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Vishnu Chandra Sharma v. Sriram Finance Company Ltd.

National Consumer Disputes Redressal Commission

Mar 20, 2017

Judgment

CaseIQ

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Factual and Procedural Background

The petitioner, Vishnu Chandra Sharma, purchased a truck on 18.10.2012 financed initially by Tata Motors Limited (OP-2). Dissatisfied with OP-2, the petitioner transferred the loan to Sriram Finance Company Ltd. (OP-1), which became the financier. The truck was deposited with OP-1 along with all papers. Subsequently, OP-1 sold the truck without the petitioner's knowledge, which he discovered 11 months later. The petitioner filed a Consumer Complaint No. 174/2010 before the District Consumer Disputes Redressal Forum, Kauroli (District Forum). OP-1 resisted the complaint, asserting that the matter was already referred to arbitration and thus not maintainable before the consumer forum. The District Forum rejected this plea, holding that the arbitration award was not a bar to the consumer complaint, and allowed the complaint, directing OP-1 to pay compensation and interest.

Both OP-1 and the complainant appealed to the State Consumer Disputes Redressal Commission, Rajasthan. The State Commission, by a common order dated 21.03.2016, allowed OP-1’s appeal and dismissed the complainant’s appeal, holding that the arbitration award preceded the consumer forum order and barred simultaneous proceedings. Aggrieved, the complainant filed these revision petitions before the National Consumer Disputes Redressal Commission against the State Commission’s order.

Legal Issues Presented

Whether the existence and finalization of an arbitration award prior to the consumer forum’s order bars the maintainability of a consumer complaint under the Consumer Protection Act, 1986.
Whether a complainant who was not a party to arbitration proceedings can be bound by the arbitration award and barred from proceeding under the Consumer Protection Act.
Whether the remedy under the Consumer Protection Act, 1986 is an additional remedy and can be invoked notwithstanding arbitration proceedings.
Whether the State Commission erred in setting aside the District Forum’s order on the ground of arbitration.

Arguments of the Parties

Petitioner’s Arguments

The State Commission erred in allowing OP-1’s appeal and dismissing the complainant’s appeal solely on the ground that arbitration proceedings had been finalized before the District Forum’s order.
The petitioner was not a party to the arbitration proceedings and hence not bound by the arbitration award.
The plea of arbitration was already taken before the District Forum but rejected, which continued the proceedings under the Consumer Protection Act, 1986.
Section 3 of the Consumer Protection Act, 1986 provides that the remedy under the Act is additional and not in derogation of any other law.
Reliance on precedents supporting that arbitration is an optional remedy and does not bar consumer complaints if chosen otherwise initially.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
National Seeds Corporation Limited Vs. M. Madhusudhan Reddy and another, (2012) 2 SCC 506	Arbitration is an optional remedy; a party can either seek arbitration or file a consumer complaint. If arbitration is chosen first, subsequent consumer complaints may be barred. Section 3 of the Consumer Protection Act provides an additional remedy, not in derogation of other laws.	The court noted that the cited case supports the proposition that arbitration is optional and consumer remedy is additional, but distinguished it on facts as in the present case an arbitration award was already passed.
Associated Road Carriers Ltd. vs. Kamlender Kashyap and others, (2008) CPJ 404 NC	Section 3 of the Consumer Protection Act is an additional remedy and arbitration clause is not a bar to entertaining consumer complaints.	The court acknowledged this principle but held that it does not assist the petitioner where an arbitration award had actually been passed prior to the consumer forum order.

Court's Reasoning and Analysis

The court first addressed the delay of 7 days in filing the revision petitions and condoned it based on the reasons given. The court observed that the arbitration award was not filed by the petitioner but found from the record that OP-1 had stated in its written statement that arbitration proceedings had been initiated and the truck was sold pursuant to the finance agreement, with the matter referred to an arbitrator.

The court noted the petitioner’s failure to file any rejoinder or to participate in arbitration proceedings, implying wilful non-participation despite knowledge. The State Commission had found that the arbitration award was passed on 14.7.2014, prior to the District Forum’s order on 4.2.2015, and thus the District Forum’s order was set aside.

The court emphasized that Section 3 of the Consumer Protection Act states that the Act's provisions are additional and not in derogation of other laws. Therefore, the Consumer Act cannot be used to override the Arbitration and Conciliation Act, 1996. Since the arbitration remedy was already pursued by OP-1 in accordance with the agreement, the consumer complaint could not be treated as an alternative remedy. The precedents cited by the petitioner were found inapplicable as none dealt with a situation where an arbitration award was already passed.

Accordingly, the court found no illegality or jurisdictional error in the State Commission’s order and dismissed the revision petitions.

Holding and Implications

The revision petitions No. 2030-2031 of 2016 are dismissed in limine.

