Arbitration and Conciliation Act, 1996: s.34 – Territorial jurisdiction – Dispute arose between the registered broker of the National Stock Exchange (NSE) and its client regarding certain transactions in securities and shares – Agreement between the parties contained a jurisdiction clause whereby the parties were to submit to the exclusive jurisdiction of the courts in Mumbai – Matter was referred by the NSE to the arbitrator having sittings at Delhi – Respondent’s claim was rejected by the sole arbitrator – Respondent then filed s.34 application before Delhi District Court – District Court dismissed s.34 application referring to the exclusive jurisdiction clause in the agreement – By impugned order, High Court remitted the matter to the Delhi District Court to decide the disputed questions of fact as regards the existence of territorial jurisdiction of the courts at Delhi after framing issue to that effect and permitting the parties thereafter to lead evidence on the same – On appeal, Held: Once courts in Mumbai have exclusive jurisdiction in terms of agreement read with the NSE bye-laws then it is the Mumbai courts alone, before which s.34 application was to be filed – High Court erred in remanding the matter for a full-dressed hearing on what he referred to as a ‘disputed question of fact’ relating to jurisdiction – The object of enactment of 1996 Act is speedy resolution of arbitral disputes – However, if issues are to be framed and oral evidence taken in a summary proceeding under s.34, this object will be defeated – 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 s.34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties – Crossexamination 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 – High Court erred in referring back the parties to the District Court to first frame an issue and then decide on evidence including the opportunity to cross examine witnesses who give depositions – Order of High Court is set aside and that of District Court is restored – Jurisdiction. Allowing the appeal, the Court
HELD: 1. 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 states that 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. The object of enactment of 1996 Act was speedy resolution of arbitral disputes and it continues to be the reason for adding amendments to the said Act to strengthen this object. However, if issues are to be framed and oral evidence taken in a summary proceeding under Section 34, this object will be defeated. It is also on the cards that if Bill No.100 of 2018 is passed, then evidence at the stage of a Section 34 application will be dispensed with altogether. [Paras 19, 22] [950-B-C; 951-E-F] Fiza Developers & Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and Anr. (2009) 17 SCC 796 : [2009] 12 SCR
1 – relied on.
M/s Punjab State Industrial Development Corporation v. Mr. Sunil K. Kansal 2012 SCC OnLine P&H 19641 – overruled.
WEB Techniques and Net Solutions Pvt. Ltd. v. M/s. Gati Ltd. and Anr. 2012 SCC OnLine Cal 4271 – approved.
Sandeep Kumar v. Dr. Ashok Hans (2004) 3 Arb LR 306; Sial Bioenergie v. SBEC Systems AIR 2005 Del 95; Cochin Shipyard Ltd. v. Apeejay Shipping Ltd. (2015) 15 SCC 522 : [2009] 12 SCR 1; State of Bihar and Ors. v. Bihar Rajya Bhumi Vikas Bank Samiti 2018
(9) SCALE 291 – referred to.
2. 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. Crossexamination 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. [Para 22] [952-AC]
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 : [2012] 12 SCR 327 – followed
Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. and Ors. (2017) 7 SCC 678: [2017] 4 SCR 744 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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