The High Court · 2025

4. Sulwa Firdaus Subhani, D/o Mr. Khaja Najmuddin Subhani, a years, Occ Medical Practitioner, R/o.101, Tangmere Crecent Scotia, B3MlK2 Canada. ged about 41 Halifax, Nava Arbitration Application Under Section 11 (5) & (6) of Arbitration & Conciliation Act, 1996 praying that this Hon'ble Court may be pleased to appoint sole arbitrator to adjudicate the claims and disputes between the applicant and the Respondents. ...RESPONDENTS lA NO: 'l OF 2023 Petition under section r si cpc praying that in the crrcumstances stated in the affidavit filed in support of the petition, the High Court may be pteased to condone the delay of 10 days in filing the above Arbitration Application Counsel for the Applicant: Sri S. M. Rafee Counsel for the Respondents: Sri prabhakar Sripada The Court made the following: ORDER i \ i TIIE HON'BLE SRI JUSTICE T. VINOD KUMAR ARBIT'RA TION APPLICA '[ION No. 20 of 2020 ORDEIT The present Arbitration Application is fited under Section I l(5) & (6) of the Arbitration and Concitiation Acr, 1996 (hereinafter 'the Act, 1996,) for appoint,rent of a sole ar.bitrator to resolve the disputes betrveen the parties.

2. Heard Sri. D. prakash Reddy, learned senior counsel appearing for the learned counsel for the applicant and Sri. Prabhakar Sripada, leamed senior counsel appearing for the counsel for the Respondents. perused the Record.

3. The applicant and the l{cspondents through one Salahuddin Afsar who is the GPA llolder of the Respondent No. I herein entered into the following agl.eeutents lor development of the propefty bearing Municipal No. 6-j-679 admeasuring 1,660 Sq. Yards situated at Somajiguda, Hyderabad, into a multi_storied complex: Memorandum of Understanding dated 02.0g.1992 _ the primary docurncnt enicrcd into bctrveen thc parties. The --! 2 covenants of this deed state preliminan. obligations of, the pafiies. Clause 22 of this deed contr.rnplates thar any developtnent agreement entered into by both parlies shall be treated as a part and parcel of this deecl. C)ause 25 thereof contains an arbitration agreement. ii. Development Agreement dated 2g.Og. g92. This deed delineates the rights and duties of botlr parties. Among others, Clause 9 thereof contemplatcs thc sharing ratio olthe applicant and the respondents as 60:400/o. t,hereas. clause I 5 contemplates that the construction of the complex is to be completed within 2 years from the clrrte of obraining mr-rnicipal plans and no objection certil'icate. CllaLrse 27 theleof contains an arbitration agreement iii. After cornpletion of the building construcrion in 2002. thc .Applicant and the Respondents hcrein errtered into a Mernorandum of Understanding dated 09.12.2005. As per the MoU dated 09.02.2005, the ground and the first floor \vere sold out to various parties; Clause 4 ther.cof contemplates that the Respondents herein ri ere tl-re absolute 3 owners of the second tloor. whereas the third and lourth floor as per Clause 5 was to be divided among equally 1.e., 50Vo each arnong the parties. Simitarly, as per Clause 6 the Office area in the said complex was to be given to the K Salahuddin Afsar. Clause l9 thereof contains arbitration agreement

4. It is the case the case of the Applicant that disputes arose between the parties after 18.05.2017 when Surana Telecom who was the tenant of the Second Floor vacated the premises; and the respondents were thereafter refusing to open their respective locks in the second floor of the complex, thereby blocking the entrances to the Applicants share in the third and fourth floors

5. While so it is the case of the Applicant that the on t8.11.2016 the.Respondent No. I herein Represented by her son i-e., the Respondent No.3 herein had issued a legal notice invoking the arbitration clausqs in MoU dated 02.08.1992, Development Agreement dated 28.08.1992 and MoU dated 09.02.2005. It is contended that though the Applicant herein in their reply notice

20.12.2016 agreed for the disputes to be referred to an arbitrator lrrl\, 4 and had thercby called forth the Respondent N,.r.l herein to name an arbitrator', the Respondents herein in contravcntion to their own legal notice dated 18. ll.20l6 had initiated proccedings belbrc the National Consumer Dispute Resolution Comrlission, New Dethi (lor short 'N(lDItC') Aggrieved by the said nclion rhc present arbitlation application is filed seeking appointmenr of an arbitrator

6. Leamed Senior Counsel for the Applicant herein contends that, the proceedings before the NCDRC are n()t rnaintainable as the Respondents herein have first invoked the arbirration clause in thcir [ega[ noticc dated 18.11.2016. Thus, it is contended rhat the clispLrtes ought to be referred to an arbitrator for resolution.