The direct effect of this decision is the affirmation of the State Commission’s order setting aside the District Forum’s consumer complaint order on the ground that the matter was already adjudicated by arbitration. The petitioner’s challenge was rejected, and no interference with the State Commission’s findings was made. The decision does not establish any new precedent beyond confirming that where an arbitration award is passed prior to a consumer forum order, the consumer complaint is not maintainable as an alternative remedy.

Show all summary ...

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

REVISION PETITION NO. 2030-2031 OF 2016

(Against the Order dated 21/03/2016 in Appeal No. 333 & 1158/2015 of the State Commission Rajasthan)

1. VISHNU CHANDRA SHARMA

S/O. SH. SONARAM SHARMA, R/O. KUDGAON, TEHSIL

SAPOTARA,

DIST. KAUROLI

RAJASHTAN ...........Petitioner(s) Versus

1. SRIRAM FINANCE COMPANY LTD. & ANR.

THROUGH MANAGER, NEAR ROADWAYS DEPOT,

AGRA ROAD,

DAUSA,

RAJASTHAN

2. TATA MOTORS LIMITED,

THROUGH MANAGER, STATION ROAD, HINDONE

CITY,

DISTRICT-KARAULI RAJASHTAN ...........Respondent(s)

BEFORE:

HON'BLE MRS. REKHA GUPTA,PRESIDING MEMBER HON'BLE MR. PREM NARAIN,MEMBER For the Petitioner : Mr. Rishi Matoliya, Advocate For the Respondent :

Dated : 20 Mar 2017

ORDER

These revision petitions have been filed by the petitioner/complainant , Vishnu Chandra Sharma against the common order dated 21.3.2016 of the State Consumer Disputes Redressal Commission, Rajasthan, Jaipur, (for short, 'State Commission') passed in two Appeals No. 333 of 2015 and 1158 of 2015.

2. Brief facts of the case relevant for deciding the revision petitions are that on 18.10.2012 petitioner/complainant purchased a truck with finance from OP-2. Later on, the complainant was not satisfied with the dealings and behaviour of OP-2 and he got his loan transferred from OP-2 to OP-1. Thus, OP-1 became the financier for the vehicle. Truck was deposited by the complainant with R-1 alongwith all the papers. Later on, the truck was sold by R-1 which the complainant came to know only after 11 months of the sale of the truck. The complainant filed a Consumer Complaint No.174/2010 before the District Consumer Disputes Redressal Forum, Kauroli (for short, 'District Forum'). The complaint was resisted by the OP- 1 on many grounds inter alia including the ground that the matter was already referred to the Sole Arbitrator Shri R.K. Sharma and therefore, the complaint was not maintainable. The

District Forum however, has opined that arbitration award was not a bar for deciding a consumer complaint. The District Forum after hearing the parties allowed the complaint as under:

"On the basis of above entire discussion, the behavior of the non-applicant no.1 and 2 is found to be unfair and malafide and non-applicant no.1 is directed to pay a sum of Rs.2,83,880/- and interest @ 11% per annum from 31.3.2009 within a period of 2 months from the date of order and a sum of Rs.10,000/- (Ten thousand) separately for mental and physical trauma. If the order is not complied with an additional interest @ 9% would be paid."

3. Being aggrieved by the above order, OP-1 Sriram Finance Ltd. as well as the complainant preferred Appeals No.333/2015 and 158/2015 respectively before the State Commission. The ld. State Commission vide a common order dated 21.03.2016 dismissed the appeal filed by the complainant, Vishnu Chand Sharma and allowed the appeal filed by OP-1, Sriram Finance Ltd.. The State Commission passed the following order:

"As per the said order of Hon'ble National Commission Arbitrator had passed the award before the order of Fora. Had Vishnu Sharma any complaint with the order of award, he should have continued that and cannot move simultaneous proceeding. For this reason the order of the ld. District Forum is arbitrary and contrary to law and liable to be set aside.

The appeal of Sriram Finance Ltd. is allowed and appeal of Vishnu Chand Sharma is dismissed. The parties would bear their own costs.

4. Aggrieved by the impugned order of the State Commission, the complainant/petitioner has filed these revision petitions against the common order passed in both the appeals.

5. Heard the learned counsel for petitioner and perused the record. The learned counsel for the petitioner stated that the State Commission has grossly erred in allowing the appeal of the OP-1/R-1 and dismissing the appeal of the complainant on the ground that arbitration proceedings were finalized before the order of the District Forum. The learned counsel argued that the petitioner was not party in the arbitration proceeding and he is not bound by that order. The plea of the arbitration proceeding was also taken before the District Forum by the OP-1, but the District Forum rejected that plea and continued with the proceedings under the Consumer Protection Act, 1986. In fact Section 3 of the Consumer Protection Act, 1986 clearly provides that remedy under Consumer Protection Act, 1986 is an additional remedy that can be availed by the complainant as the petitioner was not a party in the arbitration proceedings and continued with the proceedings under the Consumer Protection Act, 1986.

