Consumer cases cannot be arbitrated: SC

The Supreme Court recently reiterated that consumer cases cannot be arbitrated under the normal scenario although there is no inhibition in disputes being proceeded in arbitration.

“We may, however, hasten to add that in the event a person entitled to seek an additional special remedy provided under the statutes does not opt for the additional/special remedy and he is a party to an arbitration agreement, there is no inhibition in disputes being proceeded in arbitration. It is only the case where specific/special remedies are provided for and which are opted by an aggrieved person that judicial authority can refuse to relegate the parties to the arbitration”, the Court said during a review petition.

The Court relied on the fact that not only the proceedings of Consumer Protection Act, 1986 (“Act”) are special proceedings which were required to be continued under the Act despite an arbitration agreement, there are large number of other fields where an arbitration agreement can neither stop or stultify the proceedings. For example, in case where a cheque is dishonoured by one party in transaction, despite the arbitration agreement party aggrieved has to approach the criminal court. Similarly, there are several issues which are non-arbitrable. There can be prohibition both express or implied for not deciding a dispute on the basis of an arbitration agreement.

The Court relied on it previous judgments wherein it was held that disputes within the trust, trustees and beneficiaries are not capable of being decided by the arbitrator despite existence of arbitration agreement to that effect between the parties.

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