This objection appears in almost every builder matter and a good many finance and insurance matters. It is raised because it works often enough on complainants who do not know the answer, and it is withdrawn quickly when they do.
Why the clause does not bite
Two reasons, and they are independent of each other, so the objection has to defeat both.
- The remedy is statutory and additional. The commission's jurisdiction comes from the Act, not from the contract. Parties cannot agree to remove a jurisdiction that Parliament conferred, any more than an exclusive-jurisdiction clause can override Section 34(2).
- The Act protects a class, not just a party. Consumer legislation exists precisely because the bargaining power in a standard-form contract is unequal. Allowing a clause drafted by the stronger party to remove the protection would defeat the statute's purpose, and courts have said so consistently.
The position has been settled by the Supreme Court and by the National Commission, most visibly in the builder cases, where clauses of this kind were pressed hard and rejected. It is now a routine objection with a routine answer.
Is the arbitration clause in a contract you signed as a consumer?
Yes, and the grievance is deficiency in service or an unfair trade practice: the consumer commission is open to you, and the choice is yours. You may still arbitrate if you prefer, but you cannot be made to.
Yes, but the goods or services were obtained for a commercial purpose: you are likely outside Section 2(7) and outside the Act altogether, and arbitration or a civil suit is your route.
No, the dispute is between two businesses under a commercial contract: the arbitration clause governs and the Arbitration and Conciliation Act, 1996 applies.
The trap that does exist
The real risk is not the clause. It is the commercial purpose exclusion in Section 2(7). If the flat, the vehicle or the equipment was acquired for business use rather than for personal use or for earning a livelihood by self-employment, you may not be a consumer, and then the arbitration clause is the only thing left standing. That is the point the opposite party should be arguing, and it is the point to test honestly before filing.