Supreme Court of India

SMT. M. HEMALATHA DEVI & ORS.versusB. UDAYASRI

Citation: 2023 INSC 870
Decided: 5 October 2023
Disposal: Dismissed
Bench: SANJAY KISHAN KAUL

Holding

Consumer disputes under the Consumer Protection Act are non‑arbitrable unless the consumer voluntarily chooses arbitration, so the High Court was correct in refusing to appoint an arbitrator.

Summary

The appellants, a group of builders, entered into a sale agreement to construct a villa for the respondent, a home‑buyer, but failed to deliver possession and subsequently terminated the agreement. The buyer filed a complaint under the Consumer Protection Act, 2019 before the District Consumer Forum, while the builders sought appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 based on an arbitration clause. The High Court dismissed the builders' Section 11 application, allowed a Section 8 application before the consumer forum, and the forum also dismissed the Section 8 application, holding the dispute non‑arbitrable. On review, the High Court again upheld its orders, prompting the builders to appeal to the Supreme Court. The Supreme Court examined the effect of the 2016 amendment inserting sub‑section 6A to Section 11 (and the corresponding amendment to Section 8) and reiterated that disputes covered by the Consumer Protection Act are special, beneficial legislation and are non‑arbitrable unless the consumer voluntarily elects arbitration. Consequently, the Court affirmed that the High Court was correct in refusing to appoint an arbitrator and dismissed the appeals.

Issues considered

Whether a dispute arising under the Consumer Protection Act, 2019 is arbitrable despite the existence of an arbitration clause.
Whether the amendment inserting sub‑section 6A to Section 11 (and sub‑section 1 to Section 8) of the Arbitration Act obliges a court to refer a matter to arbitration when an arbitration agreement exists.
Whether a party who has availed a remedy under a special beneficial legislation can be compelled to proceed to arbitration.
Whether the High Court erred in dismissing the builders' application under Section 11 and the subsequent review.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(5), s. 11(6), s. 11(6A), s. 8(1)
Consumer Protection Act, 1986
Consumer Protection Act, 2019

Subjects

arbitrationarbitrabilityConsumer Protection Actspecial beneficial legislationSection 8Section 11public forumprivate forumnon‑arbitrable disputes

Judgment

[2023] 13 S.C.R. 258 : 2023 INSC 870

CASE DETAILS

SMT. M. HEMALATHA DEVI & ORS.
v.
B. UDAYASRI
(Civil Appeal Nos. 6500-6501 of 2023)
OCTOBER 05, 2023
[SANJAY KISHAN KAUL AND SUDHANSHU DHULIA, JJ.]
HEADNOTES
Issue for consideration: Whether the dispute between the parties is
arbitrable, and once a party has availed the remedy before a public forum
under a special beneﬁcial legislation, can it be compelled to go for arbitration.
Consumer Protection Act, 2019 – Consumer Protection Act, 1986
– Arbitration Act & Conciliation, 1996 – s.11(6A), 8(1) – Arbitrability
of consumer dispute – Constructed house/villa was not handed over to
the buyer/consumer-respondent on time – Later, builder terminated
the agreement and the appellants-builders/owners ﬁled application
u/s.11(5), (6), Arbitration Act, 1996 before the High Court for
appointment of Arbitrator, in terms of the arbitration clause in the
agreement – Respondent ﬁled complaint before the District Forum –
Appellants’ application was dismissed, liberty was granted to ﬁle a s.8
application before the District Forum which when ﬁled was dismissed
– Review ﬁled by the appellants, dismissed – Plea of the appellants
that the High Court erred in dismissing their application as under the
amended provisions of s.11, Arbitration Act, 1996 i.e. after insertion of
sub-section 6A to s.11, by way of an amendment in 2016, the High Court
had no choice but to refer the matter for arbitration:
Held: All disputes are not capable of being referred to arbitration
– The exclusion of a dispute from arbitration may be express or implied,
depending upon the nature of the dispute, and a party to a dispute cannot
be compelled to resort to arbitration merely for the reason that it has been
provided in the contract, to which it is a signatory – The arbitrability of a
dispute has to be examined when one of the parties seeks redressal under a
258
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 259

welfare legislation, in spite of being a signatory to an arbitration agreement
– Consumer Protection Act is a piece of welfare legislation with the primary
purpose of protecting the interest of a consumer – Consumer disputes are
assigned by the legislature to public fora, as a measure of public policy –
Therefore, by necessary implication such disputes will fall in the category
of non-arbitrable disputes, and these disputes should be kept away from
a private fora such as ‘arbitration’, unless both the parties willingly opt
for arbitration over the remedy before public fora – In the present case,
the application u/s.11, Arbitration Act, 1996 ﬁled by the appellants for
appointment of an arbitrator, was not maintainable – Impugned orders
which held this position upheld – High Court adopted the right approach
in its two impugned orders, where it declined to interfere in the matter and
appoint an arbitrator – Reasoning given in Emaar MGF Land Ltd. v. Aftab
Singh [2018] 14 SCR 791 (Emaar III) would be equally applicable to s.11
application before the High Court – Both the provisions incorporated in s.8
and s.11 [i.e. sub-section (1) and sub-section 6A respectively], seemingly
restrict the scope of the examination by the concerned courts, in their
reference to arbitration, or appointment of arbitrator, as the case might be,
and the language being common, “notwithstanding any judgment, decree or
order” places a similar question before the two courts – Appeals dismissed.
[Paras 9, 22, 23]
Consumer Protection Act, 2019 – Arbitration Act, 1996 – ss.11,8 –
Plea by the appellants that since it is the builder who ﬁrst approached the
“Court” by ﬁling an application u/s.11 for appointment of arbitrator, in
terms of the agreement, the consumer should have submitted before the
jurisdiction of the Arbitration and Conciliation Act, as agreed between
the parties (in their agreement), rather than seeking remedy before the
Consumer Forum:
Held: The question is of election, or of choice, and not of which party
had approached the court ﬁrst – More importantly it would be the nature
of the dispute, which would determine the forum for its redressal – The
law gives this choice to the consumer to either avail a remedy under the
Consumer Protection Act, by ﬁling a complaint before the Judicial Authority,
or go for arbitration – This option is not available to the builder, as they
are not ‘Consumers’, under the 2019 Act – It is the respondent here who
260 SUPREME COURT REPORTS [2023] 13 S.C.R.

had to make a “choice” between submitting before the private fora i.e., the
Arbitration Tribunal or to make a complaint before the Consumer Forum,
which is a public for a – She chose to go to the latter – Her reply before the
High Court on the s.11 application of the builder was not her submission
to the arbitration process – In her reply, she informed the High Court of
the complaint made by her as a consumer before the District Consumer
Forum, which is a ‘Judicial Authority’ and hence s.8 of the Arbitration
Act would come into play and not an application u/s.11 of the Arbitration
Act – Merely because the builder had approached a Court ﬁrst (u/s.11,
Arbitration Act, 1996) will itself not oust the jurisdiction of the Consumer
Courts – The jurisdiction of a Court is not determined by the fastest ﬁnger
ﬁrst, but the nature of the dispute, the public policy in the matter, the will
of the legislature, the election or choice of the consumer amongst various
factors. [Para 10]
Consumer Protection – Arbitration Act, 1996 – s.11(6A), 8(1) –
Doubt as regards a consumer pursuing his remedy before Consumer
Forums as against his going for arbitration, though being a party to an
arbitration agreement, set to rest by Supreme Court decision in Emaar
MGF Land Ltd. v. Aftab Singh [2018] 14 SCR 791 (Emaar III) – It re-
examined the issue afresh in the light of the insertion of sub-section 6A
to s.11 and sub-section 1 to s.8, Arbitration Act, 1996 – Legal position
as it existed prior to the amendments and the eﬀect of the amendment
on the legal position as examined, discussed.
Consumer Protection Act, 2019 – Consumer Protection Act,
1986 – Arbitration Act, 1996 – Consumer Protection Act, a special and
beneﬁcial legislation – Remedies provided are special remedies and a
consumer cannot be deprived of them:
Held: Being a special and beneﬁcial legislation, the remedies provided
in Consumer Protection Act are special remedies and a consumer cannot
be deprived of them should he choose to avail such a remedy, in spite of
an arbitration agreement between the parties – It is a remedy provided to
the consumer where the consumer ﬁnds a defect in either goods or services
provided to him and therefore seeks a redressal of his grievances before the
consumer forum provided to him by the legislature. [Para 16]
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 261