7. Per contra, [earned senior counsel for the Rcspondents herein contends that the disputes between the applicant and the respondents are primarily consumer disputes w.hich are public in natlrrc, and are thus, non-arbitrable; that the present application is funher not maintainable as the applicant herein had failed to file an application ur.rder Section 8 of the Act, 1996 belore rhe NCDRC seeking fbr rel-crence of the disputes to arbitration belbrc trling the prese nt application. [n support of his contentions r.e]iance is placed I f I 5 on the decisions in M. Hemalatha Devi and Ors. Vs. B. Utlqasrit, Vidya Drolia Vs. Durga Trading Corporation2, Emaar MGF Lond Limited Vs. lftab Singh3, Rosedale Developers priv e Li,nited Vs. Aghore Bhattacharya and Orsa, National Seeds Corporation Limited Vs. M. Madhusudhan Rettdy & Orss, and Secretory, Thirumurugan Corporation Limiled Vs. M. Modhusurlhan Reddy & Anr6.

8. In reply, leamed senior counsel for the Applicant hcrein subrnits that oncc a norice under section 2 I of the Act, 1996 is issued, the same would constitute the commencement of arbitration proceedings. Therefore, any subsequent proceedings instituted rvould have to give way to the former as per the Scheme of the Act, 1996 9 I have taken note oltheir respective contentions.

10. The issue of non-arbitrability of consumer disputes is no longer res integra in view of the decision in Emaar MGF (supra) r ' (1021),1 scc 155 I (2011) 2 SCC I 1zo r9; t: scc z: t '1:otal rrscct:z i 1:o tzy zscc 5oc 61zoo+1 I scc -'ios I I 6 -- Act, "vhich Apcx Court Consurner l)rotection rvas lollowed in M. Hemalatha Devi,s case (supra). The l{on'ble Suprerre Court while considering the scope of the had observed that a consumer had a choice to clect his rcrxedy by either filing rL consumer complaint belore a .ludicial authority or going for arbitration. .l.he further hcld that the jurisdiction of Consumer Courts would not be ousted rner-ely because the builder approached u Couft first under Section ll of the AcL 1996, as the jurisdiction ol_a Courr would be dctermined by the nature oI the dispute, public polic1., will ol the legislature and election or choice of the consumer. Il. Furlher, the contention of the learned senior counsel for the applicant that as the Rcspondents thenrsclves have fir.st issued a notice ol dislttrtc under scction 2l of the Act, 1996, they arc preempted fr.ont subsequently approaching the collsurner courls. thotrgh attractive at first blush, cannot be acccpted when the purpose behind enactment of the Consumer protection Act is considered It is to be seen that the Consumer pr.otection Act, is a beneficial legislation enacted to protect thc irterests of the consurrers. In M. Hemalotho Devi,s case (supra) the Hon,ble Suprenre Court while noting the jurisdiction and purpose of the 7 Consumer Courts has observed that a consumer cannot be deprived of the remedies available under the Consumer protection Act, only on the ground that an arbitration agreement exists between the parties. The relevant observations are as under: I +. YX\ It rvas held that Lhe 1986 Act was enacted to provide better protection of the interest ofconsumers and lor providing a redressal mechanism, which is cheaper, easier, expeditious and effective. For this purpose, various quasi-judioial forums were setup at district, state and national level with a u,ider rangc of powers vcsted in lhese Judicial Authorities. These Judicial Authorities were vested with thc powers to give relicf of a specific nature and to award compensation to the consumer rvhercver it rvas felt necessary to imposc penalty for non-compliance of their orders, and the judiciat authorities werc vested with such pou'crs. Norv compare this with the power cf the arbitrator. An arbitrator docs not have the power to impose a penalty. This is also one of the cssential dit'ferences 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 tbr the time being in lbrcc.

