amendment were not to be

adhered to and the Legislative intendment was clear

departure from fulfilling various conditions as noticed

in the judgment of P. Anand Gajapathi Raju (supra) and

46

Sukanya Holdings (P) Ltd. (supra). Same Legislative

intendment is decipherable by amendment of Section 11

by adding sub-section (6A). Section 11(6A) is as

follows:-

11. Appointment of arbitrators.—

xxxxxxxxxxxxxxxxxxxxxxxx

[(6A) The Supreme Court or, as the case may

be, the High Court, while considering any

application under sub- section (4) or sub-

section (5) or sub- section (6), shall,

notwithstanding any judgment, decree or order

of any Court, confine to the examination of the

existence of an arbitration agreement.

47. The same words “notwithstanding any judgment,

decree or order of any Court” finds place in sub-

section (6A) of Section 11 and Supreme Court and High

Court is confined to the examination of the existe nce

of an arbitration agreement. This Court had occasion

to consider the amendment made in Section 11(6A) in

Duro Felguera, S.A. (supra). Justice Kurian Joseph in

his concurring opinion in Paragraph No. 48 has laid

down following:-

“48. Section 11(6- A) added by the 2015

Amendment, reads as follows:

“11. (6- A) The Supreme Court or, as the

case may be, the High Court, while

considering any application under sub-

47

section (4) or sub- section (5) or sub-

section (6), shall, notwithstanding any

judgment, decree or order of any court,

confine to the examination of the

existence of an arbitration agreement.”

(emphasis supplied)

From a reading of Section 11(6- A), the

intention of the legislature is crystal clear

i.e. the court should and need only look into

one aspect— the existence of an arbitration

agreement. What are the factors for deciding

as to whether there is an arbitration agreement

is the next question. The resolution to that

is simple— it needs to be seen if the agreement

contains a clause which provides for

arbitration pertaining to the disputes which

have arisen between the parties to the

agreement.”

48. Section 8 of the 1996 Act as amended also came for

consideration in Ameet Lalchand Shah and Others Vs.

Rishabh Enterprises and Another, AIR 2018 SC 3041:

(2018) 6 SCALE 621: 2018 SCC Online SC 487. This Court

noticed the object and purpose of amended Section 8.

In Paragraph No. 29 to 31, following has been laid

down:-

“29. "Principally four amendments to Section

8(1) have been introduced by the 2015

Amendments- (i) the relevant "party" that is

entitled to apply seeking reference to

arbitration has been clarified/amplified to

include persons claiming "through or under"

such a party to the arbitration agreement; (ii)

scope of examination by the judicial authority

is restricted to a finding whether "no valid

arbitration agreement exists" and the nature

48

of examination by the 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 be presented has been defined

to mean "the date of" submitting the first

statement on the substance of the dispute; and

(iv) the amendments are expressed to apply

notwithstanding any prior judicial precedent.

The proviso to Section 8(2) has been added to

allow a party that does not possess the

original or certified copy of the arbitration

agreement on account of it being retained by

the other party, to nevertheless apply u nder

Section 8 seeking reference, and call upon the

other party to produce the same." (Ref: Justice

R.S. Bachawat's Law of Arbitration and

Conciliation, Sixth Edition, Vol. I (Sections

1 to 34) at page 695 published by LexisNexis).

31. The language of amendment to Section 8 of

the Act is clear that the amendment to Section

8(1) of the Act would apply notwithstanding any

prayer, judgment, decree or order of the

Supreme Court or any other Court. The High

Court laid emphasis upon the word ".....unless

it finds that prima- facie no valid agreement

exists". The High Court observed that there is

no arbitration agreement between Astonfield

and Rishabh. After referring to Sukanya

Holdings and the amended Section 8 and Section

45 of the Act, the High Court pointed out the

difference in language of Section 8 and Section

45 of the Act. The High Court distinguished

between Sukanya Holdings and Chloro Controls,

and observed that Sukanya Holdings was not

overruled by Chloro Controls….”

49. This Court, thus, in the above cases has noticed

that amendments are expressed to apply notwithstanding

any prior judicial precedents, but the scope of

amendment under Section 8(1) was confined to three

49

categories as has been noted in Paragraph No.29.

Amendments under Section 8, thus, were aimed to

minimise the scope of judicial authority to refuse

reference to arbitration and only ground on which

reference could have been refused was that it prima

facie finds that no valid arbitration agreement exists.

Notwithstanding any prior judicial precedents referred

to under Section 8(1) relates to those judicial

precedents, which explained the discretion and power

of judicial authority to examine various aspects while

exercising power under Section 8.

50. The Legislative intent and object were confined to

only above aspects and was not on those aspects, where

certain disputes were not required to be referred to

arbitration. Can it be said that after amendment under

Section 8(1), the law laid down by this Court in

reference to Section 2(3), where large number of

categories have bee n held to be non- arbitrable has been

reversed or set at naught. Neither any such

Legislature intendment was there nor any such

consequence was contemplated that law laid down by this

50

Court in context of Section 2(3) has to be ignored or

reversed.

51. While carrying out amendment under Section 8(1) of

Act, 199 6, the statutes providing additional

remedies/special remedies were not in contemplation.

The legislative intent is clear that judicial

authority’s discretion to refuse arbitration was

minimise in respect of jurisdiction exercise by

judicial authority in reference to Section 8. The

amendment was also aimed to do away with special or

additional remedies is not decipherable from any

material. The Law Commission 246

th

Report, the Statement

and Objects of Bill and the notes on clauses do not

indicate that amendments were made for overriding

special/additional remedies provided under different

statutes. In the event, the interpretation as put by

the learned counsel for the petitioner is accepted,

Section 8 has to be read to override the law laid down

by this Court in reference to various

special/additional jurisdictions as has been adverted

to and noted in judgment of this Court in Booz Allen

51

and Hamilton Inc.(supra) which was never the intent of

amendment in Section 8.

