M/S.
Fair Air Engineers Pvt. Ltd. & Anr Vs. N.K. Modi [1996] INSC 975 (20 August 1996)
Ramaswamy,
K. Ramaswamy, K.G.B. Pattanaik (J)
ACT:
HEAD NOTE:
O R D
E R
Leave
granted.
We
have heard learned counsel on both sides.
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.
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.
Shri
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 or 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 Commmission, 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 ad idem. 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 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 confered 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 available to the appellant. It is further
contended that 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 under the
Arbitration Act.
Having
regard to the respective contentions,the first question that arises for
consideration is: whether there is an arbitration agreement between the
parties? It is true that respondent had raised before the Commission the
dispute and in the grounds of appeal about the non-existence of the arbitration
agreement and want of consensus ad idem in that behalf but from a reading of
the order of the National Commission it would appear that the question was not
argued.
The
State Commission expressly has gone into the question and held that by
operation of clause [12] of the quotation there is an arbitration agreement
brought into vogue between the parties. It envisages reference to arbitration
and the question was offered with the consensus ad idem. It is seen that when
the quotation was offered with the conditions enumerated there under, the
respondent merely made a counter- offer giving technical details to a part of
the offer as counter offer and when it was accepted by the appellant, the
parties agreed for that. offer and the counter-offer. In other words they
became an integral part of the contract of the parties. Thereby, clause [12] of
the agreement became an integral part of the contract . Thus, there is an
arbitration agreement between the parties.
The
question then is: whether the appellanthas disabled itself by acquiescence to
the jurisdiction of the State Commission in seeking adjournment to file the
counter. It is true that in the counter-affidavit filed in this Court the
respondent has stated that the appellant had taken five adjournments to file
the counter. On the fifth occasion the counter came to be filed with the
petition for stay of the proceedings. But, unfortunately. this question was not
argued before the National Commission and, therefore, we cannot 90 into the
question whether the appellant acquiesced to the jurisdiction of the State
Commission before proceeding further in the matter.
The
crucial question is: whether the proceedings of the forums created under the
Act are legal proceedings and the authorities have the trappings of judicial
authorities or a court within the meaning of Section 34 of the Arbitration Act?
Before going into the decisions of this Court it is necessary to read the
provisions of the Act so that we can have a clear picture of the conspectus of
its operation.
Section
3 envisages that "the provisions of the Act shall be in addition to, and
not in derogation of the provisions of any other law for the time being in
force". Section 10 speaks of constitution and composition of District
Forums so as to consist of persons specified in clauses (a) and (b).
They
shall include a person who is, or who has been, or is qualified to be a
District Judge, as its Prosident, apart from other members envisaged under
clause (b) of sub- section [1] thereof. Similarly, section 16 of the. Act
speaks about composition of the State Commission. It provides that each State
Commission shall consist of a person who is, or has been, a Judge of a High
Court, appointed by the State Government, who shall be the President of the
Commission, apart from other members envisaged under clause (b) of sub-section
[1] thereof.
Section
20 of the Act, similarly, envisages the composition of the National Commission
and a person who is, or has been, a Judge of the Supreme Court, to be appointed
by the Central Government, shall be its President, apart from other members
envisaged in clause (b) of sub-section [1] thereof. Thus the presiding officers
of the forums are judicial officers and in the case of commissions they are
sitting or retired Judges of the High Court or the Supreme Court, as the case
may be. A remedy of complaint has been provided to the aggrieved consumer
defined under Section 2 (d) of the Act.
The
expression 'complaint" has been defined under section 2 (b) of the Act.
Section 12 prescribes the manner in which the complaint shall be made. Section
24-A provides for the period of limitation within which the complaint shall be
laid, namely within 2 years from the date on which the cause of action has
arisen.
Section
13 provides for the procedure after receipt of complaint and for disposal
thereof. The details thereof are not material except sub-sections (4), (5) and
(6) thereof which have cutting edge as material in this behalf. Sub- section
(4) postulates that for the purposes of that section, the District Forum shall
have the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908, while trying a suit
in respect of the enumerated matters, namely,
[i] summoning
and enforcing the attendance of any defendant or witness and examining the
witness and oath,
[ii] discovery
and production of any document or other material object producible as evidence,
[ii] the
reception of evidence on affidavits,
[iv] the
requisitioning of the report of the concerned analysis or test from the
appropriate laboratory or from any other relevant source,
[v] issuing
of any commission for the examination of any witness, and
[vi] any
other matter which may be pescribed.
