Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Reserved on: 24 October, 2017
th
Pronounced on: 7 November, 2017
+ FAO 395/2017 & CM No. 37063-37064/2017
EMAAR MGF LAND LTD & ANR ..... Appellants
Through: Mr. A.S Chandhiok, Sr. Adv.
with Mr. Aditya Narain, Mr.
Jugal Wadhwa, Mr. Arnav
Narain, Ms. Anushree Narain,
Mr. Arjun Jain, Ms. Sweta
Kakkad, Mr. Gaurav Sharma,
Mr. Mishra Rajshekhar, Mr.
Mr. Anukrit Gupta and Ms.
Pallavi Kumar, Advs.
versus
AFTAB SINGH ..... Respondent
Through: None
+ FAO 396/2017&CM Nos. 37065-66/2017
EMAAR MGF LAND LTD & ANR ..... Appellants
Through: Mr. A.S Chandhiok, Sr. Adv.
with Mr. Aditya Narain, Mr.
Jugal Wadhwa, Mr. Arnav
Narain, Ms. Anushree Narain,
Mr. Arjun Jain, Ms. Sweta
Kakkad, Mr. Gaurav Sharma,
Mr. Mishra Rajshekhar, Mr.
Mr. Anukrit Gupta and Ms.
Pallavi Kumar, Advs.
FAO No. 395-96/2017 Page 1 of 9
versus
TANU BATRA ..... Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE R.K.GAUBA
O R D E R
1. These appeals have been brought before this Court invoking
Section 37(1)(a) of the Arbitration and Conciliation Act, 1996, as
amended by Arbitration & Conciliation (Amendment) Act, 2015, to
assail two orders of the National Consumer Disputes Redressal
Commission (NCDRC), one dated 13.07.2017 of a larger bench (of
three members) answering a question of law on a reference earlier
made by a bench presided over by a single member and the other
dated 28.08.2017 of the bench which had earlier made the said
reference, thereby dismissing the identical applications of the
appellants herein seeking a reference under Section 8 of Arbitration
and Conciliation Act, 1996 of the disputes which are the subject
matter of consumer complaints of the respondents against the
appellants, presently pending consideration.
2. It may be mentioned here that the consumer complaints were
instituted by the respective respondents before the NCDRC with
reference, inter alia, to similar buyer’s agreements that had been
entered upon by the parties wherein the said complainants have raised
consumer disputes primarily on the ground of failure on the part of the
appellants to deliver timely possession of the residential villas (flats /
FAO No. 395-96/2017 Page 2 of 9
plots, etc.) being developed by it in Mohali (and other places) seeking
directions either for immediate delivery and possession or, in the
alternative, for other reliefs including compensation. It appears that
upon being served with the notices, the appellants submitted the
applications under Section 8 of the Arbitration and Conciliation Act,
1996 referring to an arbitration clause in each such buyer’s agreement
and praying for a reference accordingly. The bench presided over by a
single member had referred, to the larger bench, the question of law as
to whether Section 8(1) of the Arbitration and Conciliation Act, 1996,
as amended by Arbitration & Conciliation (Amendment) Act, 2015
mandates the consumer forum constituted under the Consumer
Protection Act, 1986 to refer the parties to arbitration in terms of a
valid arbitration agreement notwithstanding other provisions of both
the said enactments. The larger bench, by its order dated 13.07.2017,
answered the said question of law in the negative holding that the
arbitration clause in such agreements between the complainants and
the builder cannot circumscribe the jurisdiction of consumer fora
notwithstanding the amendment made in Section 8 of Arbitration and
Conciliation Act, 1996. Following the said decision of the larger
bench, the bench presided over by the single member, by identical
orders passed on the two said complaints, on 28.08.2018 dismissed the
applications of the appellants under Section 8 of the Arbitration and
Conciliation Act, 1996 thereby declining to make such reference.
3. The first and foremost issue that needs to be considered at the
threshold is as to whether these appeals can be maintained before this
FAO No. 395-96/2017 Page 3 of 9
Court. The learned senior counsel for the appellants has been heard at
length and the record has been perused.