LIST OF CITATIONS AND OTHER REFERENCES

Emaar MGF Land Ltd. v. Aftab Singh (2019) 12 SCC 751 : [2018] 14
SCR 791 – relied on.
Booz Allen and Hamilton Inc. v. SBI Home Finance Limited and
Others (2011) 5 SCC 532 : [2011] 7 SCR 310; Fair Air Engineers (P) Ltd.
v. N.K. Modi (1996) 6 SCC 385 : [1996] 4 Suppl. SCR 820; National Seeds
Corporation Limited v. M. Madhusudhan Reddy and Another (2012) 2 SCC
506 : [2012] 2 SCR 1065; Rosedale Developers Private Limited v. Aghore
Bhattacharya and Others (2018) 11 SCC 337; Aftab Singh v. Emaar MGF
Land Ltd and Anr., 2017 SCC OnLine NCDRC 1614; Emaar MGF Land
Limited v. Aftab Singh, 2018 SCC OnLine SC 2378; Lucknow Development
Authority v. M.K. Gupta (1994) 1 SCC 243 : [1993] 3 Suppl. SCR 615;
Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M.
Lalitha, (2004) 1 SCC 305 : [2003] 6 Suppl. SCR 659; Skypak Couriers
Ltd. v. Tata Chemicals Ltd., (2000) 5 SCC 294 : [2000] 1 Suppl. SCR 324;
A. Ayyasamy v. A. Paramasivam and Others (2016) 10 SCC 386 : [2016]
11 SCR 521; Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC
678 : [2018] 6 SCR 1001; SBP & Co. v. Patel Engg. Ltd. (2005) 8 SCC 618:
[2005] 4 Suppl. SCR 688; Vidya Drolia v. Durga Trading Corpn. (2021) 2
SCC 1 : [2020] 11SCR 1001 – referred to.
OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6500-6501
of 2023.
From the Judgment and Order dated 19.05.2022 in ARBA No.97 of
2020 and dated 25.11.2022 in RIA No.01 of 2022 of the High Court for the
State of Telangana at Hyderabad.
Appearances:
Kishore Rai, Sr. Adv., Himinder Lal, Roy Abraham, Ms. Reena Roy,
Akhil Abraham, Ms. Neelam Saini, Advs. for the Appellants.
Krishna Dev Jagarlamudi, Ms. Bhabna Das, Ms. Inderdeep Kaur Raina,
Advs. for the Respondent.
262 SUPREME COURT REPORTS [2023] 13 S.C.R.

JUDGMENT / ORDER OF THE SUPREME COURT

JUDGMENT
SUDHANSHU DHULIA, J.
Leave granted.
2. The appellants before this Court have challenged two orders of the
Telangana High Court. The ﬁrst is the order dated 19.05.2022, dismissing
the application of the appellants ﬁled for the appointment of an arbitrator
under Section 11 of the Arbitration & Conciliation Act, 1996 (for short
‘Arbitration Act, 1996’). It was dismissed by the High Court on the ground
that the dispute was pending before a Judicial Authority, which is the District
Consumer Disputes Redressal Forum (for short ‘District Consumer Forum’),
where a complaint has been ﬁled by the other party to the agreement, who is a
consumer and therefore the appellants have the option to move an application
under Section 8 of the Arbitration Act, 1996 for reference before Arbitration.
Consequently, the appellants moved an application for referring the dispute
for arbitration. The District Consumer Forum dismissed this application on
the ground that the complainant has invoked a public law remedy before a
“Judicial Authority”, under a beneﬁcial legislation for consumers, which
is the Consumer Protection Act, 2019 (hereinafter referred to as ‘The 2019
Act”) and therefore under the facts and circumstances of this case, the
dispute is non-arbitrable. Consequent to the dismissal of their application
under Section 8 of the Arbitration Act, 1996, the appellants ﬁled a Review
Application before the High Court for review of its earlier order dated
19.05.2022. This Review Application was dismissed vide the second order
of the High Court dated 25.11.2022, (which is again impugned before this
Court), on the ground that the appellants had already acted upon the order
dated 19.05.2022, and therefore is now estopped from seeking review of
the order dated 19.05.2022. It is these two orders which are under challenge
before this Court.
3. The facts as they stand today are that the complaint ﬁled by the
consumer (the sole respondent before this Court), has already been allowed
by the District Consumer Forum and the builders (i.e., the appellants before
this Court), have been directed to handover the possession of the plot along
with the constructed villa and pay a compensation of Rs.15,00,000/- (Rupees
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 263
[SUDHANSHU DHULIA, J.]

Fifteen Lakh Only) and a cost of Rs.1,00,000/- (Rupees One Lakh Only)
with default stipulation. The ﬁndings given by the District Consumer Forum
disclose the reasons as to why the builder backed out of its promise and
made a default:
“ ….., the opposite party no. 3 had chosen to send the termination
notices and sought for execution of cancellation deed knowing that the
value of the plot had escalated to more than 10 times from the date of
agreement and the opposite parties wanted to take the beneﬁt of such
rise in price value. The opposite party no. 3 did not ﬁx any reasonable
time for performance of his obligation though time for handing over
the possession was agreed by the opposite party no.3 in the agreement
of sale. The opposite party no. 3 had issued termination notice in the
year 2020 though he failed to keep his promise of handing over the
possession of the Villa by March, 2017.
The failure of the developer, who is also the land owner in the present
case, to hand over the possession of the residential property to the
complainant-purchaser within the contractually stipulated time
count as a deﬁciency. There exists fault, shortcoming or inadequacy
in the nature and manner of the action which has been undertaken
to be executed in the implementation of the contract with regard to
the service to be provided by the opposite parties. The terms of the
agreement of sale have been drafted keeping in mind the interest of
the developer (opposite party no. 3). The trade practice which tends
to bring about restrictive trade practice, manipulation of price or its
conditions of delivery or to aﬀect now of supplies in the market relating
to goods or services in such a manner as to impose on the consumers
unjustiﬁed costs or restrictions and shall include delay beyond the
period agreed to by a trader in supply of such goods or in providing
the services which has led or as is likely to lead to rise in the price is
nothing but restrictive practice by the opposite parties. Further, the act
of the opposite parties amounts to deﬁciency of service and unfair trade
practice. Hence, point no. a is answered in favour of the complainant.
10. Point No. b:
Homebuyers put their hard-earned savings into the real estate projects
with a hope that they will own their dream house one day. However,
264 SUPREME COURT REPORTS [2023] 13 S.C.R.