52. The amendment in Section 8 cannot be given such

expansive meaning and intent so as to inundate entire

regime of special legislations where such disputes were

held to be not arbitrable. Something which legislation

never intended cannot be accepted as side wind to

override the settled law. The submission of the

petitioner that after the amendment the law as laid

down by this Court in National Seeds Corporation

Limited(supra) is no more a good law cannot be

accepted. The words “notwithstanding any judgment,

decree or order of the Supreme Court or any Court” were

meant only to those precedents where it was laid down

that the judicial authority while making reference

under Section 8 shall entitle to look into various

facets of the arbitration agreement, subject matter of

the arbitration whether the claim is alive or dead,

whether the arbitration agreement is null and void. The

words added in Section 8 cannot be meant for any other

meaning. Reference is also made to the judgment of this

Court in Vimal Kishor Shah and others vs. Jayesh Dinesh

52

Shah and others, (2016) 8 SCC 788. This Court in the

above case 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 and

Hamilton Inc.(supra) with approval in paragraphs 40 and

42 which is to the following effect:

“40. Before we examine the scheme of the Trusts

Act, 1882, we consider it apposite to take note

of the case law, which has a bearing on this

issue. The question came up for consideration

before this Court in Booz Allen & Hamilton Inc.

v. SBI Home Finance Ltd. as to what is the

meaning of the term “arbitrability” and

secondly, which type of disputes are capable

of settlement by arbitration under the Act.

Their Lordships framed three questions to

answer the question viz.: (SCC p. 546, para 34)

(1) Whether the disputes having regard to

their nature could be resolved by a

private forum chosen by the parties

(Arbitral Tribunal) or whether such

disputes exclusively fall within the

domain of public fora (courts)?;

(2) Whether the disputes are covered by the

arbitration agreement?; and

(3) Whether the parties have referred the

disputes to arbitrator?”

42. The question to be considered in this

appeal is whether the disputes relating to

affairs and management of the Trust including

the disputes arising inter se trustees,

beneficiaries in relation to their

53

appointment, powers, duties, obligations,

removal, etc. are capable of being settled

through arbitration by taking recourse to the

provisions of the Act, if there is a clause in

the trust deed to that effect or such disputes

have to be decided under the Trusts Act, 1882

with the aid of forum prescribed under the said

Act?”

53. After noticing the issues which have arisen in

the above case this Court laid down following in

paragraphs 51 and 53:

“51. The principle of interpretation that

where a specific remedy is given, it thereby

deprives the person who insists upon a remedy

of any other form of remedy than that given by

the statute, is one which is very familiar, and

which runs through the law, was adopted by this

Court in Premier Automobiles Ltd. v. Kamlekar

Shantaram Wadke while examining the question

of bar in filing civil suit in the context of

remedies provided under the Industrial

Disputes Act (see G.P. Singh, Principles of

Statutory Interpretation, 12th Edn., pp. 763-

64). We apply this principle here because, as

held above, the Trusts Act, 1882 creates an

obligation and further specifies the rights and

duties of the settlor, trustees and the

beneficiaries apart from several conditions

specified in the trust deed and further

provides a specific remedy for its enforcement

by filing applications in civil court. It is

for this reason, we are of the view that since

sufficient and adequate remedy is provided

under the Trusts Act, 1882 for deciding the

disputes in relation to trust deed, trustees

and beneficiaries, the remedy provided under

the Arbitration Act for deciding such disputes

is barred by implication.

54

53. We, accordingly, hold that the disputes

relating to trust, trustees and beneficiaries

arising out of the trust deed and the Trusts

Act, 1882 are not capable of being decided by

the arbitrator despite existence of

arbitration agreement to that effect between

the parties. A fortiori, we hold that the

application filed by the respondents under

Section 11 of the Act is not maintainable on

the ground that firstly, it is not based on an

“arbitration agreement” within the meaning of

Sections 2(1)(b ) and 2(1)(h ) read with Section

7 of the Act and secondly, assuming that there

exists an arbitration agreement (Clause 20 of

the trust deed) yet the disputes specified

therein are not capable of being referred to

private arbitration for their adjudication on

merits.”

54. This Court held that disputes within the trust,

trustees and beneficiaries are not capable of being

decided by the arbitrator despite existence of

arbitration agreement to that effect between the

parties. This Court held that the remedy provided under

the Arbitration Act for deciding such disputes is

barred by implication. The ratio laid down in the above

case is fully applicable with regard to disputes raised

in consumer fora.

55. We may, however, hasten to add that in the event a

person entitled to seek a n additional special remedy

provided under the statutes does not opt for the

additional/special remedy and he is a party to an

55

arbitration agreement, there is no inhibition in

disputes being proceeded in arbitration. It is only the

case where specific/special remedies are provided for

and which are opted by an aggrieved person that

judicial authority can refuse t o relegate the parties

to the arbitration.

56. We, thus, do not find that any error has been

committed by the NCDRC in rejecting the application

filed by the appellant under Section 8. No exception

can be taken to the dismissal of the appeals by this

Court against the judgment of NCDRC. No ground is made

out to review the order dated 13.02.2018. The review

petitions are dismissed.

......................J.

( UDAY UMESH LALIT )

......................J.

( ASHOK BHUSHAN

)

New Delhi,

December 10, 2018.