Consumer Law; Ramunnikutty Nair C.A. Vs. Kotak Mahindra Primus Ltd. [Kerala High Court, 11-06-2012]

Consumer Protection Act, 1986 – Arbitration and Conciliation act 1996 – Whether the CDRF was right in passing order by which it found itself disabled from proceeding with the complaint in view of the arbitration clause in the agreement? Held, Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force.

# Consumer Disputes Redressal Forum (CDRF)


IN THE HIGH COURT OF KERALA AT ERNAKULAM

K.Vinod Chandran, J.

W.P.(C).No.17042 of 2006-D

Dated this, the 11th day of June, 2012

Ramunnikutty Nair C.A. Vs. Kotak Mahindra Primus Ltd.

FOR PETITIONER: ADV. SRI.C.P.MOHAMMED NIAS

FOR RESPONDENTS: R1 TO R3 BY ADV. SRI.M.A.JOSEPH MANAVALAN; SRI.SOORAJ ELANJICKAL.

J U D G M E N T

The petitioner in the above writ petition challenges Exhibit P5 order of the Consumer Disputes Redressal Forum (for short ‘CDRF’), Kozhikode, refusing to proceed with the complaint filed by the petitioner and referring the dispute to arbitration. The petitioner also challenges the proceedings taken in Arbitration O.P.No.65 of 2006 before the II Additional District Court, Ernakulam at the instance of the respondents for appointment of an Arbitrator, though no documents are produced to evidence the same.

2. The petitioner was a borrower from the respondents; having availed financial assistance for the purchase of an Ambassador Car. As per the agreement, the loan was to be repaid in 36 equated monthly instalments, for which the petitioner claims to have issued 36 post-dated cheques. It is contended that the petitioner had closed the loan account by repaying the entire amounts as on 8.4.2004. The allegation of the petitioner before the CDRF was that despite the loan account being closed, the post-dated cheques issued by the petitioner were not returned and that in fact some of them unauthorisedly presented even after the closure of the account. In addition, the “No Objection Certificate” necessary for lifting the hypothecation endorsed by the Registering Authority in the Registration Certificate also was not issued. In the circumstances, the petitioner approached the CDRF, Kozhikode, wherein the respondents appeared and also filed its version. However, later, the respondents raised a contention that the transaction of the petitioner was on the strength of an agreement executed by the petitioner with the respondents and such agreement having contained an arbitration clause, the proceedings before the CDRF was incompetent and necessarily parties had to be referred to arbitration. This was accepted by the CDRF, Kozhikode, which passed Exhibit P5 order, the legality of which is challenged in the above writ petition.

3. The petitioner’s counsel would argue that the remedy of arbitration is not the only remedy available to the petitioner and 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. The petitioner’s counsel also relies on the decision of the Supreme Court reported in

# National Seeds Corporation Limited v. M.Madhusudhan Reddy and another, (2012) 2 SCC 506

4. The respondents though were represented by counsel in the above writ petition, none has appeared when the writ petition was taken up for hearing. It is pertinent that another learned Single Judge had also issued an interim order staying the arbitration proceedings initiated by the respondents before the II Additional District Court, Ernakulam, by order dated 3.8.2006.

5. The short question to be answered is whether the CDRF was right in passing Exhibit P5 order by which it found itself disabled from proceeding with the complaint in view of the arbitration clause in the agreement. Going by the complaint as also the version of the respondents-opposite parties produced by the petitioner in the above writ petition, the transaction and the subsequent closure of the loan account is not at all in dispute. The petitioner’s contention of the respondents having presented post-dated cheques even after the account was closed and the failure of the respondents to issue NOC is seen to be disputed by the respondents. Looking at the complaint-Exhibit P1, essentially the petitioner has approached the CDRF for deficiency of service in so far as the above allegations regarding illegal enrichment by way of presenting cheques even after the account is closed as also failure to issue the NOC. The petitioner has also claimed amounts as compensation for loss and injury caused on account of the negligence and deficiency in service of the respondents.

6. The agreement between the petitioner and the respondents evidently has not been produced herein and the respondents, though appearing, have not filed any counter affidavit. The scope of the arbitration or the matters in which the arbitrator can go into, hence, is not clear. It is also to be reiterated that the petitioner too has not produced any documents evidencing initiation of proceedings before the II Additional District Court, Ernakulam. However, with respect to the disability of the CDRF as found in Exhibit P5, the decision above referred directly is an answer to the issue.

7. The Hon’ble Supreme Court, considering the provisions of the Consumer Protection Act, held that it is clear that the legislature intended to provide a remedy in addition to the remedy of arbitration under the Arbitration Act or the civil action in a suit under the provisions of the Code of Civil Procedure. Even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to certain deficiency of service, it was held that, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force. True, if the petitioner opted for an arbitration proceeding or a civil remedy, then the petitioner would not be entitled to duplicate litigation on the ground of deficiency of service under the Consumer Protection Act. However, the remedy under the Consumer Protection Act having been held to be in addition to and not in derogation of the provisions of any other law for the time being in force, the petitioner cannot be relegated to a remedy under the Arbitration and Conciliation Act, if he chooses to approach the competent consumer forum for reliefs. In the circumstances, Exhibit P5 is liable to be set aside as an order passed by the CDRF refusing to exercise the jurisdiction lawfully conferred on it and there shall be a consequential direction to restore the complaint, O.P.No.299 of 2005, to the files of the CDRF and proceed with the same in accordance with law. However, with respect to the prayer for stay of arbitration proceedings, as noticed earlier, there is no documentary evidence to prove initiation or the pendency of the same and in any event, it is for the petitioner to approach the Court in which such proceeding has been initiated and seek rejection of the same in accordance with law.

In the circumstances, the writ petition is partly allowed and Exhibit P5 is set aside, directing the CDRF, Kozhikode to restore O.P.No.299 of 2005 to its file and to proceed with it in accordance with law. There will be no order as to costs.

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