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[The Viewpoint] Consumers Wield Freedom of Choice in Dispute Resolution

For the link between arbitration and a consumer dispute under CPA 2019 or its predecessor the Consumer Protection Act, 1986 (“CPA 1986”), certain conditions must be met. One, that the dispute at hand be a consumer dispute, for which either of the parties has to be a “consumer” under the CPA 2019. That the definition of ‘consumer’ is broad is now settled through the Supreme Court case of Lucknow Development Authority v. MK Gupta which has stated that as far as the CPA 1986 is concerned, the consumer would be anyone who purchases the goods and those who avail the services (as opposed to those who pay for the services). The case also made it clear that for any action to be considered a service, it is not important to determine whether the service provider is a statutory body or a private body. What is more important is the nature of the service performed. Through Kishore Lal v. Chairman, ESIC, it is understood that the definition of a consumer under CPA 1986 has been kept wide deliberately to include transactions with not only goods, but also services, both purchase and hire for a consideration. Thus, the only supply/service that stood excluded from the CPA 1986 would be free ones, for which there was no consideration involved. Once this is established, the other aspect that there is an arbitration contract or clause in the contract between the parties. A slight deviation is available to the parties if the legislation governing such transactions mandates arbitration. These arbitrations are also called “statutory arbitrations,” and are allowed through S. 2(4) of the Arbitration and Conciliation Act, 1996 (“ACA”) It also goes without saying that the dispute should be arbitrable.

Source: Barandbench

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