Case Note & Summary
The dispute arose from a contract for installation of a centrally air-conditioned plant in a residential house in New Delhi. The appellant contractor and the respondent consumer entered into the contract. The respondent filed a complaint before the State Consumer Disputes Redressal Commission alleging deficiency in service and claiming Rs.3,75,000 as compensation. The State Commission by order dated October 30, 1990 stayed the proceedings and relegated the parties to arbitration, finding an arbitration agreement under clause 12 of the quotation. The appellant appealed to the National Consumer Disputes Redressal Commission, which by order dated November 13, 1992 reversed the State Commission, holding that proceedings before consumer forums are not legal proceedings and the forums are not judicial authorities, so Section 34 of the Arbitration Act, 1940 was not available. The Supreme Court examined three issues: whether there was an arbitration agreement, whether the appellant had acquiesced to the jurisdiction of the State Commission by seeking adjournments, and whether consumer forums are judicial authorities and their proceedings are legal proceedings for purposes of Section 34. The appellant's counsel argued that the scheme of the Consumer Protection Act, 1986, particularly Sections 3, 10, 16, 20, 13, 24, 25, and 27, shows that the forums have the trappings of judicial authorities and their proceedings are legal. The respondent's counsel contended there was no consensus ad idem for arbitration, the appellant had acquiesced, and the special statute provided exclusive jurisdiction, so relegating parties to arbitration would defeat its purpose. The Supreme Court found that clause 12 of the quotation, accepted through offer and counter-offer, became an integral part of the contract, thus creating an arbitration agreement. On acquiescence, the Court noted the question was not argued before the National Commission and declined to go into it. On the crucial question, the Court reviewed the composition and powers of the District Forum, State Commission and National Commission under the Consumer Protection Act, 1986. It noted that presiding officers are judicial officers or retired/sitting High Court/Supreme Court judges; forums have powers of a civil court under Section 13(4); proceedings are deemed judicial proceedings under Section 13(5) with reference to Sections 193 and 228 IPC and Section 195 and Chapter XXVI CrPC; orders have finality under Section 24 and are enforceable as decrees under Section 25, with penal sanctions under Section 27. The Court relied on The Bharat Bank Ltd. v. Employees of Bharat Bank, Associated Cement Companies Ltd. v. P.N. Sharma, and Sarojini Ramaswami v. Union of India, and concluded that the forums have all the trappings of a civil court and judicial authority, and their proceedings are legal proceedings. The Supreme Court's conclusion effectively held that Section 34 of the Arbitration Act, 1940 is available to stay proceedings before consumer forums, thereby overturning the National Commission's view.
Headnote
A) Arbitration Agreement - Consensus ad idem - Clause 12 of quotation became integral part of contract through offer and counter-offer - Arbitration Act, 1940 - The respondent made a counter-offer giving technical details to part of the appellant's quotation, and when accepted, the offer and counter-offer became integral parts of the contract, making clause 12 an arbitration agreement - Held that there is an arbitration agreement between the parties. B) Consumer Protection - Nature of Forums - Judicial Authority - Consumer Protection Act, 1986, Sections 10, 13, 16, 20, 24, 25, 27 - The District Forum, State Commission and National Commission have all the trappings of a civil court and judicial authority because their presiding officers are judicial officers or sitting/retired High Court/Supreme Court judges, they have powers of a civil court under Section 13(4), proceedings are deemed judicial proceedings under Section 13(5) with reference to Sections 193 and 228 IPC and Section 195 and Chapter XXVI CrPC, orders have finality under Section 24 and are enforceable as decrees under Section 25 with penal sanctions under Section 27 - Held that proceedings before them are legal proceedings and Section 34 of the Arbitration Act, 1940 applies. C) Consumer Protection - Applicability of Arbitration Act - Section 3 of Consumer Protection Act, 1986 - Section 3 states that the provisions of the Act are in addition to and not in derogation of any other law, so the special remedy under the Act does not exclude arbitration under the Arbitration Act, 1940 - Held that relegating parties to arbitration does not defeat the purpose of the special statute where an arbitration agreement exists. D) Acquiescence - Waiver of Right to Seek Stay - Arbitration Act, 1940, Section 34 - The respondent argued that the appellant had acquiesced to the State Commission's jurisdiction by taking five adjournments to file a counter, but this question was not argued before the National Commission - The Supreme Court did not go into the question of acquiescence and left it open - Held not considered.
Issue of Consideration
Whether there was an arbitration agreement between the parties; whether the appellant had acquiesced to the jurisdiction of the State Commission; whether proceedings before consumer forums under the Consumer Protection Act, 1986 are legal proceedings and the forums are judicial authorities within the meaning of Section 34 of the Arbitration Act, 1940.
Final Decision
The Supreme Court held that the District Forum, State Commission and National Commission under the Consumer Protection Act, 1986 have all the trappings of a civil court and judicial authority; proceedings before them are legal proceedings. Consequently, Section 34 of the Arbitration Act, 1940 is available to stay such proceedings. The existence of an arbitration agreement based on clause 12 of the quotation was upheld. The question of acquiescence was not considered as it was not argued before the National Commission.
Law Points
- Consumer forums under the Consumer Protection Act
- 1986 possess trappings of a civil court and judicial authority
- proceedings before them are legal proceedings
- Section 34 of the Arbitration Act
- 1940 is available to stay such proceedings
- an arbitration clause in a quotation accepted through offer and counter-offer becomes an integral part of the contract
- Section 3 of the Consumer Protection Act provides that its provisions are in addition to and not in derogation of other laws.
