Consumer VOICE

Builders can’t force buyers to go for arbitration or mediation

Here is some good news for buyers of real estate property. India’s Apex Court has ruled that real estate players cannot force buyers to settle their disputes through arbitration by stopping them from approaching consumer forums.  It is a well settled law that arbitration agreements do not bar the jurisdiction of the National Consumer Disputes Redressal Commission ('NCDRC') and other consumer forums. However, this issue was reconsidered at length by a Full Bench of the NCDRC, in Aftab Singh v Emaar MGF Land Limited & Anr [Consumer Case No 701 of 2015]  in view of the amendments to the Arbitration Act and Conciliation Act 1996 ('the Amended Act').

Real estate buyers can now make a choice between arbitration and consumer forum like NCDRC

Case of Aftab Singh v Emaar MGF Land Limited & Anr

In the case of Aftab Singh v Emaar MGF Land Limited & Anr [Consumer Case No 701 of 2015] , 30 individual cases were filed against a Builder Emaar MGF Land Limited and one case against another builder where the Complainants had booked residential villas or flats or plots in the project of the builders. Every agreement contained an arbitration clause in it. The grievance of the buyers was that the builder failed to deliver possession of the real estate within the time stipulated by the agreement between them and thus filed complaints before the Single Member of the NCDRC, seeking directions to the builders for delivery and possession of the villas, etc. and/or, in alternative, refund the amounts deposited by them, along with compensation. On the other hand, the Builders filed an application under Section 8 of Arbitration Act praying for reference to arbitration as the agreement contained a valid arbitration clause.

Judgement

While delivering the judgment of Aftab Singh v Emaar MGF Land Limited & Anr [Consumer Case No 701 of 2015], Commission relied on Booz Allen Hamilton Inc v SBI Home Finance Ltd [(2011) 5 SCC 532], where the SC said that the Arbitral Tribunals are private forum chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public forum constituted under the laws of the country.

The bench further observed, "the disputes which are to be adjudicated and governed by statutory enactments, established for specific purpose to sub-serve a particular public policy, are not arbitrable."

The NCDRC finally held that in light of the overall architecture of the Consumer Protection Act and Court-evolved jurisprudence, amended sub-section (1) of Section 8 cannot be construed as a mandate to the Consumer Forum, constituted under the CPA, to refer the parties to arbitration in terms of the Arbitration Agreement. Applications of builders were dismissed and each of the cases referred back to the respective NCDRC benches for adjudication. 

What is Arbitration?

In simpler words arbitration is mediation or out of court settlement of disputes between two parties.

What is Arbitration Act?

Section 8 of the amended Arbitration Act says a judicial authority will refer for arbitration only those cases where there is an arbitration agreement, and one of the parties files an application seeking arbitration before submitting their first statement on dispute.

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3 Comments

  1. bharat bhushan sharma, Advocate
    May 19, 2018
    Reply

    lethargic attitude of most of consumers with respect to filing and pursuing complaints to redress what is wrong, is a cause of concern and needs to be redressed by pro-active efforts of consumer activists. work of this forum is appreciated.

  2. swapan ganguly
    March 23, 2018
    Reply

    IN CONTINUATION WITH PREVIOUS COMPLAIN I AM FORCED TO SAY THAT MY MOTHER HAS GONE TO WORST SITUATION AND FIGHTING WITH HER LIFE SINCE LAST ONE YEAR DUE TO CALLOUS ACTIVITIES OF ‘BENGAL SHELTER, HOUSING DEVELOPMENT , THERE IS NO OTHER OPTION BEFORE US EXCEPT CLAIMING HUGE COMPENSATION BEFORE HONOURABLE ‘CONSUMER COURT’ AT THE COST OF MY MOTHER’S LIFE. THANKS AND REGARDS SWAPAN GANGULY, PURBARAG-1, BLOCK- 4, FLAT- 5C, ‘SISIR KUNJA’, MADHYAMGRAM, KOLKATA- 700129

  3. swapan ganguly
    March 23, 2018
    Reply

    Swapan Ganguly
    12/26/16
    to mkt_bengalshel.
    sir, i would like to inform you that the following complaint should be taken care into 1) lift gate is fixed in such a way that wheel chair can not not be taken inside lift with invalid patient which is very sensitive and dangerous. 2) i have not received letter box key till now 3) care taker is not responding in time and taking care of private car kept in car parking.as a result finding out side interference with private car and scooter. therefore i request you to look into the matter. thanking you swapan ganguly purbarag- 1/ 4 flat- 5 c contact- 8420734955/ 9062950984

    Swapan Ganguly
    12/26/16
    to mkt_bengalshel.

