Jagdish Prasad Kailash Nath (HUF) v. M/S Indiabulls Securities Ltd

1. Though the counsel for the defendants opposes but the counsel for CS(OS) 637/2011 & CS(OS) 638/2011 Page 1 of[5] y. 2013:DHC:6703 both the plaintiffs having cited his own reason for dismissal of the suits in default, the applications are allowed and both the suits are restored to their original position respectively.

2. The applications are disposedof LA. No.17299/2011 in CSfOS) 637/2011 & T.A. No.17300/2011 in CS(OS) 638/2011 (both of defendants u/S 8 of the Arbitration and Conciliation Act 1996)

3. The counsels have been heard.

4. The plaintiff in CS(OS) No.637/2011 has sued for recovery of Rs.1,04,81,155/-; theplaintiffin CS(OS) No.638/2011 has sued for recovery ofRs.71,48,768/-.

5. The plaintiff in each case had entered into Member Constituent Agreements dated 31'' May, 2006 and lO'^ May, 2006 respectively with the defendant (impleaded thrice at different addresses) for buying and selling of equity, shares and future shares and the amount claimed in each suit is stated to be due tothe plaintiffin each case out of the transactions under the said Agreement.

6. Summons of the suits were issued.

7. Applications under Section 8 of the Arbitration and Conciliation Act, 1996 along with photocopy of the Member Constituent Agreement have been filed in each suit. Clause 6.10 ofthe said Agreements is as under; CS(OS) 637/2011 &CS(OS) 638/2011 Page 2of[5] "6.10 Dispute Resolution (a) The Member and the Client are aware of the provisions if the bye laws rules and regulations of the Exchanges relating to the resolution of the disputes/differences through the mechanism of arbitration provided by the Exchanges andagree to abide by the said provisions in so far as any disputes under these terms relate to transactions that are to be carried on the exchanges. (b) The Member hereby agrees that itshall ensurefaster settlement ofany arbitration proceedings arising out ofthe transaction entered into between him and the client and that it shall be liable to implement the arbitration awards made insuch proceedings.

(c) Insofar asany other disputes ordifferences in connection with these Terms or their performance (other that the disputes referred to in 6.10 (a) above) are concerned such disputes shall, sofar as it is possible, be settled amicably between the Parties and in the case where after 30 days ofconsultation, the parties have failed to reach an amicable settlement, such disputes shall be submitted to arbitration and such arbitration shall be conducted in accordance with the Indian Arbitration and Conciliation Act, 1996 (the 'ArbitrationAct") by a panel consisting ofa solearbitrator

(d) The Member andthe client agree to abide by any awardpassed by the Ombudsman under the SEBl (Ombudsman) Regulation, 2003. "

8. llie plaintiffs have filed their respective replies to the application inter alia pleading that the defendant had filed a complaint against the CS(OS) 637/2011 &CS(OS) 638/2011 Page 3of[5] plaintiffs of offences under Section 138 of the Negotiable Instruments Act, 1881 and against the summoning order wherein the plaintiffs had approached this Court; that the defendant failed to file reply in this Court and ultimately gave a statement that tlie complaint wouldbe withdrawn and "civil remedies" shall be pursued; that the defendant is thus not entitled to invoke the arbitration. It is further pleaded that the copy of the Agreement supplied to the plaintiffs is illegible.

9. Today, the counsel for the plaintiffs has also argued that as per the Bye-laws of the National Stock Exchange of India Limited, the claims have to be preferred within a period of one year; that though the present suits were filed within the period of limitation, but the remedy of arbitration would now, not be available.

10. It has been enquired from the counsel for the defendant as to whether arbitration in these cases would be that of the National Stock Exchange of India Limited under Clause 6.10 (a) (supra) or under Clause 6.10 (c). The counsel states that the dispute, subject matter ofthese suits would faU within the ambit of Clause 6.10 (c) and not under Clause 6.10 (a).

11. None of the defenses aforesaid constitute a ground for refusing the mandate of Section 8 of the Arbitration Act. It cannot be said that the defendant, by stating that it will avail "civil remedies" has waived arbitration. Arbitration is also a civil remedy. As far as the plea of the plaintiffs ofbeingunable toinvoke arbitration is concemed, it hasbeenheld CS(OS) 637/2011 & CS(OS) 638/2011 Page 4 of S in Smt. Biba Sethi & Nitin Sethi Vs. Dyna Securities Ltd. MANU/DE/1325/2009 the appeal whereagainst being FAO(OS) No.253/2009 titled Dyna Securities Ltd. Vs. Biba Sethi was dismissedvide order dated 30^ March, 2011, that the lesser period of limitation provided for arbitration is not valid. Also, merely because the remedy of arbitration has not been invoked within the prescribed period, is no ground for not following the mandateof Section 8 of the Arbitration Act.

12. The arbitration clause aforesaid in the Agreement between the parties is all pervasive and in the face thereof^ the suits cannot be proceeded with further and are disposed ofby referringthe parties to arbitration. No costs.

FEBRUARY 04, 2013 bs.. /'UsTil''-' CS(OS) 637/2011 & CS(OS) 638/2011 RAJIV SAHAIENDLAW, J /t >- !<•' / (pff. Page 5 ofS / % $~A-36 * IN THE fflGH COURT OF DELHI AT NEW DELHI + • CS(OS) 638/2011 NIRMALA DEVI KANODIA Plaintiff Through Mr.M.N.Kural and Ms.Pushpa Sharma, Advocates versus M/S INDIABULLS SECURITES LTD & OTHERS Defendant Through CORAM: HON'BLE MR.