AC Chokshi Share Broker Private Limited vs Jatin Pratap Desai & Anr.

Issue 1: The arbitration against the husband was maintainable. Held: While interpreting contracts, courts must shun hypertechnical approach and adopt a practical approach taking into consideration the conduct and intention of the Parties – In case at hand, the joint and several liability of both the Respondents was evident from their oral contract with the stock broker and also from the transactions undertaken together by them – The fact of them maintaining separate client registration agreements, having separate client codes and accounts was immaterial – Even in institutional arbitrations (as in case at hand) as opposed to those based on parties’ consent, the following factors laid down in ONGC v. Discovery Enterprise and affirmed in Cox and Kings, are relevant in ascertaining whether a non-signatory can be made party to an arbitration: (a) the mutual intention of the parties; (b) relationship between signatory and non-signatory; (c) commonality of subjectmatter; and (d) composite nature of transaction. [Paras 14-15] Bye-law 248(a) is broadly worded which allows for reference to arbitration of any dispute “arising out of, in relation to, incidental to or in pursuance of” transactions, contracts, and dealings and hence the oral contract between the Appellant and Respondent No.1 (husband) cannot be termed as a “private” transaction as held by the High Court – Further, issues regarding jurisdiction of arbitral tribunal or scope of Bye-law 248(a) could be raised only before the Arbitral Tribunal as per s.16 of A&C Act and by failing to do so, the objecting party is deemed to have waived his right, in terms of s.4 of the A&C Act, to raise such an issue at a later stage – Hence, High court erred in entertaining such a plea u/s.37 of A&C Act which was not raised before the Arbitrator. [Paras 20, 21] Arbitration and Conciliation Act, 1996 – s.37 – Scope of s.37 of A&C Act is limited to determining whether s.34 court has exercised its jurisdiction properly and rightly: Held: High Court’s division bench erred not only by re-appreciating the evidence – A domain reserved solely for the arbitrator but also by applying ground of ‘perversity’ which is available at the stage of s.34 – Award did not suffer from any patent illegality as adjustment of accounts was done in accordance with the BSE bye-Laws and SEBI Guidelines – Arbitral Award was upheld in entirety. [Paras 22-31]