Arbitration clause in builder buyer agreement
I have purchased a under construction flat from a builder in Noida. I have paid 90% of money abd possession was due in Feb'14 . But builder has not given possession yet and there is no certainty of possession in coming 2 yrs also. And quality of flat constructed is also very poor .So , i wrote builder to resolve all these issue. The builder responded by saying they have appointed an arbitrator as per clause of builder buyer agreement and sent me a letter.
The clause read as follows : " That all disputes or disagreements arising out of , in connection with or in relation to the allotment which can not be amicably settled , shall be finally decided by arbitration and the sole arbitrator in such a case shall be appointed by the company and other provision of Indian Arbitration and Conciliation Act 1996 , or any amendment thereof shall be applicable."
So , now my question is "Can a buyer be forced into arbitration by invoking arbitration clause in builder buyer agreement. ?? " Is it legal to appoint an arbitrator unilaterally without my consent as per law of land.Can i still move district consumer forum and file an appeal for deficiency in services against builder. Or any other legal remedy which you can suggest me. I don't want to take possession of flat as it's being delayed very much and instead want a compensation with 18% per annum interest rate. So kindly advice me on these issue.
Asked 2 years ago in Business Law from Ghaziabad, Uttar Pradesh
1) you have signed agreement . the terms of contract are binding on parties
2) in your case agreement provides for appointment of sole arbitrator .
3) if you feel sole arbitrator is biased you can move court for appointment of sole arbitrator under arbitration act
4) - C.P. Act provides an additional remedy to consumer - Mere existence of an arbitration
clause does not oust consumer jurisdiction - 2008(1) CPC 448 N.C.
5) --In spite of a clause in agreement for referring the matter to the Arbitration, Consumer Fora have jurisdiction to take
cognizance of the matter in view of section 3 of C.P. Act which provides an additional remedy – 2012(3) CPC 132 H.P.
So, can i move consumer forum easily.?? And also arbitration proceeding will go parallel.So whose decision will be final. Arbitration or consumer forum?? Is arbitration decision binding. Or it can be challenged in court. Is there a way i can opt out of arbitration? i am interested in consumer forum only. As i know arbitrator is biased as builder appointed him. Please advice sir.
Asked 2 years ago
1. If there is clause of arbitration then one can refer the dispute to arbitration. if you have any objection towards the appointment of a particular arbitrator then you can challenge the appointment in court.
2. The dispute squarely falls within the ambit of consumer protection act and hence to seek proper remedy you can file case in the consumer forum.
3. i may further inform that both arbitration and consumer case can run simultaneously. Arbitration proceed in no bar for initiating case before the consumer forum. So file one asap.
1) i have cited judgments wherein it has been held you can move consumer forum in spite of arbitration clause . it is additional remedy .
2)if builder opts for arbitration proceeding dispute would be referred to arbitration . you can move court for appointment of sole arbitrator if you apprehend bias on part of arbitrator appointed by builder .
3) award if any passed by arbitrator can also be challenged in court
the arbitration clause in the agreement is not valid. appointing authority can not be named as company. It has to be a definite either by name or by designation. But you have not much options. You can challenge the jurisdiction of the arbitrator before him and if he overrules you can get the award set aside later in the Court. It has been held that the Consumer Act is a special Act and its application is not restricted by any other legislation. You can file a consumer complaint as well. the provisions of Consumer Protection Act are in addition and not derogatory to .other Acts. Please do read the supreme court case titled Secretary, Thirumurugan ... vs M. Lalitha (Dead) Through Lrs You can find it on SC website
Advocate, New Delhi
1. No, even if there is Arbitration Clause in your Agreement for Sale, you can approach the local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice and claim specific performance as regard the quality, handing over possession, damage, interest and cost,
2. There is Supreme Court order in this regard.
1. You need not go to the Arbitrator now,
2. File a complaint case before the local District Consumer forum as suggested in my earlier post,
3. I have had similar matter where I was defending my builder client pleading that there is an arbitration clause before Consumer Forum so the consumer complaint case should be rejected,
4. My argument was not accepted based on the Supreme court Judgement as stated in my earlier post,
5. You file the complaint case now and watch the reaction from the builder.
1. Paying 90% of the money before the possession is most unwise.
2. Since the builder has filed to fulfill his promise of giving the possession by February 2014 you can issue a lawyer's notice to the builder to cancel the agreement and seek the refund of the amount already paid.
3. It was also suicidal for you to agree to let the company unilaterally appoint the arbitrator.
4. You have not been forced to enter into arbitration. You have agreed to arbitration out of your own free will. As a corollary thereto, you cannot now backtrack. Arbitration, to which you agreed, has to be honoured.
5. It seems that you did not get the agreement vetted by your lawyer before signing/accepting it.
6. You cannot now go to the consumer forum unless the agreement is set aside by the court on a lawsuit filed by you.
1. You can challenge the agreement in the court on the ground that it is unreasonable, but the prospects of you succeeding therein are quite bleak.
2. The arbitrator's award can be challenged in the court.
3. Issue a lawyer's notice for cancellation of agreement.
Ashish Ji ,
I got opinion of some other lawyers that i can move consumer forum despite of arbitration clause. Also , now i don't want possession of flat as its being delayed and not ready till date. And want builder to give compensation @ 24% per annum.
Asked 2 years ago
1) you are right you can move consumer forum inspite of arbitration clause as consumer protection act provides for additional remedy .
2) i have cited judgments in this regard .
3) you wont get refund with interest at 24%pa . only reasonable rate of interest would be awarded .
4) compensation is at court discretion
1. File a complaint case before the local Consumer Forum,
2. Pray for direction upon the bilder to hand over possession and arrange for registartion of the flat. It is so required because you have already paid 90% of the consideration,
3. Your prayer should also include, payment of compensation for the delay already caused and to be caused, rent for the said period, damage, interest and cost.
1. The others are entitled to their opinion, and I am to mine.
2. I restate that you cannot go to the consumer forum as the agreement provides for arbitration.
3. As I mentioned earlier, if you do not want to take the flat then issue a notice through your lawyer for cancellation of the allotment and refund of the money paid.
My opinion on Your Queries are as under:
"Can a buyer be forced into arbitration by invoking arbitration clause in builder buyer agreement. ?? "
Opinion: When you executed the agreement then this clause is mentioned or not? if yes then now you are bound by this agreement's clause.
Is it legal to appoint an arbitrator unilaterally without my consent as per law of land.
Opinion: Yes, it is possible and legal, if there is no prior objection before signing the agreement.
Can i still move district consumer forum and file an appeal for deficiency in services against builder. Or any other legal remedy which you can suggest me.
Opinion: Yes, you can file a complaint before Consumer Forum but the possibilities for winning can be advise after reading the Agreement.
Advocate, New Delhi