SUPREME COURT OF INDIA
K. Ramaswamy & G.B. Pattanaik, JJ.
FAIR AIR ENGINEERS PVT. LTD. & ANR.—Appellants
versus
N.K. MODI—Respondent
Civil Appeal No. 11459 of 1996—Decided on 20.8.1996
CONSUMER PROTECTION ACT - ARBITRATION - STAY OF PROCEEDINGS - JURISDICTION OF CONSUMER FORUMS - JUDICIAL AUTHORITIES - SECTION 34 OF THE ARBITRATION ACT, 1940 - INTERPRETATION - ADDITIONAL REMEDY - DISCRETION OF FORUMS - OBJECT OF THE ACT.
Fact of the Case:
The appellant and respondent entered into a contract for the installation of a centrally air-conditioned plant in the respondent's residential house in New Delhi. The appellant allegedly breached the contract, and the respondent filed a complaint before the State Commission seeking compensation for deficiency in service. The State Commission stayed the proceedings and relegated the parties to arbitration. The appellant challenged this order before the National Consumer Disputes Redressal Commission, which upheld the State Commission's decision.
Finding of the Court:
The Supreme Court held that the proceedings before the District Forums, State Commission, and National Commission are legal proceedings, and the authorities have the trappings of judicial authorities. The Court also held that Section 34 of the Arbitration Act does not confer an automatic right to stay proceedings before these Forums and that it is a matter of discretion for the Forums to decide whether to stay the proceedings or proceed with the matter.
Issues: 1. Whether the proceedings before the District Forums, State Commission, and National Commission are legal proceedings and the authorities have the trappings of judicial authorities? 2. Whether Section 34 of the Arbitration Act confers an automatic right to stay proceedings before these Forums? 3. Whether the Forums created under the Consumer Protection Act are bound to refer disputes to arbitration pursuant to a contract entered into between the parties?
Ratio Decidendi: 1. The Court held that the proceedings before the District Forums, State Commission, and National Commission are legal proceedings, and the authorities have the trappings of judicial authorities, based on the provisions of the Consumer Protection Act, which confer powers similar to those of a Civil Court and deem the proceedings to be judicial proceedings. 2. The Court held that Section 34 of the Arbitration Act does not confer an automatic right to stay proceedings before these Forums, as the Forums have the discretion to stay the proceedings or proceed with the matter, considering the object of the Consumer Protection Act and the need to provide inexpensive and expeditious consumer service. 3. The Court held that the Forums created under the Consumer Protection Act are not bound to refer disputes to arbitration pursuant to a contract entered into between the parties, as the Act intends to provide an additional remedy to consumers, in addition to arbitration and civil action.
Final Decision: The Supreme Court allowed the appeal, set aside the order of the National Consumer Disputes Redressal Commission, and remitted the matter to the State Commission for decision on merits according to law.
K. Ramaswamy, J.—Leave granted.
We have heard learned Counsel on both sides.
2. This appeal by special leave arises from the order dated November 13, 1992 of the National Consumer Disputes Redressal Commission, New Delhi (the “Commission”, for short) passed in First Appeal No. 62/1991.
3. The admitted facts are that 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 in New Delhi. Since he has committed breach of the contract, seeking to recover a sum of Rs. 3,75,000/as compensation for alleged deficiency in service on the part of the appellant in carrying out the work of installation of the centrally air-conditioned plant, the respondent laid the complaint before the State Commission which in its order dated October 30, 1990 had stayed the proceedings and relegated the parties to arbitration for seeking the remedy. The appellant carried the matter in appeal. By the impugned order the Commission has held that the proceedings before the Forums created under the Consumer Protection Act, 1986 (Act 68 of 1986) (for short the “Act”) is not a legal proceedings nor is the Commission a judicial authority; therefore, Section 34 of the Arbitration Act, 1940 is not available to stay the proceedings. Thus this appeal by special leave.
4. Mr. R.S. Suri, learned Counsel for the appellant contended that the scheme of the Act, in particular Sections 3,10,16 and 20 provides for constitution of District Forum, State Commission and National Commission which conduct proceedings as per the procedure prescribed in Section 13; finality is attached to the order of the Forums under Section 24. The orders are enforceable at law by operation of Section 25 and the penalties for contravention get sanctions under Section 27. The hierarchy of appeals provided under Section 19 et al does indicate that the proceedings before the authorities under the Act are legal proceedings and the authorities are judicial authorities within the meaning of Section 34 of the Arbitration Act, 1940. The Commission, therefore, was in error in its conclusion that proceedings before the authorities are not legal proceedings nor is the Tribunal a judicial authority. Ms. Binu Tamta, learned Counsel appearing for the respondent contended that there is no consensus ad idem between the parties on the point of reference to an arbitration; pursuant to a quotation given by the appellant, the respondent agreed only on the conditions enumerated and communicated by the respondent to which the appellant had agreed thereunder. No arbitration clause emerged by consensus adidem. Therefore, there is no arbitration agreement for reference of the dispute for arbitration. It is also contended that the respondent, after issuance of the notice by the State Commission, had appeared and taken five adjournments to file the counter; thereby, it had acquiesced to the jurisdiction of the State Commission. Thereby, the appellant having participated in the proceedings before the State Commission, is not entitled to avail of the remedy of stay of further proceedings under Section 34, pending reference to an arbitration. It is also contended that the Tribunals constituted under the Act are Special Tribunals. Though they are invested with the powers of the Civil Court in a limited way it is not conferred with trappings of the Court. Therefore, it is neither legal proceedings nor is the Tribunal a judicial authority under Section 34. Thereby, the remedy of Section 34 is not available to the appellant. It is further contended that the Act being a special statute having given exclusive jurisdiction to the Forums created under the Act to provide inexpensive and expeditious remedy. Relegating the parties to the arbitration defeats the purpose of the remedy through summary trial which is provided under the Act. Therefore, the Court would be slow to relegate the parties to the process of arbitration
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