M/s Emaar MGF Land Limited v. Aftab Singh
Background
A homebuyer, Aftab Singh, had booked a villa with Emaar MGF in Mohali, Punjab under a buyer's agreement that contained an arbitration clause. When a dispute arose over possession and payment adjustments, he filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC) instead of invoking arbitration. Emaar sought to force the dispute into arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, but the NCDRC held that consumer disputes are not arbitrable and rejected the application; the Supreme Court had earlier dismissed Emaar's appeal against that ruling, and Emaar then filed this review petition asking the Court to reconsider its own decision.
Decision Breakdown
Relying on the established principle that where a statute creates a specific/special remedy for a category of disputes, a party entitled to that remedy cannot be forced into arbitration instead, the Court held that consumer disputes remain within the jurisdiction of consumer fora even where the underlying contract contains an arbitration clause, so long as the consumer has chosen to invoke the Consumer Protection Act's remedy. Finding no error in its earlier ruling on this point, the Court dismissed the review petitions, confirming the disputes as non-arbitrable and rejecting the appellant's recourse to Section 8 of the Arbitration Act a second time.
Lesson Learnt
A builder-buyer or similar arbitration clause in a contract cannot be used to force a consumer out of the consumer courts, where the law gives consumers a specific additional remedy, they remain free to use it instead of arbitration, even if they had earlier signed an arbitration agreement.