Builders can’t force Buyers for arbitration : NCDRC

India’s apex consumer commission, National Consumer Disputes Redressal Commission (NCDRC), has ruled that the real estate developers cannot force the buyers to settle their disputes through arbitration and restricting them from approaching consumer forums. A three-member bench of NCDRC also ruled that the buyers have no compulsion to go for arbitration even if the buyer-seller agreement conditions about settling the disputes through a private resolution mechanism. The 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 dispute. But the bench which included NCDRC president Justice D. K. Jain, rejecting the builders’ contention, ordered, “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 forum, notwithstanding amendments made in the Arbitration Act.” The NCDRC bench analysed many Supreme Court judgments which held consumer forums were not bound to refer disputes to arbitration. The bench further said, “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 also 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.”