16. -lhis Court in a series of decisions, while considering both rhe pror isions in the Consumer Protection Act, 1986 and the Arbitration Act, t996. has hcld that the Consumer Protection Act being a special and bcnel'icial Iegislation, the remedies provided therein are special remedies and a conshmer cannot bc deprived of them should he choose to avail such a remedy, in spite of an arbitration agrccment bclrveen the parties. It is a remedy provided to the consumer where the oonsumer finds a delect in either goods or services provided to him and thereibre seeks a redressal of his grievances before the consumer forum prorided to him by the legislature. While referring to a plethora of precedents in the rnatter. this Court had hetd in Emaar III (supr.a) that not only the proccedings under thc 1986 Act are spccial procecdings rvhich will continue undcr thc Act in spite of the arbitration 8 agreemcnt' but therc would also be a large number of other fio"e"aing. as well rvhich ought to continue in spite of an arbitration Ig.""-".,i such as proceedings in Criminat Coyi't' f .Commcrcial dispute of a particular naturc or any other non-arbitrable dispute"' (l::mPhasis suPPlied) When the aforesaid ratio is applied to the facts at hand, this Court is of the view that though the Respondents herein had initially sent a notice invoking the arbitral clause, as they had thereafter specifically elected to fi [c a consumer complaint before the NCDRC i.e., they had approached a Judicial Aurhority before even proposing the name of an arbitrator, thus the disputes would be rendered non-arbitrablc.

12. Even othent'ise, in Arche$pe Inditr Construclion Consultanls Private Limited Vs. The Bombay Dyeing and Mfg' Co. LimiredT, the High Court ol Bombal' through Justice D' Y' Chandrachud (as his lordship then was) held that an arbitration application cannot bc prefened without filing an application under Section 8( I ) of the Act, 1996, before the Court where the first remedy was preferred, as they are parallel proceedings This Court is in respectful agreernent with the views expressed above' 'MnNU/MH'o90tl2otz 9 'lherefbre , the present application cannot be entertained without the Applicant herein first filing an application of under Section 8(l) of the Act, [996 bcfore the NCDRC r3 In light of the loregoing discussion, the present arbitration application is dismissed Pending miscellaneous pctitions if any shall stand closed. No order as to costs Sd/- M. RAMANA KRISHNA JOINT REGISTRAR qE //TRUE COPY// SECTION OFFICER To,

1. J\/r. BashaMohiudin Managing Director,M/s.Erite Foundation a partnershio Firm. reoistered under the'ind'ia; i;a;;;ir-p ri;i, ie5ri,;;;;'s Ttr'#iilii"id 3-679, Somajiguda, Hyderabad Mr -- -- ''' -' 2. AqeelaSubhani Wo. ?1. [f.,rl, Najamuddin Subhani aged about 75 vears. occ Housewife R/o..t 0.t, Id.smer; C;;;ent"rj]r,rri NZri Bi,i,ii.r, "BiMTKi 9gng9g Rep, by her GpA Hrr;";; ''Ei'"rr,rorin'-sioir"i,"'s7"-'"bll Kha.laNalamuddin Subhani, ,geo ioori eal,.io, b"", erJ;;;R/o.ij."No "ti_ 2-596/8, Road.10, Banjara Hiits, Htder;l;&_6bl bs+. 3. Dr. .Khaja- Najamuddinsubhani s/o subhani, aged about 77 years. occ Medicat practitioner. R/o .101, iang;;; br;;"triirr"l, "Nr;;:'"d#;: 83MlK2 Canada 4 Hamad El Mominsubhani s/o Dr. KhajaNizamuddinSubhani, aqed about 38 r#JrlJiliil; yea rs, occupation Business, nlo. H. ruol e-r_59678, R;;'N;i'i o, Hyderabad- 500034.

5. Sulwa Firdaus Subhani, D/o Mr Khaja Najmuddin Subhani, aged about 41 years, Occ Medical practitioner, nlol t Or,'ta-ng;"r" Cr""uniFiifrx" N;;; Scotia, B3MlK2 Canada.

6. One CC to Sri S. M. Rafee, Advocate [OPUC] 7. One CC to Sri Prabhakar Sripada, Advocate tOpUCl B. Two CD Copies W VFVpsl HIGH COURT DATED: 2810712025 , ,\) \* ORDER ARBAPPL.No.20 ot 2020 DISMISSING THE ARBITRATION APPLICATION 1 \1 g r