their dreams get shattered when the builders fail to deliver the
possession of their houses even after a prolonged delay.
In the present case, the obligation of the opposite party no. 3 (who is the
land owner and developer) to deliver the Villa on the time mentioned
in the agreement of sale was not fulﬁlled despite receipt of payment of
amount as per the said agreement. The receipt of part payment towards
transfer of the plot by the opposite parties without discharging their
obligations for the construction of the Villa and ﬁnally cancelling the
agreement of sale unilaterally on the pretext that the prices have gone
up for the subject property is nothing but commission of deﬁciency
of service and adoption of unfair trade practice on the part of the
opposite parties.”
The builders, who are the appellants before this Court, have
already filed their statutory appeal before the State Consumer
Commission which is presently pending and the order of the District
Forum has been stayed.
4. The essential argument of the appellants before this Court is that
the High Court committed a gross error in dismissing the application of
the appellants under Section 11 (sub-sections 5 & 6) of the Arbitration Act,
1996 for the reasons that under the amended provision of Section 11 of the
Arbitration Act, 1996 i.e., after insertion of sub-section 6A to Section 11,
by way of an amendment in 20161, the High Court had no choice but to
refer the matter for arbitration. The provision which has been pressed into
service reads as under:
“11. Appointment of arbitrators: -
XXX XXX XXX
6A) The Supreme Court or, as the case may be, the High Court, while
considering any application under sub-section (4) or sub-section (5)
or sub-section (6), shall, notwithstanding any judgment, decree or

1 It may be necessary to note that the aforesaid provision was inserted by an Act No.3 of
2016 and though by an Act No.33 of 2019, Sub Section 6A has been omitted but as the
relevant provisions of the amending Act (No.33 of 2019) has not been notiﬁed as yet,
Sub Section 6A continues to be in operation.
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 265
[SUDHANSHU DHULIA, J.]

order of any Court, conﬁne to the examination of the existence of an
arbitration agreement.”
5. The validity of the two orders impugned before us, therefore,
have to be examined in light of sub-section 6A to Section 11 and Section
8 of the Arbitration Act, 1996. We will thus also be examining whether
the dispute between the parties is arbitrable, and once a party has availed
the remedy before a public forum under a special beneﬁcial legislation,
can it be compelled to go for arbitration?
In order to arrive at a conclusion, we will ﬁrst have to refer to the
nature of the dispute between the parties. The respondent before this
Court is a home buyer who had entered into an Agreement for Sale
with the present appellants on 27.08.2013. The present appellants will
hereinafter be referred to as the builders/owners and the respondents
as buyer/consumer. The builders/owners are three in number. They are:
(a) M/s R.G. Prime Spaces Private Limited
(b) Smt. M. Hemalatha Devi
(c) M/s Legend Estates Private Limited
They are the joint owners of the land on which they had agreed
to construct a residential house/villa for the buyer/consumer Smt. B.
Udayasri. The terms of agreement dated 27.08.2013 stipulate that the
project will be developed by M/s Legend Estates Private Limited who
is one of the owners of the property. The total area of the land on which
the residential house/villa was to be constructed was 357 sq. yards
in Kokapet Village, Rajendra Nagar Mandal, Ranga Reddy District,
Telangana, and the total construction was 4,000 sq. feet for a total sale
consideration of Rs.49,42,000/- (Rupees Forty Nine Lakhs and Forty
Two Thousand Only).
6. As per the agreement, the mode of payment was to be done as
per clauses 9.1, 9.2 and 9.3 which read as under:
“9.1 Mode: The purchaser paid to the Developer, the total
consideration mentioned in Clause 8.1 above, in the following
manner:
266 SUPREME COURT REPORTS [2023] 13 S.C.R.

S. No. Date Chq. No. Bank Amount
1. 29/08/2013 303650 ING, Vysya Bank, 4,94,200
Hyderabad
Total 4,94,200
9.2 The balance of Rs.44.47,800/- (Rupees Forty Four Lakhs Seven
Thousand Eight Hundred Only) shall be paid by the vendee at the time
of registration of sale deed in favour of purchaser or her nominee/s.
9.3 Essence: timely payment of the total consideration is the essence
of this contract.”
The possession of the house was to be given as per clauses 10.1 and
10.1.1 of the agreement which reads as under:
“10.1 Possession: Vacant and peaceful possession of the said plot
along with constructed villa shall be delivered by the Developer
to the Purchaser simultaneously with the full payment of the Total
Consideration as mentioned in the Sale deed and the Construction
Agreement and registration of Sale Deeds in favour of the purchaser
shall be done after completion of Villa.
10.1.1 The Developer agrees to hand over possession of the said Villa
within period of three years and six months grace period from the date
of agreement of sale. That in case of the developer is unable to hand
over the possession of Villa in stipulated time then the developer is
liable to pay the purchaser compensation Rs.5/- per sq. ft., per month
for any delay in completing the construction of the Villa.”
7. It is therefore, absolutely clear that the builders/owners had to hand
over the fully constructed house/villa to the buyer, within three years from
the date of the agreement i.e., 27.08.2013, with a six months grace period.
In other words, this constructed house/villa had to be handed over to the
buyer/consumer on or before February 27, 2017. This has admittedly not
been done. What happened instead is that in 2020, i.e., after three years
from the date when the constructed house/villa had to be handed over to the
buyer, the builder sends a “Termination Notice” to the buyer and terminates
the agreement, ostensibly on the ground that the buyer had not signed “the
Construction Agreement”. It is not disputed that at the time of signing the
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 267
[SUDHANSHU DHULIA, J.]

agreement in the year 2013, the buyer in terms of the agreement (Clauses 9.1,
9.2 and 9.3) had handed over the ﬁrst instalment of Rs. 4,94,200/- (Rupees
Four Lakh Ninety Four Thousand and Two Hundred Only) to the builders/
owners. The remaining amount of Rs.44,47,800/- (Rupees Forty Four Lakh
Forty Seven Thousand and Eight Hundred Only) was to be paid at the time
of registration of Sale Deed and handing over of the constructed house to
the buyer/consumer. This event, as we have already stated above, never took
place.
8. Meanwhile, the builders/owners after sending notice to the
consumer/buyer moved an application under sub-sections 5 and 6 of Section
11 of the Arbitration Act, 1996 before the High Court for appointment of
an Arbitrator, in terms of the arbitration clause which is admittedly there in
the agreement.
The buyer, who was also a consumer, as deﬁned under the 2019 Act,
moved a complaint before the District Consumer Forum. At the same time,
having received notice of Section 11 application, the respondent ﬁled her
reply before the Court. In her reply, the respondent apprised the High Court
that she being a consumer has moved a complaint before a Judicial Authority,
which is District Consumer Forum, where an application under Section 8 of
the Arbitration Act, 1996 for appointment of Arbitrator is always available to
the appellants. Vide the impugned order dated 19.05.2022, the application of
the present appellants was dismissed by the High Court, and the appellants
were granted liberty to move a Section 8 application of the Arbitration Act,
1996 before the District Consumer Forum. This application (under Section 8
of the Arbitration Act, 1996), as we have already referred to above, was later
dismissed by the District Consumer Forum on the ground that the legislature
had purposely provided a remedy under the 2019 Act in addition to any
other remedy which may be available to the consumer and although there
is an Arbitration clause between the parties but that itself will not oust the
jurisdiction of a Consumer Court for the reason that it is a remedy available
to the consumer in a public fora. The District Consumer Forum relied upon
the Judgment of this Court in Emaar MGF Land Ltd. v. Aftab Singh,
(2019) 12 SCC 751 (“Emaar III”) (this seminal decision of the Supreme
Court, we would be discussing in detail in a while), wherein it has been
268 SUPREME COURT REPORTS [2023] 13 S.C.R.

