20 August 1996
Supreme Court


Case number: C.A. No.-011459-011459 / 1996
Diary number: 89468 / 1993






DATE OF JUDGMENT:       20/08/1996




JUDGMENT:                          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 thereunder, 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 ofthe 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  circumetances of  perticular 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.