They Pointed To The Arbitration Clause. The Consumer Forum Still Has You.
A flat buyer complained about delayed possession. Three forums in a row sent him to arbitration because his agreement had a clause. The Supreme Court sent him back.
An arbitration clause does not, by itself, oust the jurisdiction of a consumer forum. The Consumer Protection Act creates a special adjudicatory mechanism, and once that mechanism is validly invoked and the complaint admitted, the consumer cannot be driven out of it merely because the agreement contains an arbitration clause. A private contractual clause cannot defeat a statutory remedy that Parliament made expressly additional to other remedies under Section 3.
- Section 3 is the answer. The consumer remedy is in addition to, not in substitution for, other remedies.
- Admission matters. Once the complaint is admitted and notice issued, the consumer is in that forum.
- A contract cannot contract out of a statute. A private clause cannot defeat the continued operation of a Parliamentary remedy.
- Three forums got it wrong in a row — District Forum, State Commission and National Commission — which is why the point was worth restating.
- Court
- Supreme Court of India
- Bench
- Justice VIKRAM NATH, Justice V. Mohana
- Citation
- 2026 INSC 649
- Reported
- [2026] 7 S.C.R. 401
- Case
- CIVIL APPEAL/10724/2016
- Decided
- 3 June 2026
- Outcome
- Appeal allowed
What happened
The appellant filed a consumer complaint against a cooperative group housing society alleging deficiency in service through delay in handing over possession of a flat. The agreement between them contained an arbitration clause.
The District Forum admitted the complaint and issued notice — and then referred the parties to arbitration. The State Commission affirmed. The National Commission dismissed the revision.
Why the clause did not matter
The Consumer Protection Act creates a special adjudicatory mechanism for consumer disputes. Once that mechanism is validly invoked and the complaint is admitted, the consumer cannot be driven out of the forum merely because the agreement carries an arbitration clause.
Section 3 makes the consumer remedy additional to other remedies. A private contractual clause cannot be permitted to defeat the continued operation of a statutory remedy Parliament has expressly made additional.
The existence of the clause could not, by itself, displace the statutory jurisdiction the complaint had already engaged.
Who argued it
Appearances as recorded in the judgment of the Court.
Frequently asked
Can a builder force me into arbitration instead of the consumer forum?
No. An arbitration clause does not by itself oust the jurisdiction of the consumer forum, and once your complaint is admitted you cannot be driven out of it.
Does it matter that I signed the agreement with the clause in it?
No. A private contractual clause cannot defeat a statutory remedy that Parliament made expressly additional under Section 3.
What if the forum has already referred me to arbitration?
That is what happened here, through three tiers, and the Supreme Court set it aside.
When the other side points at the arbitration clause
- Get the complaint admitted. The reasoning turns on the forum's jurisdiction having been validly invoked.
- Cite Section 3 expressly: the remedy is in addition to, and not in derogation of, other remedies.
- Resist the reference at the first opportunity rather than appealing it through three tiers, which is what this appellant had to do.
- Keep the deficiency pleaded as a consumer grievance, not as a contract breach, so the forum's jurisdiction is plainly engaged.
Source. Supreme Court of India, 2026 INSC 649, [2026] 7 S.C.R. 401, CIVIL APPEAL/10724/2016, decided 3 June 2026 by Justice VIKRAM NATH, Justice V. Mohana. This explainer is written from the judgment text as reported.
Claw tracks Supreme Court of India and 24 other High Courts, reads every order handed back, and surfaces the directions that carry a deadline. clawlaw.in