held that an Arbitration Clause in the agreement does not bar the jurisdiction
of the Consumer Forum to entertain the complaint. After the dismissal of
their Section 8 application, the appellants moved an application before the
Telangana High Court seeking review of its order dated 19.05.2022. The
Review Petition was also dismissed vide order dated 25.11.2022 on the
ground that the earlier order had been acted upon by the appellants.
9. Now before this Court, there is a long line of decisions, including the
decision which had come up post amendment to sub-section (1) of Section
8 and post insertion of sub-section 6A to Section 11 of the Arbitration Act,
1996, where it has been held that in spite of sub-section (1) to Section 8 the
Court has to ﬁnd out not only whether there is an arbitration clause in the
agreement but whether the dispute is arbitrable or not.
All disputes are not capable of being referred to arbitration 2. The
nature of certain disputes may be such that they should never be sent near
an arbitration table. To give an illustration, there would be certain types
of criminal matters, matters involving public corruption, etc. This aspect
has been well considered by this Court in Booz Allen and Hamilton Inc.
v. SBI Home Finance Limited and Others, (2011) 5 SCC 532 and it has
been held as under:
“35. The Arbitral Tribunals are private fora chosen voluntarily by the
parties to the dispute, to adjudicate their disputes in place of courts
and tribunals which are public fora constituted under the laws of the
country. Every civil or commercial dispute, either contractual or non-
contractual, which can be decided by a court, is in principle capable of
being adjudicated and resolved by arbitration unless the jurisdiction
of the Arbitral Tribunals is excluded either expressly or by necessary
implication. Adjudication of certain categories of proceedings are
reserved by the legislature exclusively for public fora as a matter of
public policy. Certain other categories of cases, though not expressly

2 “Not all matters are capable of being referred to arbitration. As a matter of English
law certain matters are reserved for the court alone and if a tribunal purports to deal
with them the resulting award will be unenforceable. These include matters where the
type of remedy required is not one which an Arbitral Tribunal is empowered to give.”
[Russel on Arbitration (22 Edn.)]
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 269
[SUDHANSHU DHULIA, J.]

reserved for adjudication by public fora (courts and tribunals), may
by necessary implication stand excluded from the purview of private
fora. Consequently, where the cause/dispute is inarbitrable, the court
where a suit is pending, will refuse to refer the parties to arbitration,
under Section 8 of the Act, even if the parties might have agreed upon
arbitration as the forum for settlement of such disputes.
36. The well-recognised examples of non-arbitrable disputes are: (i)
disputes relating to rights and liabilities which give rise to or arise
out of criminal oﬀences; (ii) matrimonial disputes relating to divorce,
judicial separation, restitution of conjugal rights, child custody; (iii)
guardianship matters; (iv) insolvency and winding-up matters; (v)
testamentary matters (grant of probate, letters of administration and
succession certiﬁcate); and (vi) eviction or tenancy matters governed
by special statutes where the tenant enjoys statutory protection against
eviction and only the speciﬁed courts are conferred jurisdiction to
grant eviction or decide the disputes.”
The exclusion of a dispute from arbitration may be express or implied,
depending again upon the nature of the dispute, and a party to a dispute
cannot be compelled to resort to arbitration merely for the reason that it has
been provided in the contract, to which it is a signatory. The arbitrability of
a dispute has to be examined when one of the parties seeks redressal under a
welfare legislation, in spite of being a signatory to an arbitration agreement.
‘The Consumer Protection Act’ is deﬁnitely a piece of welfare legislation
with the primary purpose of protecting the interest of a consumer. Consumer
disputes are assigned by the legislature to public fora, as a measure of public
policy. Therefore, by necessary implication such disputes will fall in the
category of non-arbitrable disputes, and these disputes should be kept away
from a private fora such as ‘arbitration’, unless both the parties willingly
opt for arbitration over the remedy before public fora.
In Fair Air Engineers (P) Ltd. v. N.K. Modi (1996) 6 SCC 385, Section
8 of the Arbitration Act, 1996 was considered in light of the provisions of
the 1986 Act.
“16. 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
270 SUPREME COURT REPORTS [2023] 13 S.C.R.

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 discretion. Considered 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 a particular case, come
to the conclusion that the appropriate forum for adjudication of the
disputes would be otherwise those given in the Act.”
Again, the question which came up before this Court was whether
existence of Arbitration clause in the agreement would exclude the
jurisdiction of the Consumer Courts and whether the Consumer Court is
bound to refer the matter for reference to arbitration. This was in the case
of National Seeds Corporation Limited v. M. Madhusudhan Reddy and
Another (2012) 2 SCC 506 and it was answered thus:
“64. According to the learned counsel for the appellant, if the growers
had applied for arbitration then in terms of Section 8 of the Arbitration
and Conciliation Act the dispute arising out of the arbitration clause
had to be referred to an appropriate arbitrator and the District
Consumer Forums were not entitled to entertain their complaint.
This contention represents an extension of the main objection of the
appellant that the only remedy available to the farmers and growers
who claim to have suﬀered loss on account of use of defective seeds
sold/supplied by the appellant was to ﬁle complaints with the Seed
Inspectors concerned for taking action under Sections 19 and/or 21
of the Seeds Act.
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 271
[SUDHANSHU DHULIA, J.]

65. The consideration of this issue needs to be prefaced with an
observation that the grievance of a farmer/grower who has suﬀered
ﬁnancially due to loss or failure of crop on account of use of defective
seeds sold/supplied by the appellant or by an authorised person is not
remedied by prosecuting the seller/supplier of the seeds. Even if such
person is found guilty and sentenced to imprisonment, the aggrieved
farmer/grower does not get anything. Therefore, the so-called remedy
available to an aggrieved farmer/grower to lodge a complaint with
the Seed Inspector concerned for prosecution of the seller/supplier of
the seeds cannot but be treated as illusory and he cannot be denied
relief under the Consumer Protection Act on the ground of availability
of an alternative remedy.
66. The remedy of arbitration is not the only remedy available to a
grower. Rather, it is an optional remedy. He can either seek reference
to an arbitrator or ﬁle a complaint under the Consumer Protection
Act. If the grower opts for the remedy of arbitration, then it may be
possible to say that he cannot, subsequently, ﬁle complaint under the
Consumer Protection Act. However, if he chooses to ﬁle a complaint
in the ﬁrst instance before the competent Consumer Forum, then he
cannot be denied relief by invoking Section 8 of the Arbitration and
Conciliation Act, 1996. Moreover, the plain language of Section 3 of
the Consumer Protection Act makes it clear that the remedy available
in that Act is in addition to and not in derogation of the provisions of
any other law for the time being in force.”
Later, in a similar matter before this Court [Rosedale Developers
Private Limited v. Aghore Bhattacharya and Others (2018) 11 SCC 337],
the plea of the builder for arbitrability was dismissed at the very threshold as
a “frivolous piece of litigation”, relying upon National Seeds Corporation
Limited (supra).
10. Another question raised before this Court by the appellants is that
since it is the builder who had ﬁrst approached the “Court” by ﬁling an
application under Section 11 for appointment of an arbitrator, in terms of
the agreement, the consumer in all fairness should have submitted before
the jurisdiction of the Arbitration and Conciliation Act, as agreed between
the parties (in their agreement), rather than seeking remedy before the
Consumer Forum.
272 SUPREME COURT REPORTS [2023] 13 S.C.R.

The question, however, is of election, or of choice, and not of which
party had approached the court ﬁrst. More importantly it would be the
nature of the dispute, which would determine the forum for its redressal.
The law gives this choice to the consumer to either avail a remedy under
the Consumer Protection Act, by ﬁling a complaint before the Judicial
Authority, or go for arbitration. This option is not available to the builder,
as they are not ‘Consumers’, under the 2019 Act. It is the respondent here
Smt. B. Udayasri who has to make a “choice” between submitting before the
private fora i.e., the Arbitration Tribunal or to make a complaint before the
Consumer Forum, which is a public fora. She has chosen to go to the latter.
Her reply before the Telangana High Court on the Section 11 application
of the builder is not her submission to the arbitration process. In her reply,
she informs the High Court of the complaint made by her as a consumer
before the District Consumer Forum, which is a ‘Judicial Authority’ and
hence Section 8 of the Arbitration Act, 1996 would come into play and not
an application under Section 11 of the Arbitration Act, 1996.
Now merely because the builder had approached a Court ﬁrst (under
Section 11 of the Arbitration Act, 1996) will itself not oust the jurisdiction
of the Consumer Courts. The jurisdiction of a Court is not determined by
the fastest ﬁnger ﬁrst, but the nature of the dispute, the public policy in the
matter, the will of the legislature, the election or choice of the consumer
amongst various factors.
11. Any doubt which so far may have existed for a consumer pursuing
his remedy before Consumer Forums as against his going for ‘arbitration’,
though being a party to an arbitration agreement, have now been set to rest
by a recent Supreme Court decision in Emaar III (supra). This decision is
signiﬁcant for the reason that it has re-examined the whole issue afresh in
the light of the insertion of sub-section 6A to Section 11 and sub-section 1
to Section 8 of the Arbitration Act, 1996.
A short background to this case should be in order as this Court while
determining the present dispute has relied heavily on the above decision.
We must also refer here to the well elaborated order of a larger bench of
National Consumer Disputes Redressal Commission (NCDRC), dated
13.07.2017 in Aftab Singh v. Emaar MGF Land Ltd and Anr., 2017 SCC
OnLine NCDRC 1614 (“Emaar I”) which had set the background to the
decision of this Court in Emaar III (supra).
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 273
[SUDHANSHU DHULIA, J.]

