Gujarat High Court
Vipulbhai Piyushkumar Choliya vs Motilal Oswal Securities Ltd on 19 September, 2025
NEUTRAL CITATION
C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6482 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE MAULIK J.SHELAT Sd/-
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Approved for Reporting Yes No
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VIPULBHAI PIYUSHKUMAR CHOLIYA
Versus
MOTILAL OSWAL SECURITIES LTD
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Appearance:
MS TEJAL K SHAH(2719) for the Petitioner(s) No. 1
MS DISHA N NANAVATY(2957) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE MAULIK J.SHELAT
Date : 19/09/2025
ORAL JUDGMENT
1. Heard learned advocate Ms.Tejal K. Shah, appearing for the petitioner, and learned advocate Ms. Disha Nanavati, appearing for the respondent.
2. The present application is filed under Article 227 of the Constitution of India, seeking the following relief:-
"[A] "YOUR LORDSHIPS may be pleased to Quashed and set a side the judgment and order passed in New trial Application no. 18 of 2013 dated 12/10/2015 by the learned Appellate Bench Of Small Causes Chief Court At Ahmedabad it is also marked as Annexure - A. [B] "YOUR LORDSHIPS may be pleased to pending hearing and dispose of this said petition by way of order ad interim relief to stay and operation the appellate court order during the pendancy of this petition.
[B.B.] Your Lordship may be pleased to direct the respondent no.1 to release amount of Rs.40,000/- which Page 1 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined was margin deposited by the petitioner with interest plus cost.
[C] " YOUR LORDSHIP' may be pleased to admit and allow this petition.
[D] " YOUR LORDSHIP may be pleased to any other relief, which is suitable and necessary int eh circumstances of this case be granted."
3. As far as possible, the parties will be referred to as per their original position before the Trial Court. THE BRIEF FACTS OF THE CASE
4. The petitioner appears to be the plaintiff of Summary Suit No. 1952 of 2006, filed against the respondent. It appears from the plaint that the plaintiff executed a member-client agreement with the defendant to trade in the stock market. 4.1. There appears some dispute as regards the trading of shares, which resulted in alleged loss caused to the plaintiff to the tune of Rs.50,000/-. So, the aforesaid suit came to be filed against the defendant, who happened to be a registered stockbroker with the Stock Exchange Board of India (hereinafter referred to as SEBI).
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NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined 4.2. On entering appearance, the defendant appears to have filed the impugned application below Exhibit 23, under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act, 1996'), contending inter alia that as per the member-client agreement executed by the plaintiff and defendant, containing an arbitration clause, thereby, the suit would not be maintainable, and the plaintiff requires to be relegated to arbitration.
4.3. After hearing the parties, the Trial Court, vide its order dated 28.10.2013, allowed the impugned application filed below Exhibit 23 by the defendant, whereby the plaintiff was relegated to initiate arbitration proceedings. 4.4. Having aggrieved by such order, the defendant appears to have filed a new trial application under Section 38 of the Presidency Small Causes Courts' Act, 1882 (hereinafter referred to as 'the Act, 1882'), being New Trial Application No. 18 of 2013. After hearing the parties, the appellate bench of the Small Causes Court, having not found any substance in such Page 3 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined application, rejected such application. Hence, the present application.
SUBMISSION OF THE PETITIONER
5. Learned advocate Ms. Shah would submit that the Trial Court as well as the Appellate Court both have committed a grave error in law, inasmuch as they have not appreciated the fact that there was no arbitration agreement executed by the plaintiff with the defendant, and as such, the suit was the only remedy available with the plaintiff to recover the damages from the defendant.
5.1. Learned advocate Ms. Shah would submit that once issues are already framed by the Trial Court, it should not have entertained such impugned application filed by the defendant under Section 8 of the Act, 1996. 5.2. Learned advocate Ms. Shah would further submit that when it has not been established on record that an arbitration agreement was, in fact, in existence between the parties, the Page 4 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined Trial Court and so also, the Appellate Court, should not entertain the impugned application.
5.3. Learned advocate Ms. Shah would submit that considering the definition of 'Court' given under Section 2(1)
(e) of the Act, 1996, a Small Causes Court would not be a Court within the purview of the Act, 1996, thereby also, the impugned application was misconceived at law and requires to be rejected.
5.4. Making the above submission, learned advocate Ms. Shah would request this Court to allow the present application. SUBMISSION OF THE RESPONDENT
6. Per contra, learned advocate Ms. Nanavati, appearing for the defendant, would submit that there is an arbitration clause existing between the parties, as it is not in dispute that the plaintiff had executed a member-client agreement with the defendant, and the matter requires to be referred to arbitration.
