Networth Stock Broking Ltd vs B. Lakshmi Narayana on 25 June, 2009

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    skt/-



              IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                                  
                  ORDINARY ORIGINAL CIVIL JURISDICTION




                                                          
                   ARBITRATION PETITION NO. 284 OF 2009

    Networth Stock Broking Ltd.                                    ...Petitioner.




                                                         
                 Vs.
    B. Lakshmi Narayana                                            ...Respondent.




                                                
    Mr. Dipen Merchant with Mr. Dilip Rai i/by Aruna Singh for the 
    Petitioner.              
    None for the Respondent.
                            
                               CORAM :- ANOOP V. MOHTA, J.

DATED :- 25TH JUNE, 2009.

JUDGMENT :-

1. None appeared for the respondent. An Affidavit of service is

taken on record. There is an agreement which provides an arbitration

clause. Based upon Clause 23 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 respondents. Therefore

the petitioner has filed the present petition under Section 9 of the

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Arbitration and Conciliation Act, 1996 somewhere in February/March

2009 before this Court at Mumbai.

2. The relevant Clause 23 of Client-Member Agreement is

reproduced as under :

“23. 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,
Byelaws, 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.

3. The Apex Court in Rajasthan State Electricity Board V/s.

Universal Petrol Chemicals Ltd. (2009) 3 Supreme Court Cases 107

has reiterated in following words about agreed territorial jurisdiction :

” Para 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

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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

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have to be made at Jaipur Court and in no other Court.”

3. The petitioner’s basic claim is described in the petitioner. The

sole Arbitrator has passed an Award on 19th November 2008 at

Chennai. There is nothing to show that the respondent has

challenged the Award.

4. In view of this, the averments remained unchallenged

including the findings given by the Arbitral Tribunal.

5.

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 V/s. Lehman Brothers Advisors

Pvt. Ltd., I have already taken such view relying upon Adhunik Steels

Ltd. V/s. 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

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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.”

4. 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.

6. 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.

(ANOOP V. MOHTA, J.)

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