By Act No.3 of 2016, an amendment was incorporated, inter alia,
in Sections 8 & 11 of the Arbitration Act, 1996. The amendment was
incorporated by Act No. 3 of 2016 was w.e.f. 23.10.2015. These are as
follows:
Pre-Amendment Post Amendment
Section 8: Section 8:
8. Power to refer parties to arbitration 8. Power to refer parties to arbitration
where there is an arbitration where there is an arbitration
agreement.— agreement.—
(1) A judicial authority, before (1) A judicial authority, before
which an action is brought in a which an action is brought in a
matter which is the subject of an matter which is the subject of an
arbitration agreement shall, if a arbitration agreement shall, if a
party so applies not later than when party to the arbitration agreement
submitting his ﬁrst statement on the or any person claiming through
substance of the dispute, refer the or under him, so applies not later
parties to arbitration. than the date of submitting his ﬁrst
statement on the substance of the
dispute, then, notwithstanding any
judgment, decree or order of the
Supreme Court or any court, refer
the parties to arbitration unless
it ﬁnds that prima facie no valid
arbitration agreement exists.
(2) The application referred to (2) The application referred to
in sub-section (1) shall not be in sub-section (1) shall not be
entertained unless it is accompanied entertained unless it is accompanied
by the original arbitration agreement by the original arbitration agreement
or a duly certiﬁed copy thereof. or a duly certiﬁed copy thereof.
Provided that where the original
arbitration agreement or a certiﬁed
copy thereof is not available with
the party applying for reference to
arbitration under sub-section (1) and
274 SUPREME COURT REPORTS [2023] 13 S.C.R.

the said agreement or certiﬁed copy
is retained by the other party to
that agreement, then, the party so
applying shall ﬁle such application
along with a copy of the arbitration
agreement and a petition praying
the court to call upon the other party
to produce the original arbitration
agreement or its duly certiﬁed copy
before that court.
(3) …….. (3) …….
Section 11: Section 11:
Appointment of arbitrators.— Appointment of arbitrators.—
(1) ……. (1) …….
(2) ……. (2) …….
(3) ……. (3) …….
(4) If the appointment procedure in (4) If the appointment procedure in
sub-section (3) applies and— sub-section (3) applies and—
(a) ……. (a) ……
(b) the two appointed arbitrators (b) the two appointed arbitrators
fail to agree on the third arbitrator fail to agree on the third arbitrator
within thirty days from the date of within thirty days from the date of
their appointment, the appointment their appointment, the appointment
shall be made, upon request of a shall be made, upon request of a
party, by the Chief Justice or any party, by the Supreme Court or, as
person or institution designated by the case may be, the High Court or
him. any person or institution designated
by such Court;
(5) Failing any agreement referred to (5) Failing any agreement referred to
in sub-section (2), in an arbitration in sub-section (2), in an arbitration
with a sole arbitrator, if the parties with a sole arbitrator, if the parties
fail to agree on the arbitrator within fail to agree on the arbitrator within
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 275
[SUDHANSHU DHULIA, J.]

thirty days from receipt of a request thirty days from receipt of a request
by one party from the other party to by one party from the other party to
so agree the appointment shall be so agree the appointment shall be
made, upon request of a party, by made, upon request of a party, by the
the Chief Justice or any person or Supreme Court or, as the case may
institution designated by him. be, the High Court or any person or
institution designated by such Court.
(6) Where, under an appointment (6) Where, under an appointment
procedure agreed upon by the procedure agreed upon by the
parties,— parties,—
(a) ….. (a) …..
(b) …. (b) …..
(c) a person, including an institution, (c) a person, including an institution,
fails to perform any function fails to perform any function
entrusted to him or it under that entrusted to him or it under that
procedure, a party may request procedure, a party may request the
the Chief Justice or any person or Supreme Court or, as the case may
institution designated by him to be, the High Court or any person or
take the necessary measure, unless institution designated by such Court
the agreement on the appointment to take the necessary measure, unless
procedure provides other means for the agreement on the appointment
securing the appointment. procedure provides other means for
securing the appointment
(6A) The Supreme Court or, as
the case may be, the High Court,
while considering any application
under sub-section (4) or sub-
section (5) or sub-section (6), shall,
notwithstanding any judgment,
decree or order of any Court, conﬁne
to the examination of the existence
of an arbitration agreement.
276 SUPREME COURT REPORTS [2023] 13 S.C.R.

(6B) The designation of any person
or institution by the Supreme Court
or, as the case may be, the High
Court, for the purposes of this
section shall not be regarded as a
delegation of judicial power by the
Supreme Court or the High Court.
Now post amendment, the newly incorporated sub-section (1) to
Section 8 has the words “notwithstanding any judgment, decree or order of
the Supreme Court or any court, refer the parties to arbitration unless it ﬁnds
that prima facie no valid arbitration agreement exists”. When complaints
were ﬁled before the consumer forum, such matters were referred to a larger
three-member bench of NCDRC. The question referred was whether the
judicial authority i.e., the consumer forum had any option (post amendment),
but to refer the dispute to arbitration when an application under Section 8
is moved before it. The answer which was given by the NCDRC in a well-
considered order, holds that there is no change in the law on the arbitrability
of a dispute before a consumer forum, and the Consumer Court is hence not
liable to refer the matter for arbitration.
This decision of NCDRC dated 13.07.2017 was challenged by the
builder in his statutory appeal before this court, which was summarily
dismissed, vide order dated 13.02.2018 in Emaar MGF Land Limited v.
Aftab Singh, 2018 SCC OnLine SC 2378 (“Emaar II”).
Subsequently a review petition was ﬁled before this Court seeking
review of the order dated 13.02.2018. The matter was hence reconsidered
by this court, in the light of the 2016 amendment and the question was
whether the amendment now necessitates a reappraisal of the earlier view
of this Court. This Court after giving an extensive hearing to the parties
reaﬃrmed its earlier views holding that the amendment in the Act, would
not make any diﬀerence to the legal position held earlier.
12. The main argument of the appellants was that subsequent to the
amendment in the year 2016 (Act No. 3 of 2016) by which the Parliament
added the word “notwithstanding any judgment, decree or order” refer the
parties to arbitration unless it ﬁnds that prima facie no valid arbitration
agreement exists, the legislative intent was clear that hereinafter Judicial
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 277
[SUDHANSHU DHULIA, J.]

