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2009 DIGILAW 775 (BOM)

NETWORTH STOCK BROKING LTD. v. K. VINAYA PRASAD

2009-07-02

ANOOP V.MOHTA

body2009
JUDGMENT An Affidavit of service is taken on record. The Respondent appeared through his advocate and filed an affidavit, which is also taken on record. There is an agreement which provides an arbitration clause. Based upon Clause 19 of a Member-Client Agreement and as agreed, the Court in Mumbai has jurisdiction to decide the dispute or conflict arising out of the agreement. The agreement deals with buying and/or selling and dealing in securities and trading on the National Stock Exchange. The business was done accordingly. The amount as claimed is due and payable by the Respondent. Therefore the petitioner has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short, "the Act") in February 2009 before this Court at Mumbai. The relevant Clause 19 of Client-Member Agreement is reproduced as under: "19. The member and the constituent declare and agree that the transactions executed on the Exchange are subject to Rules, Bye-laws and Regulations and circulars issued there under of the respective Exchange shall be deemed to be and shall take effect as wholly made, entered into and to be performed in the city of Mumbai and the parties to such trade shall be deemed to have submitted to the jurisdiction of the Courts in Mumbai for purpose of giving effect to the Rules, Bye-laws, and Regulations of the relevant exchange segments and also with regards to any claims or matters arising under the terms and conditions set out in this agreement." Strikingly, the Agreement between the parties has been approved by the SEBI. The Apex Court in Rajasthan State Electricity Board vs. Universal Petrol Chemicals Ltd. (2009) 3 Supreme Court Cases 107 has reiterated in following words about agreed territorial jurisdiction: "Paragraph No. 27: The aforesaid legal proposition settled by this Court in respect of territorial jurisdiction and applicability of Section 20 of the Code to the Arbitration Act is clear, unambiguous and explicit. The said position is binding on both the parties who were contesting the present proceeding. Both the parties with their open eyes entered into the aforesaid purchase order and agreements thereon which categorically provide that all disputes arising between the parties out of the agreements would be adjudicated upon and decided through the process of arbitration and that no court other than the court at Jaipur shall have jurisdiction to entertain to try the same. Both the parties with their open eyes entered into the aforesaid purchase order and agreements thereon which categorically provide that all disputes arising between the parties out of the agreements would be adjudicated upon and decided through the process of arbitration and that no court other than the court at Jaipur shall have jurisdiction to entertain to try the same. In both the agreements in Clause 30 of the general conditions of the contract it was specifically mentioned that the contract shall for all purposes be construed according to the laws of India and subject to jurisdiction only at Jaipur in Rajasthan Courts only and in addition in one of the purchase order the expression used was that the court at Jaipur only would have jurisdiction to entertain or try the same. Paragraph No. 32: We may also at this stage appropriately refer to the definition of the word "court" as appearing in Section 2(c) of the Act wherein the expression "court" is defined to mean : "a civil court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of the suit, but does not, except for the purpose of arbitration proceedings under Section 21 include a Small Cause Court." Paragraph No. 35: "The parties have clearly stipulated and agreed that no other Court, but only the Court at Jaipur will have jurisdiction to try and decide the proceedings arising out of the said agreements, and therefore, it is the civil court at Jaipur which would alone have jurisdiction to try and decide such issue and that is the Court which is competent to entertain such proceedings. The said Court being competent to entertain such proceeding, the said Court at Jaipur alone would have jurisdiction over the arbitration proceedings and all subsequent applications arising out of the reference. The arbitration proceedings have to be made at Jaipur Court and in no other Court." The petitioner's basic claim is described in the petition. The sole Arbitrator has passed an Award on 11th November, 2008 at Chennai. There is nothing to show that the Respondent has challenged the Award. In view of this, the averments remained unchallenged including the findings given by the Arbitral Tribunal. The sole Arbitrator has passed an Award on 11th November, 2008 at Chennai. There is nothing to show that the Respondent has challenged the Award. In view of this, the averments remained unchallenged including the findings given by the Arbitral Tribunal. It is settled that while granting any protection or measure, in such proceeding under the Act, the Court needs to consider Order 38 Rule 5, Order 39 Rule 1 and 2 and Section 14 and 41 of the Specific Relief Act, 1963. In Arbitration Petition (Lodging) No. 324 of 2009 dated 2nd May, 2009 in Vijay Agarwal vs. Lehman Brothers Advisors Pvt. Ltd., I have already taken such view relying upon Adhunik Steels Ltd. vs. Orissa Manganese and Minerals (P.) Ltd. in ( (2007) 7 S.C.C. 125 ), the Apex Court observed are as under: "It is true that Section 9 of the Act speaks of the Court by way of an interim measure passing an order for protection, for the preservation, interim custody or sale of any goods, which are the subject-matter of the arbitration agreement and such interim measure of protection as may appear to the court to be just and convenient." "Moreover, when a party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures under Section 9 of the Act." Having observed above, and as a prima facie case is made out and it is just and convenient to grant the prayer of securing the amount of Award, I am inclined to grant the following order: (a) "The Respondent is directed to furnish/secure the amount as awarded from the date of receipt of the Order within eight weeks. (b) The liberty is granted to the Respondent to move for settlement, if any. (c) The parties are also at liberty to raise their respective pleas/defence before the arbitral tribunal, if any. Having observed above, there is nothing survive in this petition. The petition is accordingly allowed to the above extent with liberty. No order as to cost.