Under
the Rules framed under the Act, District Forums have got power to prescribe the
procedure of collecting and discovering evidence. Under sub-section (5), every
proceedings before the District. Forum shall be deemed to be a judicial
proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code
and shall be deemed to be a Civil Court
for the purpose of Section 195 and Chapter XXVI of the Code of Criminal
Procedure, 1973. Sub-section (6) provides that where the complainant is a
consumer referred to in sub-clause (iv) of Clause (b) of sub-section (1) of
Section 2, the provisions of Rule 8 of Order 1 of the First Schedule to the
Code of Civil Procedure, 1908 shall apply subject to the modification that
every reference therein to a suit or decree shall be construed as a reference
to a complaints or the order of the District Forum thereon. The finding of the
District Forum is envisaged under Section 14 of the Act. If any person feels
aggrieved by the order of the District Forum there is a right of appeal
provided under Section 15 to the State Commission.
The
State Commission, in addition to the remedy of appeal against the order of
District Forum, has original jurisdiction to entertain complaints if the matter
is covered under its specified pecuniary jurisdiction. Under Section 18 of the
Act, the procedure for the disposal of complaints provided in Section 12, 13
and 14 of the Act and the rules made thereunder, is made available for the
disposal of the complaint' or the appeals by the State Commission. Similarly,
the National Commission under Section 21, has been given, in addition to
original jurisdiction power to entertain an appeal against the order of the
Stake Commission or to call for the records and pass appropriate orders, in
circumstances enumerated under clause [b] thereof, in are consumer dispute
pending before or decided by any State Commission, By operation of Section 22,
the power of a civil court as specified in sub-sections (4), (5) and (6) of
Section 13 of the Act are vested in the National Commission for disposal of any
complaint or proceedings before it the procedure to be followed by it shall be
such as may be prescribed by the Central Government. Under Section 23 of the
Act, remedy of appeal to this Court is made available to any person aggrieved
by an order of the National Commission. Section 24 attaches finality to every
order of the District Forum, State Commission or of the National Commission if
no appeal is preferred within specified time. However, that is subject to any
judicial review under Article 226 or 32 of the Constitution, Section 25 gives
teeth to the orders passed by the District Forum, State Commission and National
Commission; every order cen be enforced in the same manner as if it were a
decree or an order made by a court in a civil suit pending therein; it shall be
lawful for the District Forum, State Commission or National Commission to send
its orders, in case of it inability to execute it, for execution to the appropriate
executing court. It is obliigatory for the executing court to execute the order
treating it to be a decree or order of a court sent lo it for execution. For
specific enforcement of the Ace, Section 27 gives sanction of the State for
imposing penalties against the traders or persons against whom a complaint is
made if fails to comply the order passed by the aforesaid District Forums,
National Commission or State Commission, as the case may be.
Thus,
it would be seen that the District Forums. State Commission and National
Commission have all the trappings of a civil court and judicial authority. The
proceedings before them are legal proceedings. Similar controversy was
considered by this Court in The Bharat Bank Ltd. Delhi vs. The employees of the
Bharat Bank [(1950)] 1 SCR 459] and in Associated Cement Companies Ltd. vs P.N.Sharma
& Anr.[(1965) 2 SCR 366]. In Sarojini Ramaswami vs. Union of India [(1992)]
4 SCC 501], one of us, K. Ramaswamy, J. had dealt with this aspect of the
matter and held thus:
"The
Pariament while considering the motion for removal of the Judge for deciding
whether to adopt the motion or not takes into consideration the report as well
as the dissenting opinion, if any, of the third member of the Inquiry Committee
in case the majority opinion is that the Judge is guilty. along with the entire
evidence received by the Inquiry Committee on which the finding of guilt of the
Inquiry Committee is based. No doubt, the Parliament does not substitute its
finding for that of the Inquiry Committee or supersede it in case it decides
not to adopt the motion by the requisite majority so that the motion for
removal of the Judge fails and the proceedings terminate but in doing so it
does take the decision to not adopt the motion because it declines to accept
and act on the finding of guilty recorded in the report of the Committee after
debating the issue on the basis of the material before it".
This
Court in recent decision in Canara Bank vs. Nuclear Power Corporation of India
Ltd. & Ors. [J.T. 1995 (3) SC 42] considered the controversy and held they
the word 'court" must be read in the context in which it is used in the
statute. It is permissible, in given the context, to read it as comprehending
the courts of civil judicature and courts or some tribunals exercising curial,
or judicial powers. In the context in which the word "court" is used
in Section 9A of the Special Courts Act, it is intended to encompass all curial
or judicial bodies which have the jurisdiction to decide matter or claim, inter
alia, arising out of transactions in securities entered into between the stated
dates in which a securities entered into between the stated dates in which a
person notified was involved.
Therein,
the Company Law Board has been held to be a court exercising the function of
the court; therefore, it is possessed of the trappings of a Court. thus, we
have no hesitation to hold that the proceedings before the District Forum,
State Commission and the National Commission are legal proceedings. The
District Forum, National Commission and the State Commission are judicial
authorities falling under Section 34 of the Arbitration Act.
