Date: 14 December, 2020
by Nishtha Girdhar, UILS, Panjab University
APPELLANT: M/S EMKAY GLOBAL FINANCIAL SERVICES LTD.
RESPONDENT: GIRDHAR SONDHI
CITATION: Civil Appeal No. 8367 of 2018
DECIDED ON: 20th August, 2018
BENCH: Justice R.F. Nariman
FACTS OF THE CASE:
In the present case, the dispute arose between M/S Emkay Global Financial Services Ltd.(appellant), a broker registered with the National Stock Exchange (NSE) and the respondent, who was a client for the appellant.
The respondent, Mr Girdhar Sondhi, filed a claim for Rs. 736,620, and thus initiated an arbitral proceeding against the appellant.
The arbitral proceedings took place under an agreement and were also subjected to NSE bye-laws.
The parties also agreed in the agreement to grant exclusive jurisdiction to courts in Maharashtra.
The dispute was referred to a sole arbitrator, who conducted proceedings in Delhi.
The arbitrator passed an award (dated December 8, 2009) rejecting the claim of the respondent.
The respondent subsequently challenged the same referring to Section 34 of the Arbitration and Conciliation Act, 1996 before the District Court, Delhi.
The application was dismissed by the District Court owing to the exclusive jurisdiction of Mumbai Courts, as specified in clause 12 of the said agreement.
On an appeal to the Delhi High Court, it was held that, since the disputed question of fact was decided without providing parties with an opportunity to lead evidence therefore it would be necessary that the disputed issue regarding territorial jurisdiction of the courts at Delhi be decided only after the issues are framed and the parties have led evidence.
Whether the courts of Delhi or Mumbai had the exclusive jurisdiction to deal with the matter?
Whether a party can lead evidence in proceedings instituted under Section 34 of the Arbitration and Conciliation Act, 1996?
The Court cited several of its judgements to come to a decision:
Following the judgement in Indus Mobile Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. (2017) 7 SCC 678 the court held that Mumbai courts will have exclusive jurisdiction owing to the Agreement and NSE bye-laws in the present case.
Additionally, in the case of Atlas Power v. National Transmission, the major dispute was related to the seat of the arbitration. It was held that the seat of arbitration was London, by considering that numerous authorities establish that the courts of the jurisdiction, England & Wales, regard the choice of seat of an arbitration as akin to an exclusive jurisdiction clause.
As regards the second issue, the Court clarified that “an application for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the Arbitrator. However, if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties. Cross-examination of persons swearing to the affidavits should not be allowed unless absolutely necessary, as the truth will emerge on a reading of the affidavits filed by both parties.”
Also, the Court took into consideration the recommendations of Justice B.N. Srikrishna Committee wherein it was specifically stated that an amendment has to be made to Section 34(2)(a) of the Arbitration and Conciliation Act, 1996, substituting the words “furnishes proof that” with the words “establishes on the basis of the arbitral tribunal’s record that”.
The present judgement holds an important place in the present scenario since it attempts to strengthen the arbitration regime in the country. This ruling would certainly help speedy disposal of arbitration cases and limit the interference of courts in such matters.