TMI Blog2018 (8) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... ely necessary, as the truth will emerge on a reading of the affidavits filed by both parties. Appeal allowed - decided in favor of appellant. - Civil Appeal No. 8367 of 2018 (Arising Out of SLP (Civil) No. 33248 of 2017) - - - Dated:- 20-8-2018 - Mr. R.F. Nariman And Ms. Indu Malhotra JJ. For the Appellant(s) : Mr. Divyakant Lahoti, Adv. And Mr. Parikshit Ahuja, Adv. For the Respondent(s) : Mr. Arup Banerjee, Adv. JUDGMENT R.F. NARIMAN, J. 1. Leave granted. 2. The present appeal arises out of a dispute between the Appellant, who is a registered broker with the National Stock Exchange, and the Respondent, its client, regarding certain transactions in securities and shares. The Respondent had initiated an arbitration proceeding against the Appellant, claiming an amount of ₹ 7,36,620/-, which was rejected by the Sole Arbitrator vide an Arbitration Award dated 08.12.2009. 3. The appeal arises out of an agreement dated 03.07.2008, which contains the following clauses: General Clause 1. The parties hereto agree to abide by the provisions of the Depositories Act, 1996, SEBI (Depositories and Participants) Regulation, 1996 Bye-Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the place of arbitration for each reference and the places where the Arbitrator can hold meetings have also to be designated. It is common ground that the National Stock Exchange referred the dispute to one Shri Mahmood Ali Khan, who held sittings in Delhi, and delivered an award dated 08.12.2009, whereby the Respondent s claim was rejected. The Respondent then filed a Section 34 application under the Arbitration and Conciliation Act, 1996 on 17.03.2010 before the District Court, Karkardooma, Delhi. By a judgment dated 22.09.2016, the learned Additional District Judge referred to the exclusive jurisdiction clause contained in the agreement, and stated that he would have no jurisdiction to proceed further in the matter and, therefore, rejected the Section 34 application filed in Delhi. In an appeal filed before the High Court, a learned Single Judge of the Delhi High Court held as follows: 4. Accordingly, since the impugned judgment decides the disputed question of fact without allowing parties to lead evidence i.e. depositions supported by documentary evidence, and without opportunity to the other side to cross-examine the witnesses who give depositions, it is necessary that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine witnesses who give depositions. 7. Learned counsel for the Respondent, on the other hand, supported the impugned judgment, and argued that as the seat of arbitration was at Delhi, the courts at Delhi would have jurisdiction, even though there is an exclusive jurisdiction clause vesting such jurisdiction only in the courts at Mumbai. 8. Section 34(2)(a) states as follows: 34. Application for setting aside arbitral award .- (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application furnishes proof that- (i) a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above, the moment seat is determined, the fact that the seat is at Mumbai would vest Mumbai courts with exclusive jurisdiction for purposes of regulating arbitral proceedings arising out of the agreement between the parties. 20. It is well settled that where more than one court has jurisdiction, it is open for the parties to exclude all other courts. For an exhaustive analysis of the case law, see Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. [Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 SCC 32 : (2013) 4 SCC (Civ) 157]. This was followed in a recent judgment in B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd. [B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd., (2015) 12 SCC 225 : (2016) 1 SCC (Civ) 427]. Having regard to the above, it is clear that Mumbai courts alone have jurisdiction to the exclusion of all other courts in the country, as the juridical seat of arbitration is at Mumbai. This being the case, the impugned judgment [Datawind Innovations (P) Ltd. v. Indus Mobile Distribution (P) Ltd., 2016 SCC OnLine Del 3744] is set aside. The injunction confirmed by the impugned judgment will continue for a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the objects underlying the 1996 Act. The process of oral evidence would prolong the process of hearing objections and cannot be countenanced. 7. Furthermore the Supreme Court in FCI v. Indian Council for Arbitration, 2003 (6) SCC 564 had summarized the ethos underlying the Act as follows:- The legislative intent underlying the 1996 Act is to minimize the supervisory role of the Courts in the arbitral process and nominate/appoint the arbitrator without wasting time leaving all contentious issues to be urged and agitated before the arbitral tribunal itself. 8. Accordingly, I see no merit in these applications and the prayer made therein is rejected. 14. We now come to a judgment of this Court in Fiza Developers Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and Anr. , (2009) 17 SCC 796. In this case, the question that was posed by the Court was whether issues as contemplated under Order XIV Rule 1 of the Code of Civil Procedure, 1908 should be framed in applications under Section 34 of the Arbitration and Conciliation Act, 1996. This Court held: 14. In a summary proceeding, the respondent is given an opportunity to file his objections or writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The court may vary the said procedure, depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under Rule 1 of Order 14 of the Code is not an integral part of the process of a proceedings under Section 34 of the Act. 15. A Punjab and Haryana High Court judgment in M/s Punjab State Industrial Development Corporation v. Mr. Sunil K. Kansal , 2012 SCC OnLine P H 19641 [CR No. 4216 of 2011 (decided on 11.10.2012)] after referring to our judgment in Fiza Developers (supra) held: 30. In view of the above, we answer the question of law framed as follows: (i) The issues, as required under Order XIV Rule 1 of the Code as in the regular suit, are not required to be mandatorily framed by the Court. However, it is open to the Court to frame questions which may arise for adjudication. (ii) The Court while dealing with the objections under Section 34 of the Act is not bound to grant opportunities to the parties to lead evidence as in the regular civil suit. The jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liation Act, 1996, substituting the words furnishes proof that with the words establishes on the basis of the arbitral tribunal s record that . 19. We have been informed that the Arbitration and Conciliation (Amendment) Bill of 2018, being Bill No.100 of 2018, contains an amendment to Section 34(2)(a) of the principal Act, which reads as follows: In section 34 of the principal Act, in sub-section (2), in clause (a), for the words furnishes proof that , the words establishes on the basis of the record of the arbitral tribunal that shall be substituted. Bill No.100 of 2018, THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2018, p. 3. 20. One more recent development in the law of arbitration needs to be adverted to. After the decision in Fiza Developers (supra), Section 34 was amended by Act 3 of 2016, by which sub-sections (5) and (6) were added to the principal Act with effect from 23.10.2015. Section 34(5) and 34(6) reads as under: 34. Application for setting aside arbitral award .- xxx xxx xxx (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. Given the current state of the law, we are of the view that the two early Delhi High Court judgments, cited by us hereinabove, correctly reflect the position in law as to furnishing proof under Section 34(2)(a). So does the Calcutta High Court judgment (supra). We may hasten to add that if the procedure followed by the Punjab and Haryana High Court judgment (supra) is to be adhered to, the time limit of one year would only be observed in most cases in the breach. We therefore overrule the said decision. We are constrained to observe that Fiza Developers (supra) was a step in the right direction as its ultimate ratio is that issues need not be struck at the stage of hearing a Section 34 application, which is a summary procedure. However, this judgment must now be read in the light of the amendment made in Section 34(5) and 34(6). So read, we clarify the legal position by stating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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