On 20th June 2026, the Supreme Court in a landmark judgment decided that mere existence of arbitration clause does not oust the right of a consumer to file a complaint with consumer forum.
In the case, the builder had claimed that the agreement’s arbitration clause dictated that the buyer should have gone to arbitration and not to the consumer forum as he intended to do, since the flat was delayed in delivery. The Supreme Court, however, set aside this argument, observing that Consumer Protection Act gives consumer a specific legal rights which cannot be rebuttalable under an arbitration clause in a contract. Hence, in case a complaint is submitted to a consumer forum, it can be referred to another forum only if the arbitration clause in the complaint is compelling to the forum.
The Supreme Court has also said that even if the buyer does end up owning the flat while the proceedings are continued, they would still be able to get compensation for any losses or mental anguish due to the delay, thereby not waiving their consumer rights.
This ruling is important as it affirms that the statutory rights under Consumer Protection Act cannot be undermined by arbitration clauses in any private contract, further to strengthen the rights of consumers. This is an important and useful choice especially in case the purchaser is a homebuyer or other buyers.
– Team Lawyer Talks
