Builders can’t force buyers to go for arbitration: NCDRC


By Accommodation Times Bureau

Real estate players cannot force buyers to settle their disputes through arbitration by restraining them from approaching consumer forums, India’s apex consumer commission has ruled.

A three-member bench of the National Commission Dispute Reddressal Corporation (NCDRC) has said it is not a compulsion for buyers to go for arbitration even if the seller-buyer agreement stipulates that disputes be settled through a private resolution mechanism. Builders had cited changes made in the Arbitration and Conciliation Act in 2015 to make the point that all cases of flat buyers be referred to arbitration.

Section 8 of the amended Arbitration Act says a judicial authority will refer for arbitration the cases where there is an arbitration agreement, and one of the parties files an application seeking arbitration before submitting their first statement on the dispute.

But the bench, including NCDRC president Justice D K Jain, rejected the builders’ contention.

“We unhesitatingly reject the arguments on behalf of the builder, and hold that the arbitration clause in the afore-stated kind of agreements (read builder-buyer agreements) between complainants and builder circumscribe the jurisdiction of a consumer fora, notwithstanding amendments made in the Arbitration Act,” the bench ordered.

The NCDRC bench analysed many Supreme Court judgments which held consumer forums were not bound to refer disputes to arbitration .

“Acceptance of the arguments on behalf of the builder would lead to another undesirable outcome – setting at naught the entire purpose and object of the Consumer Protection Act viz. to ensure speedy, just and expeditious resolution and disposal of consumer disputes,” the bench said.

The bench observed, “The disputes which are to be adjudicated and governed by statutory enactments, established for specific purpose to sub-serve a particular public policy, are not arbitrable. ”

“It is a big relief for buyers since the arbitrator can settle a dispute within the framework of the contract agreement. In almost all cases, the agreements are tilted in favour of the builders,” said advocate Sushil Kaushik, who contested the case on behalf of buyers.

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