Can Consumer Court Entertain Complaint After Adjudication of Dispute in Arbitration? NCDRC

The National Consumer Disputes Redressal Commission passed an order on 2nd March, 2021 concerning seizing of a vehicle on non-repayment of amount.


The petitioner/ complainant had bought a Tata Truck for which a loan of Rs.11, 25, 000 was taken from the respondents Magma Shrachi Finance Ltd. This was to be repaid in 56 monthly instalments commencing from 30th July 2007 to 20th February 2012. The petitioner said to have repaid the amount of Rs.14, 13, 120 till November 2011. An amount of Rs.52, 730 was still due to be paid. In December 2011, the Finance company forcibly took possession of the vehicle. The value of the vehicle at that time was Rs.11, 00, 000.

The complainant immediately filed a report with the police and sent a legal notice to the respondents the next day. In response, the complainant was asked to furnish an amount of Rs.5 lakhs for the release of vehicle. If such was not done, the vehicle would be auctioned off. Even after the amount was given, the respondent did not release the vehicle. Hence, he filed a complaint in the District Court.

It was prayed that the truck be returned along with 10 new tires, pay a loss of Rs.2500 per each day since the seizure, a further Rs.5 lakh for mental harassment, award the cost of suit, interest of 12% on the compensation amount and any other relief the court deems fit.

Proceeding in the Lower Courts:

The complaint was contested by the Financing Company by filing a written statement. It stated that the as per Hire Purchase Agreement, the company had become owner of the vehicle and the purchaser was only a Bailee. The matter was referred to Arbitration, after notice to the Complainant. The Arbitrator passed an award dated 2011, but the Complainant did not comply with the Award. The Complaint before the District Commission, therefore, was not maintainable.

The court dismissed the complaint and ordered the complainant to pay Rs.2000 as cost of the suit and if it was not paid, 9% interest would be payable. Thus aggrieved, an appeal was filed in the State Commission.

After hearing the parties, the State Commission affirmed the District’s order and dismissed the appeal. Hence, a revision petition was filed in the NCDRC.

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Decision of the National Commission:

The counsel for the complainant stated that the District Court had erred in observing that once award is passed by the Arbitrator, the only remedy available to the aggrieved party is to file an application under Sec.34 of the Arbitration and Conciliation Act, 1996 for setting aside the award. It was also submitted that the State Commission failed to appreciate that the vehicle was forcibly repossessed by the Respondent.

On the other hand the respondent counsel stated that the complainant had failed to make the payment of the balance amount and thus the vehicle was taken away. Before taking the vehicle, intimation was given to the police.  It was also contended that as the dispute had already been decided by the Arbitrator, the proceedings before the Consumer Forum were not maintainable and further both the Forums below rightly dismissed the Complaint.

Presiding Member, C. Viswanath, considered the facts of the case, orders of the lower forums and past judgements. It was seen that  the National Commission has to exercise the jurisdiction vested in it only if the State Commission or the District Forum has failed to exercise their jurisdiction or exercised when the same was not vested in their or exceeded their jurisdiction by acting illegally or with material irregularity.

There was no infirmity or illegality in the impugned order, warranting interference in revision jurisdiction, and the revision petition was thus dismissed. 

Case Details: Revision Petition 1780 of 2014 (01.03.2021)

Story by Sai Kulkarni

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