ARBITRATION TRIBUNAL OR CONSUMER FORUM - A CONSUMER’S DILEMMA*

*Published in "LEGAL NEWS & VIEWS", Vol. 19, No. 6, June 2005, pp. 14-15 ( A monthly publication of Indian Social Institue, New Delhi - 110 003)

When a potential consumer goes to buy some goods e.g. electronics or vehicle for private use etc. or to hire any service e.g. insurance, electricity or housing construction, etc., he may be required to sign on an agreement paper in which an arbitration clause is also appended. In case a dispute arises out of the transaction, the question pops up whether the aggrieved consumer can approach the Consumer Forum/Commissions or he is bound to be dragged in arbitration proceedings. In other words, whether he has the option of seeking relief in the Consumer Forum/Commissions by avoiding the arbitration.

On the one hand, Section 5 of The Arbitration and Conciliation Act, 1996("Act of 1996") provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part I, no judicial authority shall intervene except where so provided in that Part. On the other hand, Section 3 of The Consumer Protection Act, 1986 ("Act of 1986") provides that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

It is well settled principle of law that a special enactment or rule cannot be held to be overridden by a later general enactment or simply because the latter opens up with a non-obstante clause. There should be a clear inconsistency between the two before giving an overriding effect to the non-obstante clause (See R. S. Raghunath v. State of Karnataka, AIR 1992 SC 81, pp. 147, 148). It is apparent that there is no inconsistency between the two because the Act of 1986 provides an additional remedy to the consumers only, whereas the Act of 1996 affords an alternative method of settling disputes to general civil litigants.

Moreover, main objective of the Act of 1986 is to provide for the better protection of the interest of the consumers and for that purpose to provide for better redressal mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. A three-tier quasi-judicial machinery is set up at the District, State and Central levels. These quasi-judicial bodies observe principles of natural justice and have been empowered to give relief of specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of orders given by quasi-judicial bodies have also been provided. The Act of 1986 enables a consumer to ventilate his grievances before a forum where justice can be done without any procedural wrangles and hyper technicalities. Having due regard to the scheme of the Act and purpose sought to be achieved to protect the interest of the consumers, it is justified and warranted that the provisions are interpreted broadly, positively and purposefully to give meaning to additional/ extended jurisdiction.

In the case of Skypak Couriers Ltd. V. Tata Chemicals Ltd. (2000) 5 SCC 294, the Apex Court observed that the modern methods of advertisement in media, influence the mind of the consumers and notwithstanding the manufacturing defect or imperfection in the quality, a consumer is tempted to purchase the goods. The Hon’ble Court laid down that 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 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.

Recently in Secretary Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (Dead) through L. R. & Ors, I (2004) CPJ 1 (SC), the Apex Court gave the reasoning for the non ouster of jurisdiction of Consumer Disputes Redressal Agencies in spite the presence of non obstante clause in the Act of 1996. It observed that the remedies that are available to an aggrieved party under the Act of 1986 are wider. For instance, in addition to granting a specific relief the Forums under the Act of 1986 have jurisdiction to award compensation for the mental agony, suffering, etc., which possibly could not be given under other statutes.

While awarding damages, the Forums make an attempt to serve the ends of justice aiming not only at recompensing the individual but also to bring about a qualitative change in the attitude of trader or service provider (See State of Karnataka v. Vishwabharathi House Building Coo. Society and Ors. (2003)2 SCC 412, pp. 426-427). It attempts to remove the helplessness of a consumer which he faces against powerful, influential and well-organized sectors of manufacturers and traders.

The Forums under this benevolent legislation supplements and not supplants the jurisdiction of the civil courts or other statutory authorities. Therefore, an arbitration clause in a contract cannot debar an aggrieved consumer from knocking the door of the District Forum or the State/National Commission as the case may be and seek shelter under the Act enacted specially and exclusively to protect him.
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© Praveen Kumar Jain
Advocate, Supreme Court of India

+91 98712 78525