4. Section 37 of the Arbitration and Conciliation Act, 1996, to the
extent relevant here, reads as under:-
“ (1) An appeal shall lie from the following orders (and
from no others) to the Court authorised by law to hear
appeals from original decrees of the Court passing the
order, namely:—
(a) refusing to refer the parties to arbitration under
Section 8;
”
xxx
5. It may be mentioned here that clause (a) of sub-section (1) of
Section 37, as quoted above, was inserted (besides other clauses) by
amendment of the statute, with retrospective effect from 23.10.2015,
by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of
2016).
6. NCDRC is a forum established by the Central Government
under Section 9(c) of the Consumer Protection Act, 1986. It exercises
jurisdiction envisaged in Section 21 wherein it may, inter alia,
entertain complaints where the value of the goods or services and
compensation, if any, claimed exceeds rupees one crore. [Section
21(a)(i)]. The orders passed by NCDRC in exercise of such
jurisdiction are subject to appeal before the Supreme Court and for
this reference may be made to Section 23 which, to the extent relevant,
may be quoted as under:-
“ Appeal . — Any person, aggrieved by an order made by
the National Commission in exercise of its powers
conferred by sub-clause (i) of clause (a) of section 21,
FAO No. 395-96/2017 Page 4 of 9
may prefer an appeal against such order of the Supreme
Court within a period of thirty days from the date of the
order:
xxx”
7. It is the contention of the appellants that Section 37 of the
Arbitration and Conciliation Act, 1996 was amended in 2015 so as to
permit the remedy of appeal against an order of the judicial authority
declining to make a reference of the dispute to Arbitration under
Section 8 so as to mirror it with the existing provision contained in
Section 50. It may be mentioned here that Section 50 finds place in
the first chapter of the second part of the Arbitration and Conciliation
Act, 1996 and relates primarily to the enforcement of Foreign Awards
(New York Convention Awards). It is the submission of the
appellants that while considering an application for reference under
Section 8 of the Arbitration and Conciliation Act, 1996, the judicial
authority exercises powers conferred upon it by the said statute and
not such powers as are exercisable by it in terms of the enactment
under which the proceedings or the lis has been initiated before it.
Arguing that the Arbitration and Conciliation Act, 1996 constitutes
self-contained, exhaustive and comprehensive code, it has been
submitted that the provisions only of the said enactment could be
looked into to ascertain whether an order declining to make a
reference (to arbitration) can be challenged thereunder. It is the
contention of the appellants that Section 37(1)(a) of the Arbitration
and Conciliation Act 1996 vests, in the appellants, a statutory right to
prefer an appeal before this Court and correspondingly confers, upon
FAO No. 395-96/2017 Page 5 of 9
this court, the appellate jurisdiction to entertain such an appeal,
notwithstanding the remedy of appeal before the Supreme Court under
Section 23 of the Consumer Protection Act 1986 for the reason that
NCDRC, while passing the impugned orders, has exercised
jurisdiction conferred on it not by the Consumer Protection Act 1986
but by virtue of Section 8 of the Arbitration and Conciliation Act,
1996.
8. Section 8 of the Arbitration and Conciliation Act, 1996, to the
extent relevant here, may be quoted as under :-
“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.
xxx”.
9. Noticeably, while conferring the jurisdiction to refer the parties
to a dispute to arbitration, the law refers to the forum as a “judicial
authority”, and not a “court”. It is trite that the expression “judicial
authority”, also used in Section 5, may encompass within its fold not
only a court but also a tribunal. [see SBP & Co. Vs. Patel Engg. Ltd.,
(2005) 8 SCC 618; Morgan Securities & Credit (P) Ltd. Vs. Modi
Rubber Ltd., (2006) 12 SCC 642 ; Modi Korea Electro Communication
Ltd. Vs. Eppcon Consultants Pvt. Ltd. 2000 (supp.) Arb. Law Reporter
FAO No. 395-96/2017 Page 6 of 9
618 and Sudershan Chopra & Ors. vs. Vijay Kumar Chopra & Ors.
(2003) 117 Comp. Cases 660 ].