    Swapan Ganguly
    1/21/17
    to mkt_bengalshel.
    sir, refer my earlier message dtd 26.12.16 i would like to inform you that the following complaint should be taken care very seriously. lift gate is fixed in such a way that wheel chair can not not be taken inside lift with invalid patient which is very sensitive and dangerous.so, again i remind you to look into the matter urgently to avoid any future complications related to any untoward incidents.

    Swapan Ganguly
    2/12/17
    to mkt_bengalshel.
    I AM RESIDING ON 5TH FLOOR AT SISIR KUNJ APARTMENT ON JESSORE ROAD AT MADHYAMGRAM. VERY OFTEN LIFT’ IS BECOMING OUT OF SERVICE. NO MECHANICS ARE ATTENDING IMMEDIATELY TO RECTIFY THE SAME. IF ANY UNTOWARD INCIDENT TAKES PLACE WHO WILL BE ANSWERABLE? MANY TIMES I HAVE REPORTED THIS MATTER BUT NEITHER SITE NOR ANY ONE OF ‘BENGAL SHELTER’ IS TAKING SERIOUSLY. THIS IS IS MOST DANGEROUS . PLEASE TAKE IMMEDIATE ACTION TO AVOID ANY SERIOUS COMPLICATION IN FUTURE. AGAIN REMINDING PLEASE DO NOT TAKE THIS ISSUE LIGHTLY RATHER KEEPING ON TOP PRIORITY LIST FOR THE SAFETY OF RESIDENTS. THANKS.

    Swapan Ganguly
    2/12/17
    to mkt_bengalshel.

    Swapan Ganguly
    4/6/17
    to mkt_bengalshel.
    SIR/MADAM, REFER MY EARLIER MESSAGE REGARDING IMPROPER INSTALLATION OF LIFT DOOR AT PURBARAG-1,BLOCK-4.AS A RESULT FACING LOT OF SERIOUS PROBLEM WITH MY BED RIDDEN MOTHER. BECAUSE WHEEL CHAIR CAN NOT BE TAKEN INSIDE NO INITIATIVE HAS BEEN TAKEN TILL NOW. IF ANY THING GOES WRONG WITH MY MOTHER BENGAL SHELTER WILL BE RESPONSIBLE..FURTHER SHOULD NOT ASK FOR MAINTENANCE CHARGES.I CAN NOT UNDERSTAND WHY NO ACTION WHEN THIS IS AN MOST IMPORTANT ISSUE AND QUESTION OF AN BEDRIDDEN MOTHER? THANKS.

    Swapan Ganguly
    5/16/17
    to mkt_bengalshel.
    SIR, DUE TO CARELESSNESS BY THE SERVICES OF CARETAKER, ELECTRICIAN AND WITH LIFT DOOR MY OLD BED RIDDEN MOTHER IS BEING HARASSED BADLY. IF ANY THING GOES WORST WITH MY MOTHER BENGAL SHELTER’ HAS TO TAKE RESPONSIBILITY. THANKS PR 1/4, FLAT- 5C

    Swapan Ganguly
    6/28/17
    to mkt_bengalshel.

    Swapan Ganguly
    7/15/17
    to mkt_bengalshel.
    SIR, REFER MY EARLIER MESSAGES/ MAILS IN THE MONTH OF APRIL ,MAY AND JUNE REGARDING LIFT DOOR. AS A RESULT OF WHICH I CAN NOT TAKE MY OLD INVALID BED RIDDEN MOTHER FROM 5TH FLOOR TO DOWN WITH THE HELP OF WHEEL CHAIR EVEN CAN NOT TAKE TO THE HOSPITAL WHICH IS FREQUENTLY NEEDED FOR HER FREQUENT CHECK UP AND IN CASE OF EMERGENCY. IN SPITE OF REPEATED MAILING ‘BENGAL SHELTER’ IS NOT AT ALL TAKING THIS ISSUE AS A SERIOUS MATTER AND THEY ARE LEAST BOTHERED. THEREFORE, IF ANY THING GOES WRONG WITH HER LIFE ‘BENGAL SHELTER’ HAS TO TAKE THE LIABILITY. THANKS WITH REGARDS

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