NCDRC Reiterates, Arbitration Clause Doesn't Bar Consumer Fora's Jurisdiction To Hear Complaints

The New Delhi bench of the National Consumer Disputes Redressal Commission (NCDRC) bench comprising presiding members, C. Vishwanath and Subhash Chandra, recently held that the presence of an arbitration clause in an agreement does not prevent Consumer Fora from exercising their jurisdiction to entertain a Complaint. To emphasize the stance further, reference was made to Section 3 of the Consumer Protection Act, 1986 which clearly states that the Act's provisions are in addition to and not in derogation of any other prevailing law. The NCDRC also affirmed its jurisdiction in cases involving some questions of law and facts.

Brief Facts:

The Army Welfare Housing Organisation’s (“Complainant”) case is that they were given 5 acres of land in Ambala City by the Haryana Urban Development Authority (HUDA) in 1991, for a price of Rs.1,58,48,000/-. They received possession of the land in 1993 and made the final payment to HUDA in 1996. However, in 1997, HUDA demanded an additional amount of Rs.5097990.78 for enhanced compensation based on a court judgment dated 06.05.1992 of Ld. Additional District Judge, Ambala. HUDA never informed the complainant about this additional amount before the final payment was made. Resultantly, the complainant paid the enhanced compensation as determined by the judgment. HUDA's demand came more than six years after the court order and was higher than the compensation awarded. The complainant sent a legal notice seeking clarification of the inflated demand, but HUDA threatened to impose a penalty instead of providing an explanation. HUDA also charged for the land that was part of the green belt, which was illegal. The complainant requested the exclusion of the green belt from the land allotment but received no response. Instead, HUDA raised further demands in 2000, 2005, and 2008, which were paid under protest by the complainant. The total amount demanded by HUDA exceeded the actual cost of the land. 

The complainant filed a complaint seeking a refund of the amounts paid, along with interest and costs. HUDA argued that the complaint was not valid as the complainant would not qualify as a "consumer" under the Consumer Protection Act. HUDA also claimed that the complaint was barred by limitation and that the complainant was legally obligated to pay the increased compensation as per the terms of the allotment letter and the HUDA Act. It was also mentioned that the green belt area was included in the allotted land and that the complainant had been given the benefit of the green belt.

HUDA further contended that the Complaint is essentially a claim for monetary recovery, which should be pursued in a Civil Court instead of a Consumer Court. It was emphasized that the Complaint involved complex factual issues that are better suited for resolution in a Civil Court. Additionally, HUDA highlighted that Clause No. 22 of the allotment letter requires disputes to be resolved through arbitration, suggesting that the Complaint is barred by this clause and should not be entertained by the Consumer Commission.

Observations of the Commission:

The National Consumer Disputes Redressal Commission (“NCDRC”) observed that the complaint was well within the limitation period as per Section 12 of the Limitation Act, 1963 as it was filed just after the dismissal of the case under the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act). Relying on Supreme Court’s judgment in MS. Agriculture Industries 2009 CTJ 481 (SC), the NCDRC further held that involvement of some questions of law and fact cannot be a ground for limiting the jurisdictions of the consumer fora. Additionally, this case did not involve any complicated questions on law and facts.   

It was further held that the remedy provided by the Consumer Protection Act, of 1986 is an additional remedy and is not restricted by any specific law. Reliance was placed on the Supreme Court case of M/s Emaar MGF Land Limited vs. Aftab Singh I (2019) CPJ 5 (SC), wherein it was affirmed that an arbitration clause in an agreement does not bar the jurisdiction of Consumer Fora to entertain a Complaint. Furthermore, Section 3 of the Consumer Protection Act, 1986 explicitly states that the provisions of the Act are ‘supplementary to’ and not ‘derogatory to’ any other existing law, the NCDRC noted.

Regarding the payment of enhanced compensation and interest, the NCDRC referred to the case of Pankaj Aggarwal & Ors vs State of Haryana & Anr (2015), wherein the Punjab & Haryana High Court declared that a corporation was empowered to recover the enhanced compensation from the allottee, as per the terms of the allotment letter. Therefore, considering the provisions of the allotment letter, the Regulations, and the judgment in Pankaj Aggarwal & Ors vs State of Haryana & Anr (2015), the NCDRC held that HUDA had the right to recover the enhanced compensation, awarded by the District Judge, from the Complainants. According to Clause 9 of the allotment letter, the Complainants were obligated to make the payment within 30 days. As the Complainant failed to meet this deadline, HUDA rightfully charged interest on the outstanding amount, the NCDRC held. 

In conclusion, the NCDRC was of the view that the HUDA charged enhanced compensation from the Complainant in accordance with the terms of the allotment letter and the relevant regulations. Hence, the Complaint was dismissed.

Case: Army Welfare Housing Organisation Vs Chief Administrator, Huda & Anr.

Case No.: CC/258/2011

Counsel for the Petitioner(s): Mr. A.K. Tewari

Counsel for the Respondent(s): Mr. Vishal Mahajan

Click Here To Read/Download Order