IMPORTANT POINTS
Once courts in Mumbai have exclusive jurisdiction it is the Mumbai courts and the Mumbai courts alone, before which a Section 34 application can be filed. Fact that arbitration was held at Delhi has no bearing.
There is no requirement for parties to lead evidence u/s 34(2)(a).

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 Rs.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-Laws and Operating Instructions issued by CDSL from time to time in the same manner and to the same extent as if the same were set out herein and formed part of this Agreement.”

xxx xxx xxx

“Arbitration

11. The parties hereto shall, in respect of all disputes and differences that may arise between them, abide by the provisions relating to arbitration and conciliation specified under the Bye-Laws.”

 xxx xxx xxx

“Jurisdiction

12. The parties hereto agree to submit to the exclusive jurisdiction of the courts in Mumbai in Maharashtra (India).”

4. Though the bye-laws referred to in the agreement are under the provisions of the Depositories Act, 1996, it is common ground that the arbitration proceeding took place under the National Stock Exchange bye laws. Under these bye-laws, Chapter VII speaks of dealings by trading members and grants exclusive jurisdiction to the civil courts in Mumbai in relation to disputes that arise under the bye-laws as follows:

“CHAPTER VII

DEALINGS BY TRADING MEMBERS.

   Jurisdiction.

(1) (a) Any deal entered into through automated trading system of the Exchange or any proposal for buying or selling or any acceptance of any such proposal for buying and selling shall be deemed to have been entered at the computerised processing unit of the Exchange at Mumbai and the place of contracting as between the trading members shall be at Mumbai. The trading members of the Exchange shall expressly record on their contract note that they have excluded the jurisdiction of all other Courts save and except, Civil Courts in Mumbai in relation to any dispute arising out of or in connection with or in relation to the contract notes, and that only the Civil Courts at Mumbai have exclusive jurisdiction in claims arising out of such dispute. The provisions of this Byelaw shall not object the jurisdiction of any court deciding any dispute as between trading members and their constituents to which the Exchange is not a party.”

5. The bye-laws go on to describe the relevant authority prescribing regulations for creation of seats of arbitration for different regions, or prescribing geographical locations for conducting arbitrations, and prescribing the courts which shall have jurisdiction for the purpose of the Act – see Chapter XI dealing with Arbitration – clause 4(a)(iv). Equally, under subclause (xiv), 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