Consumer Fora Jurisdiction Prevails over Arbitration Clause

The appellant filed consumer complaint against the society for deficiency in service on account of delay in handing over possession of the flat.

The complaint was admitted and the notice was issued to the respondent.

The respondent invoked section 8 of the Arbitration Act in view of arbitration clause in the agreement.

The dispute was referred to the arbitration.

This was confirmed by the State and the National Consumer Commissions.

The National Commission, however, dismissed the revision petition on the ground that the appellant was not a consumer at the time of filing of the complaint, since he had already taken possession of the flat without protest.

A claim for compensation for delayed possession necessarily arises from the period prior to the actual delivery of possession. The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay.

The appellant’s complaint was not a civil suit simpliciter. It was a complaint under the 1986 Act alleging deficiency in service on account of delay in handing over possession of a flat. The fact that the agreement between the parties contained an arbitration clause could not, by itself, be treated as sufficient to non-suit the appellant before the consumer forum.

In our opinion, this approach did not give due effect to the scheme of the 1986 Act and to the settled principle that an arbitration clause does not, by itself, oust the jurisdiction of the consumer forum.

Order dated 4.6.2026 of the Supreme Court in Civil Appeal No.10724 of 2016 of T.K.A. Padmanabhan Vs.  Abhiyan Cooperative Housing Ltd through its Secretary.