The
question then is: whether the case shall be stayed by operation of Section 34
of the Arbitration Act? Section 34 envisages that where any party to an
arbitration agreement or any person claiming under him commences any legal
proceedings against any other party to the agreement or any person claiming
under him in respect of the matter agreed to be referred, any party to such
legal proceedings, before filing a written statement at any time or before
taking any other steps in the proceedings, shall apply to the judicial
authority before which the proceedings are pending to stay the proceedings; and
such authority, if satisfied that there is no sufficient reason why the matter
should not be referred in accordance with the arbitration agreement and that
the applicant was, at the time when the proceedings were commenced, and still
remains ready and uilling to do all things nacessary to the proper conduct of
the arbibration, may make an order staying the proceedings.
It
would thus be clear that, by invocation of Section 34, the party to the
proceedings does not get an automatic right to have the proceedings pending
before the judicial authorities stayed. The said section gives discretion to
the authorities to stay the proceedings on their satisfying that there was no
sufficient reason why the matter should not be referred in accordance with the
agreement between the parties for arbitration when the party seeking stay of
the proceedings was and still remains ready and willing to do all things
necessary to the proper conduct of the arbitration. In other words, on judicial
satisfaction as to the contract between the parties and subject matter of the dispute
as to the nature of the dispute, the judicial authority has been invested with
a discretion to stay the proceeding or proceed with the matter pending before
its Similar power is available under Section 8 of the Arbitration and
Conciliation Third Ordinance,1996. The Act was enacted to provide for
protection of the interests of consumers and for that purpose the Act has made
provision for the establishment of Consumer Councils and other authorities, viz.,District
Forums, State Commissions and National Commission for the settlement of
consumers' disputes and for matters connected therewith.
This
Court in Lucknow Development Authority M.K. Gupta [(1994) 1 SCC 243]
elaborately considered. The scheme and object of the Act. It was held that
object was to secure social purpose to promote the facilities in a
comprehending manner for settlement of issue involved in the consumer
complaints and to assess the damage. In construing the object of the Act, the
interests of the consumers which the Act seeks to protect are given
predominance. The Act has departed from the settle legal forums provided under
the Code of Civil Procedure. The importance of the Act is to promote the
welfare of the society by enabling the consumers to participate directly in the
market economy. It attempts to remove the helplessness of a consumer which he
faces against powerful business, described as a 'network of rackets' or a
society in which 'producers have secured power' to rob the rest or as right of
public bodies which are degenerating into storhnouses of inaction where papers
do not move from one desk to another as a matter of duty and responsibility but
for extraneous consideration leeving the common man helploss, bewildered and
shocked. The malady is becoming so rampant, widespread and deep that the
society, instead of bothering, complaining and fighting against it is accepting
it as a part of life. The Act, therefore, intends to secure inexpensive and cxpeditious
consurer service.
Accordingly,
it must be held that the orovisions of the Act are to be construed widely to
live effect to the object and purpose of the Act. Itis seen that Section 3
envisages that the provisions of the Act are in addition to and are not in
derogation of any other law in forces. it is true, as rightly contended by Shri,
that the words "in derogation of the provisions of any other law for the
time being in force" would be given proper meaning and effect and if the
complaint is not stayed and the parties are not relegated to the arbitration,
the Act purports to operate in derogation of the provisions of the Arbitration
Act. Prima facie, the contention appears to be plausible but on cunstruction
and conspectus of the provisions of the Act we think that the contention is not
well-founded. The Parliament is aware of the provisions of the Arbitration Act
and the Contract Act and the consequential remedy available under Section 9 of
the Code of Civil Procedure, i.e., to avail of right of civil action in a
competent court of civil jurisdiction.
Nonetheless,
the Act provides the additional remedy.
It
would, therefore, be clear that the Legislature intended to provide a remedy in
addition to the consentient arbitration which could be enforced under the
Arbitration Act or the civil action in a suit under the provisions of the Code
of Civil Procedure. Thereby, as seen, Section 34 of the Act does not confer an
automatic right nor create an automatic embargo on the exercise of the power by
the judicial authority under the Act. It is a matter of discreation. consedered
from this perspective, we hold that though the District Forum, State Commission
and National Commission are judicial authorities, for the purpose of Section 34
of the Arbitration Act, in view of the object of the Act and by operation of
Section 3 thereof, we are of the considered view that it would be appropriate
that these forums created under the Act are at liberty to proceed with the
matters in accordance with the provisions of the Act rather than relegating the
parties to an arbitration proceedings pursuant to a contract entered into
between the parties. The reason is that the Act intends to relieve the
consumers of the cumbersome arbitration proceedings or civil action unless the
forums on their own and on the peculiar facts and circumstances of particular case,
come to the conclusion that the appropriate forum for adjudication of the
disputes would be otherwise those given in the Act.
Considered
from this perpective, we hold that this dispute need not be referred to
arbitration under clause [12] of the agreement and the matter could be decided
on merits by the State Commission itself.
The
appeal is, therefore, allowed to the above extent but, in the circumstances,
without cost. The order of the State Commission stands set aside and the matter
is remitted to the State Commission for decision on merits according to law.
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