6. The learned counsel for the petitioner/complainant relied upon the following judgments to support his contentions:

(1) National Seeds Corporation Limited Vs. M. Madhusudhan Reddy and another (2012) 2 Supreme Court Cases 506. The relevant paras are as under:

"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 57sold /supplied by the appellant was to file complaints with the concerned Seed Inspectors for taking action under Sections 19 and/or 21 of the Seeds Act.

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 concerned Seed Inspector for prosecution of the seller/supplier of the seed cannot but be treated as illusory and he cannot be denied relief under the Consumer 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 58seek reference to an arbitrator or file a complaint under the Consumer 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 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 Act. Moreover, the plain language of Section 3 of the Consumer 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."

(2) Associated Road Carriers Ltd. vs. KamlenderKashyap and others, (2008) CPJ

404 NC.The relevant portion are as under:

"13. As regards the plea of arbitration, that was rightly rejected by the State Commission for it should suffice to say that provisions of Section 3 of the Consumer Protection Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. We need not repeat that Section 3 is an additional remedy to the complainants in addition to all the remedies, which are otherwise available under the existing laws. Now it is settled that the arbitration clause would not be a bar to the entertainment of the complaint by the redressal agency constituted under the Act, even if the arbitration clause had been provided in an agreement or and if any reliance is required, one may refer to Ram Nath v. Improvement Trust, Bathinda 1994 (I) CPR 357."

7. The learned counsel also pointed out that there is a delay of 7 days in filing the present revision petitions. He drew our attention towards the application for condonation of delay filed

by the petitioner and prayed that the delay of 7 days may be condoned.

8. We have carefully examined the record and have given a thoughtful consideration to the arguments advanced by the learned counsel for the petitioner. First of all, we take up the question of delay in filing the revision petitions. There is delay of only 7 days. For the reasons mentioned in the application for condonation of delay, we condone the delay.

9. We find that the arbitration award has not been filed by the petitioner in these revision proceedings before this Commission. However, we find that the OP-1 in its written statement dated 2.5.2011 has stated as under:

"That the complainant entered into an agreement with the company for Rs.6,38,880/- on 4.3.2008 for the truck and as per that the complainant had to pay from 4^th March 2008 onwards 19 EMIs of Rs.21,228/- and 20 EMIs of Rs.18,135/- and remaining EMIs of Rs.12,090/- but the complainant has deposited Rs.25,000/- only. Thereafter, the complainant did not deposit any amount and then the company sold the said truck for Rs.7,20,000/- and for the remaining money it gave notices to the complainant and his guarantor Shamsher Khan many a times and since no money was paid by them, as per the finance agreement the matter was sent to arbitrator Sh. R.K. Sharma for disposal. Therefore, the complaint is not maintainable before the Hon'ble Forum."

10. It is not clear whether any rejoinder was filed by the complainant after the written statement was filed by OP-1. We find that no rejoinder is available on the case file before us. One thing is clear that after filing of the written statement of the OP-1, the complainant must have come to know that there is some arbitration proceedings going on against him. Even then, if he chose not to participate in that proceedings, his absence or non-participation in the arbitration proceedings was wilful and not due to lack of knowledge of such proceedings. The State Commission has clearly stated that the arbitration award was passed on 14.7.2014 and the order of the District Forum was passed on 4.2.2015. Therefore, the order of the District Forum has been set aside by the State Commission. Section 3 of the Consumer Protection Act, 1986 states that the provisions of Consumer Protection Act, 1986 shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Thus, it is clear that the provisions of the Consumer Protection Act, 1986 cannot be used in derogation of The Arbitration and Reconciliation Act, 1996. Remedy under Consumer Protection Act, 1986 is an additional remedy if the main remedy under the concerned Act has not been taken. In the present case, it was made known to the petitioner/complainant that the remedy under the Arbitration and Reconciliation Act, 1996 was already taken up by OP-1 as per the provisions of the Agreement, therefore the proceedings under the Consumer Protection Act, 1986 could not have been taken as an alternative remedy. The cases cited by the learned counsel do not come handy to help the case of the petitioner as none of these deals with the situation where arbitration award was actually passed.

11. Based on the above discussion, we find no illegality, material irregularity or jurisdictional error in the order dated 21.3.2016 passed by the State Commission which calls for any interference from this Commission. Accordingly, the revision petitions No. 2030-2031 of 2016 are dismissed in limine.

......................

REKHA GUPTA

PRESIDING MEMBER

......................

PREM NARAIN

MEMBER