Authority is mandated to refer a dispute for arbitration once there was a
valid arbitration agreement, and an application under Section 8 is duly
presented. The argument was that though prior to the amendment, and in
view of the law laid down by this Court in National Seeds Corporation
Limited (supra), an option was available to the consumer to avail a remedy
under the Consumer Protection Act, but post amendment and in terms of the
unambiguous language of Section 8, the judicial authority is left with no
option but to refer the dispute for arbitration when an application is moved
before the judicial authorities under Section 8 of the Arbitration Act, 1996.
The same argument has been made before us by the appellants, though
in the context of their Section 11 application before the High Court, they
would argue that in view of the similar mandate now given in sub-section
6A of Section 11, the High Court had no choice but to appoint an arbitrator!
13. The counter argument before this Court raised on behalf of
the consumer (in Emaar MGF Land Ltd. case), was that the Consumer
Protection Act is a beneﬁcial legislation for the consumers, which gives a
speedy, and expeditious remedy for redressal of consumer disputes. If the
argument of the review petitioners were to be accepted then it would amount
to setting at naught the beneﬁcial legislation i.e., Consumer Protection Act.
It would also have similar eﬀect in cases relating to trusts, tenancy disputes,
industrial disputes, IPR and other non-arbitrable disputes. It was for this
reason that the three-member Bench of NCDRC in Emaar I (supra) had
said “the ripple of the amendment to Section 8(1) cannot be so large as to
inundate domains of other legislations and jurisprudence, painstakingly
built by the Legislators and Courts, especially without any engagement,
debate and critique with the foundations of these related laws.”
14. This court then examined the legal position as it existed prior to
the amendments and the eﬀect of the amendment on the legal position.
The preamble of the 1986 Act was examined.3 The 1986 Act was
enacted to provide better protection of consumer interest and to have level

3 Although the Consumer Protection Act of 1986 has now been repealed and the new
Act of 2019 i.e., the Consumer Protection Act, 2019 has come into force, yet for our
purpose the reference to the 1986 Act at various places in the present judgment would
not make any diﬀerence as the basic purpose of the 1986 Act and 2019 Act remains
primarily the protection of consumers and providing them with an easy, inexpensive
redressal mechanism of their grievances
278 SUPREME COURT REPORTS [2023] 13 S.C.R.

playing ﬁeld for the consumers in the market driven economy. The 1986
Act as a beneﬁcial legislation was considered in Lucknow Development
Authority v. M.K. Gupta (1994) 1 SCC 243. It was considered thus:
“…………. To begin with the preamble of the Act, which can aﬀord
useful assistance to ascertain the legislative intention, it was enacted,
‘to provide for the protection of the interest of consumers’. Use of
the word ‘protection’ furnishes key to the minds of makers of the Act.
Various deﬁnitions and provisions which elaborately attempt to achieve
this objective have to be construed in this light without departing from
the settled view that a Preamble cannot control otherwise plain meaning
of a provision. In fact the law meets long felt necessity of protecting the
common man from such wrongs for which the remedy under ordinary
law for various reasons has become illusory. Various legislations
and regulations permitting the State to intervene and protect interest
of the consumers have become a haven for unscrupulous ones as the
enforcement machinery either does not move or it moves ineﬀectively,
ineﬃciently and for reasons which are not necessary to be stated.
The importance of the Act lies in promoting welfare of the society by
enabling the consumer 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’ and
the might of public bodies which are degenerating into storehouses of
inaction where papers do not move from one desk to another as a matter
of duty and responsibility but for extraneous consideration leaving
the common man helpless, 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
part of life. The enactment in these unbelievable yet harsh realities
appears to be a silver lining, which may in course of time succeed in
checking the rot.”
In Secretary, Thirumurugan Cooperative Agricultural Credit Society
v. M. Lalitha, (2004) 1 SCC 305, in paras 11 and 12 it was held as under:
“11. From the Statement of Objects and Reasons and the scheme of
the 1986 Act, it is apparent that the main objective of the Act is to
provide for better protection of the interest of the consumer and for
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 279
[SUDHANSHU DHULIA, J.]

that purpose to provide for better redressal, mechanism through which
cheaper, easier, expeditious and eﬀective redressal is made available
to consumers. To serve the purpose of the Act, various quasi-judicial
forums are set up at the district, State and national level with wide
range of powers vested in them. These quasi-judicial forums, observing
the principles of natural justice, are empowered to give relief of a
speciﬁc nature and to award, wherever appropriate, compensation
to the consumers and to impose penalties for non-compliance with
their orders.
12. As per Section 3 of the Act, as already stated above, the provisions
of the Act shall be in addition to and not in derogation of any other
provisions of any other law for the time being in force. Having due
regard to the scheme of the Act and purpose sought to be achieved
to protect the interest of the consumers better, the provisions are to
be interpreted broadly, positively and purposefully in the context of
the present case to give meaning to additional/extended jurisdiction,
particularly when Section 3 seeks to provide remedy under the Act in
addition to other remedies provided under other Acts unless there is
a clear bar.”
It was held that the 1986 Act was enacted to provide better protection
of the interest of consumers and for providing a redressal mechanism,
which is cheaper, easier, expeditious and eﬀective. For this purpose, various
quasi-judicial forums were setup at district, state and national level with a
wider range of powers vested in these Judicial Authorities. These Judicial
Authorities were vested with the powers to give relief of a speciﬁc nature
and to award compensation to the consumer wherever it was felt necessary
to impose penalty for non-compliance of their orders, and the judicial
authorities were vested with such powers. Now compare this with the power
of the arbitrator. An arbitrator does not have the power to impose a penalty.
This is also one of the essential diﬀerences between the two forums. It was
ﬁnally held that the provisions given under the 1986 Act were in addition
to, and not in derogation to, any other provisions or any other law for the
time being in force.
15. In Fair Air Engineers (P) Ltd. (supra) and in Skypak Couriers Ltd.
v. Tata Chemicals Ltd., (2000) 5 SCC 294 the above position was reiterated
by this Court. The ﬁnding of this Court in National Seeds Corporation
280 SUPREME COURT REPORTS [2023] 13 S.C.R.

Limited (supra) has also been referred to in the preceding paragraphs of
this Judgment wherein it was held that arbitration is not the only remedy
available to the consumer and they can either seek a reference to arbitration
or ﬁle a complaint under the 1986 Act, but can never be forced to seek a
remedy only under Arbitration Act, 1996, in spite of the arbitration agreement
in the contract.
This position was reiterated by this Court in Rosedale Developers
Private Limited (supra), wherein paras 4, 6 and 7 stated as under:
“4. In our opinion, there is no merit in the submission of the learned
counsel. The question whether the existence of an arbitration clause
contained in the agreement executed between the parties excludes the
jurisdiction of the consumer forum and on an application made by
either party, the consumer forum is duty-bound to make a reference
to the arbitrator was extensively considered in National Seeds Corpn.
Ltd. v. M. Madhusudhan Reddy [National Seeds Corpn. Ltd. v. M.
Madhusudhan Reddy, (2012) 2 SCC 506: (2012) 1 SCC (Civ) 908]
and it was observed…… (SCC pp. 534-35, paras 64-66).
5………………..
6. The judgments relied upon by Shri Ghose do not have any bearing
on the issue raised in this appeal. In neither of those cases, has this
Court interpreted the provisions of the 1996 Act in the light of the
provisions contained in the 1986 Act. Therefore, the propositions laid
down in those judgments that Section 8 of the 1996 Act is mandatory
cannot lead to an inference that the consumer forum is bound to make
a reference to the Arbitral Tribunal.
7. In view of the abovestated legal position, the National Commission
did not commit any error by holding that the remedy of arbitration
available to the complainant does not bar the jurisdiction of the
consumer forums and the consumer forums are not under an obligation
to refer the matter to the Arbitral Tribunal. With the above observation,
the appeal is dismissed.”
16. This Court in a series of decisions, while considering both the
provisions in the Consumer Protection Act, 1986 and the Arbitration
Act, 1996, has held that the Consumer Protection Act being a special and
beneﬁcial legislation, the remedies provided therein are special remedies
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 281
[SUDHANSHU DHULIA, J.]

