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HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
A.V. Vijayakumar – Appellant
Versus
The Director, M/s. Sharekhan Limited, Mumbai & Others – Respondents
O.P. No. 216 of 2016
Decided On : 02-02-2021
Arbitration and Conciliation Act - Territorial Jurisdiction - Securities Contracts (Regulation) Act, 1956 - Section 9 - NSE Bye Laws - Chapter XI - Juridical Seat - Exclusive Jurisdiction
Fact of the Case:
The case involved a petition under Section 34 of the Arbitration and Conciliation Act, 1996, regarding the territorial jurisdiction of the court in a dispute between a depository participant and a client qua NSE. The court examined the arbitration agreements, NSE Bye Laws, and the Securities Contracts (Regulation) Act, 1956 to determine the appropriate jurisdiction for the case.
Finding of the Court:
The court found that the parties had chosen Mumbai as the juridical seat of arbitration, as evidenced by the arbitration agreements. It held that the challenge to the arbitral award made in the Bombay High Court was to a court with territorial jurisdiction, and therefore, the petition lacked territorial jurisdiction. The court emphasized that the supervisory court with exclusive jurisdiction was the Bombay High Court.
Issues: The main issue was the determination of the territorial jurisdiction for the petition under Section 34 of the Arbitration and Conciliation Act, 1996, in light of the arbitration agreements, NSE Bye Laws, and the Securities Contracts (Regulation) Act, 1956.
Ratio Decidendi: The court relied on the principles established in the Indus Mobile case, BGS SGS Soma case, and Hindustan Construction Company Limited case to determine the juridical seat of arbitration and the exclusive jurisdiction of the supervisory court. It emphasized that the choice of the juridical seat by the parties determined the exclusive jurisdiction of the supervisory court.
Final Decision: The court rejected the petition for lacking territorial jurisdiction and directed the petitioner to present the petition in the Bombay High Court, which had exclusive jurisdiction over the matter. The court clarified that it had not expressed any opinion on the merits of the challenge to the arbitral award, as that fell within the exclusive domain of the supervisory court.
JUDGMENT :
(Prayer: Petition filed under Section 34 of Arbitration and Conciliation Act, 1996 to set aside the award of the Panel of Appellate Arbitrators Appeal Arbitration Matter (A.M) No.CM/C-0001/2015 dated 03-11-2015 to the extent the said award denies 50% value of lost shares of the petitioner an cost of the proceedings throughout and pass such further or other orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.)
1. Captioned 'Original Petition' ('OP' for the sake of brevity) is an application under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity. To be noted, in terms of short forms OP in plural shall be referred to as 'OPs'.
2. A question regarding territorial jurisdiction arises in captioned OP.
3. Owing to territorial jurisdiction issue, in terms of factual setting, it will suffice to say that the lis is between a depository participant and client qua NSE. To be noted, NSE and other short forms / abbreviations used in previous proceedings made in the earlier listings (extracted and reproduced elsewhere infra in this order) shall continue to be used in this order for the sake of convenience and clarity.
4. This Court having set out bare minimum facts, which is sententious and terse, but sufficient for the purposes of this order, deems it appropriate to mention that essential facts and those aspects of the matter imperative for appreciating the territorial jurisdiction controversy in captioned OP have been captured in earlier proceedings dated 16.09.2020 and 25.01.2021 listings. Though the proceedings made in these two listings will suffice, as these proceedings refer to earlier proceedings, this Court deems it appropriate to extract and reproduce proceedings of this Court in listings on 23.07.2020, 24.08.2020, 16.09.2020, 22.12.2020, 25.01.2020 and 01.02.2021, which read as follows:
Mr.Hari Radhakrishnan, counsel on record for petitioner and Ms.G.Mahar Amutha Surya, learned counsel on record for contesting first respondent are before me in this web-hearing on a video-conferencing platform.
2. Both learned counsel seek re-scheduling of the matter.
At request, list under the same caption on 24.08.2020.'
Read this in conjunction with and in continuation of earlier proceedings dated 23.07.2020, same set of learned counsel are before me in this web-hearing/virtual hearing on a video-conferencing platform today also.
2. Mr.Hari Radhakrishnan, learned counsel on record for petitioner is ready. Ms.G.Mahar Amutha Surya, learned counsel seeks time to file a compilation of judgments on jurisdiction issue. 3. However, both sides agree and consent that main OP can be taken up for final hearing in the next listing.
List under the same caption on 16.09.2020.'
Read this in conjunction with and in continuation of earlier proceedings dated 24.08.2020.
2. Mr.Hari Radhakrishnan, learned counsel on record for sole petitioner and Ms.Meera Gnanasekar, learned counsel on record for contesting first respondent are before me in this web hearing on a video conferencing platform today.
3. Adverting to earlier proceedings dated 24.08.2020, both learned counsel reiterated their consent to have the captioned OP taken up for final disposal, but an interesting scenario unfurls.
4. Subject matter is a 'National Stock Exchange of India Limited' ('NSE' for brevity) arbitration and the impugned arbitral award made by the 'Appellate Arbitral Tribunal' ('AAT' for brevity) is dated 03.11.2015. To be noted, NSE by laws has a three tiered arbitration clause.
5. What is of significance is learned counsel for contesting first respondent submits that the impugned award made by AAT has been challenged by the contesting first respondent in the Bombay High Court vide Arbitration Petition No.353 of 2016. It comes to light that this peti
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