2018 (8) TMI 1115 - SC - Indian Laws

Jurisdiction - National Stock Exchange byelaws - place of arbitration proceedings - rejection of arbitral reward - Held that - Once courts in Mumbai have exclusive jurisdiction thanks to the agreement dated 03.07.2008, read with the National Stock Exchange bye-laws, it is clear that it is the Mumbai courts and the Mumbai courts alone, before which a Section 34 application can be filed. The arbitration that was conducted at Delhi was only at a convenient venue earmarked by the National Stock Exchange, which is evident on a reading of bye-law 4(a)(iv) read with (xiv) contained in Chapter XI. 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. Cross-examination 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. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Jurisdiction of Courts in Arbitration Proceedings
2. Interpretation of Exclusive Jurisdiction Clauses
3. Procedure under Section 34 of the Arbitration and Conciliation Act, 1996
4. Requirement of Evidence in Section 34 Applications

Detailed Analysis:

1. Jurisdiction of Courts in Arbitration Proceedings:
The central issue was whether the courts in Delhi had jurisdiction to entertain a Section 34 application to set aside an arbitral award, given the exclusive jurisdiction clause in the agreement and the National Stock Exchange (NSE) bye-laws, which designated Mumbai courts as having exclusive jurisdiction. The Supreme Court reaffirmed that the Mumbai courts alone had jurisdiction due to the agreement and the NSE bye-laws, despite the arbitration being conducted in Delhi for convenience.

2. Interpretation of Exclusive Jurisdiction Clauses:
The Supreme Court emphasized the binding nature of exclusive jurisdiction clauses, referencing the judgment in Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd. The Court stated that once the seat of arbitration is designated, it is akin to an exclusive jurisdiction clause. Thus, the Mumbai courts had exclusive jurisdiction as per the agreement dated 03.07.2008 and the NSE bye-laws, despite the arbitration proceedings being held in Delhi.

3. Procedure under Section 34 of the Arbitration and Conciliation Act, 1996:
The Court examined whether the procedure under Section 34 required a full trial with evidence and cross-examination. It was clarified that Section 34 proceedings are summary in nature and do not require framing of issues or leading of oral evidence. The Court cited Fiza Developers & Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and other judgments to support this interpretation, emphasizing the need for expeditious disposal of such applications.

4. Requirement of Evidence in Section 34 Applications:
The Court discussed the meaning of "furnishes proof" under Section 34(2)(a) of the Act. It was held that the record before the Arbitrator is generally sufficient to determine the grounds for setting aside an award. Additional evidence by way of affidavits may be allowed, but cross-examination should be permitted only if absolutely necessary. The Court noted that the proposed amendment to Section 34(2)(a) aims to further streamline this process by eliminating the need for additional proof beyond the arbitral record.

Conclusion:
The Supreme Court set aside the Delhi High Court's judgment, which had remanded the matter for a full trial on jurisdictional issues, and reinstated the Additional District Judge's decision, which had declined jurisdiction. The appeal was allowed, reinforcing the principles of minimal court intervention and expedited resolution in arbitration-related disputes.

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