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NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined 6.1. Learned advocate Ms. Nanavati would further submit that as per Section 8 of the Act, 1996, the Court is required to relegate the party to arbitration when it is found that there is a valid arbitration agreement executed and existed between the parties. It is submitted that once found satisfied, and accordingly the Trial Court as well as the Appellate Court have not entertained the plea of the plaintiff, this Court, in its limited jurisdiction under Article 227 of the Constitution of India, should not interfere with the finding of fact recorded by the courts below.
6.2. Learned advocate Ms. Nanavati would respectfully submit that as per Notification issued by the State in consultation with the High Court, the Small Causes Court is empowered to decide summary suit like the present case; thereby, the suit came to be presented by the Small Causes Court. It is respectfully submitted that the definition of 'Court' given under Section 2(1)(e) of the Act, 1996, cannot be interpreted in a narrow sense because the opening words of Section 2 of the Act, 1996, clearly speaks that "unless the Page 6 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined context otherwise requires, 'Court' would mean the principal Civil Court of original jurisdiction in a district." It is respectfully submitted that when the Small Causes Court is empowered to decide the lis between the parties and it has original jurisdiction like the principal Civil Court in the district, it would be construed as a 'Court' within the definition of Section 2(1)(e) of the Act, 1996.
6.3. Making the above submission, learned advocate Ms. Nanavati would request this Court to reject the present application.
7. No other and further submissions are made. ANALYSIS
8. The facts, which are observed hereinabove, are not in dispute. It remains undisputed that there is a member-client agreement executed between the plaintiff and defendant, and as per such agreement, there was an arbitration clause embodied in the agreement itself. It is also undisputed that arising from such an agreement, when some trade in relation Page 7 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined to the purchase / sale of stock, dispute arose between the parties.
9. Prima facie, considering the cause of action for which the suit instituted by the plaintiff against the defendant, it would be a dispute falling within the purview of such arbitration agreement, and in those circumstances, such disputes require to be resolved through arbitration only.
10. The defendant, on entering its appearance, undisputedly, at the first instance, filed the impugned application below Exhibit 23 under Section 8 of the Act, 1996, requesting the Trial Court to refer the matter to arbitration.
11. At this stage, it would be apposite to refer to Section 8 and Section 2(1)(e) of the Act, 1996, which are as under:-
SECTION 8 OF THE ACT, 1996
8. Power to refer parties to arbitration where there is an arbitration agreement.--[(1)A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] Page 8 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] (3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.
SECTION 2(1)(e) OF THE ACT, 1996
2. Definitions.--(1) In this Part, unless the context otherwise requires,--
[(e) "Court" means-- (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;"
11.1. The plain reading of Section 8 would indicate that once, there is an arbitration agreement exists between the parties, the Court is required to refer the parties to arbitration.Page 9 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025
NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined 11.2. Further, the definition of 'Court' given under Section 2(1)(e) of the Act, 1996, would also indicate that 'Court' defined and meant as per the Act, 1996, would be the principal Civil Court of original jurisdiction in a district.
11.3. The opening words of Section 2 also require to be taken note of while considering the definition of 'Court' given under the Act, 1996. The opening words of Section 2 of the Act, 1996, states, "unless the context otherwise requires". Such would be the fact; the context in which the definition of 'Court' is given requires some relevance and observance.
11.4. The Small Causes Court, before whom the suit instituted by the plaintiff, was empowered to decide the disputes between the parties, as the State, in consultation with the High Court, empowered the Small Causes Court to decide monetary claims of the parties. When such would be the case, according to my view, the Small Causes Court would be a 'Court' as defined under Section 2(1)(e) of the Act, 1996.Page 10 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025
NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined 11.5. Thus, it would not be appropriate and required to accept the argument on the part of the plaintiff that none of the provisions of the Act, 1996, including Section 8 of the Act, 1996, would apply.
12. Now, it is a well-settled legal position of law that whenever there is an arbitration agreement executed between the parties and existing as on the date, the case instituted before the court concerned, it would be incumbent upon the court to refer the party to arbitration.
CONCLUSION
13. In light of the aforesaid discussions, observations, and reasons, I do not find any merits in the present application, which requires to be rejected. Consequently, the impugned order dated 12.10.2015 passed by the Appellate Bench of Small Causes Court is hereby confirmed.
14. In view of the foregoing conclusion, the present application is hereby rejected. No order as to costs. The Page 11 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025 NEUTRAL CITATION C/SCA/6482/2016 JUDGMENT DATED: 19/09/2025 undefined plaintiff can avail the remedy of arbitration if so advised. Rule is discharged.
(MAULIK J.SHELAT,J) MOHD MONIS Page 12 of 12 Uploaded by MOHD MONIS(HC01900) on Fri Sep 19 2025 Downloaded on : Sat Sep 20 05:31:33 IST 2025