and a consumer cannot be deprived of them should he choose to avail such
a remedy, in spite of an arbitration agreement between the parties. It is a
remedy provided to the consumer where the consumer ﬁnds a defect in
either goods or services provided to him and therefore seeks a redressal
of his grievances before the consumer forum provided to him by the
legislature. While referring to a plethora of precedents in the matter, this
Court had held in Emaar III (supra) that not only the proceedings under
the 1986 Act are special proceedings which will continue under the Act in
spite of the arbitration agreement, but there would also be a large number of
other proceedings as well which ought to continue in spite of an arbitration
agreement such as proceedings in Criminal Court, a Commercial dispute of
a particular nature or any other non-arbitrable dispute. In Para 30 of Emaar
III (supra), it was stated as under:
“30. Not only the proceedings of the Consumer Protection Act, 1986
are special proceedings which were required to be continued under
the Act despite an arbitration agreement, there are large number
of other ﬁelds where an arbitration agreement can neither stop nor
stultify the proceedings. For example, any action of a party, omission
or commission of a person which amounts to an oﬀence has to be
examined by a criminal court and no amount of agreement between the
parties shall be relevant for the said case. For example, there may be a
commercial agreement between two parties that all issues pertaining to
transaction are to be decided by arbitration as per arbitration clause in
the agreement. In case where a cheque is dishonoured by one party in
transaction, despite the arbitration agreement party aggrieved has to
approach the criminal court. Similarly, there are several issues which
are non-arbitrable. There can be prohibition both express or implied
for not deciding a dispute on the basis of an arbitration agreement.”
17. In Booz Allen and Hamilton Inc. (supra), what would be a non-
arbitrable dispute was elaborated by this Court in detail. Emaar III (supra)
then analysed whether this position has changed after the 2016 amendment
in the Arbitration Act, 1996. The provisions amended in the Arbitration Act,
1996 particularly with which we are concerned here i.e., Sections 8 and
11 have already been referred to in the preceding paragraphs. This Court
in Emaar III (supra), after a change in the provisions post amendment,
referred to Section 2(3) of the Arbitration Act, 1996, which reads as under:
282 SUPREME COURT REPORTS [2023] 13 S.C.R.

“2. (3) This Part shall not aﬀect any other law for the time being
in force by virtue of which certain disputes may not be submitted to
arbitration.”
Thus, it was clear that this part of the Arbitration Act, 1996 (i.e., Part
I) shall not aﬀect any other law for the time being in force by virtue of
which certain disputes may not be submitted to arbitration. Those disputes
which cannot be submitted for arbitration have already been referred to
above and have been discussed in detail in Booz Allen and Hamilton Inc.
(supra). For the sake of repetition and in order to just make an illustration,
these disputes would be:
(i) patent, trademarks and copyright;
(ii) anti-trust/competition laws;
(iii) insolvency/winding up;
(iv) bribery/corruption;
(v) fraud;
(vi) criminal matter.
In A. Ayyasamy v. A. Paramasivam and Others (2016) 10 SCC 386,
this Court in para 35 had held as under:
“35. Ordinarily every civil or commercial dispute whether based on
contract or otherwise which is capable of being decided by a civil
court is in principle capable of being adjudicated upon and resolved
by arbitration “subject to the dispute being governed by the arbitration
agreement” unless the jurisdiction of the Arbitral Tribunal is excluded
either expressly or by necessary implication. In Booz Allen and
Hamilton Inc. v. SBI Home Finance Ltd. [Booz Allen & Hamilton Inc.
v. SBI Home Finance Ltd., (2011) 5 SCC 532 : (2011) 2 SCC (Civ) 781]
, this Court held that (at SCC p. 546, para 35) adjudication of certain
categories of proceedings is reserved by the legislature exclusively
for public fora as a matter of public policy. Certain other categories
of cases, though not exclusively reserved for adjudication by courts
and tribunals may by necessary implication stand excluded from the
purview of private fora. This Court set down certain examples of non-
arbitrable disputes such as : (SCC pp. 546-47, para 36)
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 283
[SUDHANSHU DHULIA, J.]

(i) disputes relating to rights and liabilities which give rise to or arise
out of criminal oﬀences;
(ii) matrimonial disputes relating to divorce, judicial separation,
restitution of conjugal rights and child custody;
(iii) matters of guardianship;
(iv) insolvency and winding up;
(v) testamentary matters, such as the grant of probate, letters of
administration and succession certiﬁcates; and
(vi) eviction or tenancy matters governed by special statutes where a
tenant enjoys special protection against eviction and speciﬁc courts
are conferred with the exclusive jurisdiction to deal with the dispute.
This Court held that this class of actions operates in rem, which is
a right exercisable against the world at large as contrasted with a
right in personam which is an interest protected against speciﬁed
individuals. All disputes relating to rights in personam are considered
to be amenable to arbitration while rights in rem are required to be
adjudicated by courts and public tribunals. The enforcement of a
mortgage has been held to be a right in rem for which proceedings in
arbitration would not be maintainable. In Vimal Kishor Shah v. Jayesh
Dinesh Shah [Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC
788 : (2016) 4 SCC (Civ) 303] , this Court added a seventh category of
cases to the six non-arbitrable categories set out in Booz Allen [Booz
Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 :
(2011) 2 SCC (Civ) 781] , namely, disputes relating to trusts, trustees
and beneﬁciaries arising out of a trust deed and the Trust Act.”
18. This Court in Emaar III (supra) then considered the scope and
eﬀect of Section 5 of the Arbitration Act, 1996 which reads as under:
“5. Extent of judicial intervention. – Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part.”
19. What were then the factors which necessitated an amendment, inter
alia, in Sections 8 and 11 of the Arbitration Act, 1996 and what was the
purpose behind these amendments? This aspect again has been examined in
284 SUPREME COURT REPORTS [2023] 13 S.C.R.

detail in Emaar III (supra). Such amendments were recommended by the
Law Commission in its 246th Report, paragraph 33 of the 246th Report of
the Law Commission stated as under:
“33. It is in this context, the Commission has recommended amendments
to Sections 8 and 11 of the Arbitration and Conciliation Act, 1996.
The scope of the judicial intervention is only restricted to situations
where the court/judicial authority ﬁnds that the arbitration agreement
does not exist or is null and void. Insofar as the nature of intervention
is concerned, it is recommended that in the event the court/judicial
authority is prima facie satisﬁed against the argument challenging the
arbitration agreement, it shall appoint the arbitrator and/or refer the
parties to arbitration, as the case may be. The amendment envisages
that the judicial authority shall not refer the parties to arbitration only
if it ﬁnds that there does not exist an arbitration agreement or that it
is null and void. If the judicial authority is of the opinion that prima
facie the arbitration agreement exists, then it shall refer the dispute
to arbitration, and leave the existence of the arbitration agreement
to be ﬁnally determined by the Arbitral Tribunal. However, if the
judicial authority concludes that the agreement does not exist, then
the conclusion will be ﬁnal and not prima facie.”
The Statement of Objects and Reasons of the Arbitration and
Conciliation (Amendment) Bill 2015 reads as under:
“2. The Act was enacted to provide for speedy disposal of cases relating
to arbitration with least court intervention. With the passage of time,
some diﬃculties in the applicability of the Act have been noticed.
Interpretation of the provisions of the Act by courts in some cases have
resulted in delay of disposal of arbitration proceedings and increase
in interference of courts in arbitration matters, which tend to defeat
the object of the Act.
* * *
6. (iv) to provide that while considering any application for appointment
of arbitrator, the High Court or the Supreme Court shall examine the
existence of a prima facie arbitration agreement and not other issues;
Notes on the Clauses on amendment in Section 8 read as follows:
“Clause 4 of the Bill seeks to amend Section 8 of the principal Act to
specify that the judicial authority shall refer the parties to arbitration
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 285
[SUDHANSHU DHULIA, J.]