10. There can be no quarrel with the proposition that while
considering an application for the parties to a dispute to be referred to
arbitration on the ground that it is subject to an arbitration agreement
in terms of Section 8(1), the judicial authority exercises the
jurisdiction conferred upon it by the Arbitration and Conciliation Act,
1996 and not the jurisdiction it exercises under the law whereunder it
has been established. [see Sundaram Finance Ltd. vs. T. Thankam
(2015) 14 SCC 444 ; State of Goa Vs. Praveen Enterprises, 2012 (12)
SCC 581 ; Today Hotels (New Delhi) Pvt. Ltd. Vs. Intecture India
Designs Pvt. Ltd., 2016 (154) DRJ 567 (DB) ; and Cornos Steels Pvt.
Ltd. (Mumbai) Vs. Lu Qin (Hong Kong), AIR 2015 Bom. 206 (FB) ].
11. Reference to Section 50 of the Arbitration and Conciliation Act,
1996, in the opinion of this court, in the present context, is mis-placed.
Sections 45 and 48 which fall in the first chapter of second part of the
enactment relate to power of a judicial authority to refer parties to
arbitration and the conditions for enforcement of foreign awards,
refusal on the part of the judicial authority or the court respectively to
exercise such jurisdiction being amenable to appeal to the court
“ authorised by law to hear appeals from such order ”. Unlike Section
50, for purposes of the remedy of appeal under the first part of the
Arbitration and Conciliation Act, 1996, as envisaged in Section 37 (1),
the appellate court is described as the one “ authorised by law to hear
appeals from original decrees of the court passing the order ”.
FAO No. 395-96/2017 Page 7 of 9
12. From the context in which the expression “ court authorised by
law to hear appeals ” has been used in Section 37(1), it is clear that it
cannot be a reference to the “court”, the meaning of which word is
defined in Section 2(1)(e) in as much as the said definition clause
relates to the forum of first instance (original jurisdiction) and not the
forum which is authorized to hear the appeals.
13. The remedy of appeal was provided in Section 37(1) till 2015
Amendment against orders of a court with reference to the jurisdiction
conferred on the “court” (as defined in Section 2) for “ interim
measures ” (under Section 9) or to consider “ setting aside an arbitral
award ” (under Section 34) only. The law then did not conceive of
appeal against order making or refusing a reference to arbitration
(under Section 8). This is why the provision in Section 37(1) prior to
its amendment was not concerned with act of any forum except a
“court”. After 2015 amendment, when the reference or refusal to make
over to arbitration has been additionally made subject to appeal, the
words “ the court passing the order ” appearing in Section 37(1)
acquire new dimension and need to be properly construed so as to
harmonise them with Section 8 which confers the jurisdiction to pass
the order that may be challenged in appeal. Since Section 8 does not
restrict such a power to a “court” but extends it to every “judicial
authority”, the forum conceived by the expression “ the court passing
the order ” under the amended law – Section 37(1)(a) – has to be read
contextually and understood to connote “ the judicial authority ” which
passed the order making or refusing the reference. The reference to
“ original decrees ” in the opinion of this court, is meant to convey a
FAO No. 395-96/2017 Page 8 of 9
decision taken by a court of first instance in exercise of its original
jurisdiction.
14. If construed as above, the appeal against the order of NCDRC
(making or) refusing the reference of the dispute to arbitration cannot
be brought before this court since appeals against orders of said forum
lie before the Supreme Court. NCDRC is a tribunal and not a court.
This court is not authorised by the law to hear appeals from the orders
passed by NCDRC in exercise of its original jurisdiction. By virtue of
Section 23 of the Consumer Protection Act, 1986, such appeal is
available under the said law, as noted earlier, only before the Supreme
Court. Therefore, the words “ the court authorised by law to hear
appeals ” in present cases essentially mean “the Supreme Court”.
15. For the foregoing reasons, this court holds that these appeals
under Section 37(1) of the Arbitration and Conciliation Act, 1996
have been wrongly brought before this court. The same, therefore,
cannot be entertained here and are consequently hereby returned to be
presented before the appropriate appellate court.
(R.K. GAUBA)
JUDGE
NOVEMBER 07, 2017
nk/yg
FAO No. 395-96/2017 Page 9 of 9