unless it ﬁnds that prima facie no valid arbitration agreement exists.
A proviso below sub-section (2) is inserted to provide that where the
original arbitration agreement or certiﬁed copy thereof is not available
with the party who apply under sub-section (1), and is retained by the
other party, such party shall ﬁle a copy of the arbitration agreement
along with application under sub-section (1) praying to the court to
call upon the other party to produce the original arbitration agreement
or its duly certiﬁed copy before the court.
On amendment to Section 11 by inserting sub-section (6-A), the
following was stated:
“Clause 6 of the Bill seeks to amend Section 11 of the principal Act to
provide that appointment of arbitrator shall be made by the Supreme
Court or the High Court, as the case may be, instead of the Chief Justice
of India or the Chief Justice of the High Court. Sub-section (6-A) is
inserted to provide that the Supreme Court or the High Court while
considering application under sub-sections (4) to (6) shall conﬁne to
the examination of an arbitration agreement.”
20. The amendment which was made in Section 8 of the Arbitration
Act, 1996 came up for consideration before this Court in Ameet Lalchand
Shah v. Rishabh Enterprises, (2018) 15 SCC 678, where in paras 28 and
30, it was stated as under:
“28. ‘Principally four amendments to Section 8(1) have been
introduced by the 2015 Amendments — (i) the relevant “party” that
is entitled to apply seeking reference to arbitration has been clariﬁed/
ampliﬁed to include persons claiming “through or under” such a party
to the arbitration agreement; (ii) scope of examination by the judicial
authority is restricted to a ﬁnding whether “no valid arbitration
agreement exists” and the nature of examination by the judicial
authority is clariﬁed to be on a “prima facie” basis; (iii) the cut-oﬀ
date by which an application under Section 8 is to be presented has
been deﬁned to mean “the date of” submitting the ﬁrst statement on
the substance of the dispute; and (iv) the amendments are expressed
to apply notwithstanding any prior judicial precedent. The proviso to
Section 8(2) has been added to allow a party that does not possess the
original or certiﬁed copy of the arbitration agreement on account of it
286 SUPREME COURT REPORTS [2023] 13 S.C.R.

being retained by the other party, to nevertheless apply under Section 8
seeking reference, and call upon the other party to produce the same.’
(Ref.: Justice R.S. Bachawat’s Law of Arbitration and Conciliation,
Sixth Edn., Vol. I (Sections 1 to 34) at p. 695 published by Lexis Nexis).
* * *
30. The language of amendment to Section 8 of the Act is clear that
the amendment to Section 8(1) of the Act would apply notwithstanding
any prayer, judgment, decree or order of the Supreme Court or any
other court. The High Court laid [Ameet Lalchand Shah v. Rishabh
Enterprises, 2017 SCC OnLine Del 7865] emphasis upon the word
‘… unless it ﬁnds that prima facie no valid agreement exists’. The
High Court observed that there is no arbitration agreement between
Astonﬁeld and Rishabh. After referring to Sukanya Holdings [Sukanya
Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531] and the
amended Section 8 and Section 45 of the Act, the High Court pointed
out the diﬀerence in language of Section 8 and Section 45 of the Act.
The High Court distinguished between Sukanya Holdings [Sukanya
Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531] and Chloro
Controls [Chloro Controls (India) (P) Ltd. v. Severn Trent Water
Puriﬁcation Inc., (2013) 1 SCC 641 : (2013) 1 SCC (Civ) 689] and
observed that Sukanya Holdings [Sukanya Holdings (P) Ltd. v. Jayesh
H. Pandya, (2003) 5 SCC 531] was not overruled by Chloro Controls
[Chloro Controls (India) (P) Ltd. v. Severn Trent Water Puriﬁcation
Inc., (2013) 1 SCC 641 : (2013) 1 SCC (Civ) 689].”
21. This Court ultimately held that the main purpose of bringing an
amendment inter alia in Sections 8 and 11 of the Arbitration Act, 1996 was
to minimise the scope of judicial authority, which was to refuse reference
to arbitration only on the ground when it prima facie ﬁnds that there was
no valid arbitration agreement. The legislative intent for the amendment
was conﬁned to limiting judicial intervention, and once the Court ﬁnds
that there is a valid arbitration agreement, it has no option but to refer the
matter for arbitration. But this would not mean that where the matter itself
is non-arbitrable, or is covered by a special legislation such as the Consumer
Protection Act, it still has to be referred for arbitration. In Para 59 of Emaar
III (supra), it was stated as under:
SMT. M. HEMALATHA DEVI & ORS. v. B. UDAYASRI 287
[SUDHANSHU DHULIA, J.]

“59. The amendment in Section 8 cannot be given such expansive
meaning and intent so as to inundate entire regime of special
legislations where such disputes were held to be not arbitrable.
Something which legislation never intended cannot be accepted as side
wind to override the settled law. The submission of the petitioner that
after the amendment the law as laid down by this Court in National
Seeds Corpn. Ltd. [National Seeds Corpn. Ltd. v. M. Madhusudhan
Reddy, (2012) 2 SCC 506 : (2012) 1 SCC (Civ) 908] is no more a good
law cannot be accepted. The words “notwithstanding any judgment,
decree or order of the Supreme Court or any court” were meant only
to those precedents where it was laid down that the judicial authority
while making reference under Section 8 shall be entitled to look into
various facets of the arbitration agreement, subject-matter of the
arbitration whether the claim is alive or dead, whether the arbitration
agreement is null and void. The words added in Section 8 cannot be
meant for any other meaning.”
Emaar III (supra) though ends with a caveat, where it leaves the option
with the party who may have an option to choose between a public or private
forum, may consciously choose to go for private fora. This is what it says:
“63. We may, however, hasten to add that in the event a person entitled
to seek an additional special remedy provided under the statues
does not opt for the additional/special remedy and he is a party to
an arbitration agreement, there is no inhibition in disputes being
proceeded in arbitration. It is only the case where speciﬁc/special
remedies are provided for and which are opted by an aggrieved
person that judicial authority can refuse to relegate the parties to the
arbitration.”
22. Thus, in our considered opinion in the case at hand, the Telangana
High Court had adopted the right approach in its two impugned orders, where
it declined to interfere in the matter and appoint an arbitrator.
True in Emaar III (supra) this Court had examined the scope of
sub-section (1) to Section 8 and not of sub-section 6A to Section 11 of the
Arbitration Act, 1996. All the same, the reasoning given in the above judgment
would be equally applicable to Section 11 application before the High
Court. Both the provisions incorporated in Section 8 and Section 11 of the
288 SUPREME COURT REPORTS [2023] 13 S.C.R.

Arbitration Act, 1996 [i.e., sub-section (1) and sub-section 6A respectively],
seemingly restrict the scope of the examination by the concerned courts, in
their reference to arbitration, or appointment of arbitrator, as the case might
be, and the language being common, “notwithstanding any judgment, decree
or order” places a similar question before the two courts.
More importantly, when the Principal Civil Court or a judicial authority
such as consumer redressal forum can have powers to dismiss a Section 8
application on the ground of arbitrability of a dispute, will such powers not
be available with the High Courts? In SBP & Co. v. Patel Engg. Ltd.4 , it
was decided by this Court that both Section 8 and Section 11 of Arbitration
Act, 1996 are complementary provisions. This position has been reiterated,
in the post-amendment context, in Vidya Drolia v. Durga Trading Corpn.5
23. The application under Section 11 of the Arbitration Act, 1996
for appointment of an arbitrator, was not maintainable in the present case,
and consequently we uphold the impugned orders dated 19.05.2022 and
25.11.2022, which held this position. We refrain from saying anything further
on the matter as the dispute is still sub judice before the State Consumer
Forum (Appellate Authority).
24. The appeals are hereby dismissed.

Headnotes prepared by: Appeals dismissed.
Divya Pandey

4 (2005) 8 SCC 618
5 (2021) 2 SCC 1

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