Madan Mohan Rajgarhia vs Mahendra R. Shah & Anr.
1995 Latest Caselaw 139 Del

JUDGMENT

Usha Mehra, J.

(1) Shri Madan Mohan Rajgarhia, has filed this suit for recovery of Rs.5,63,334.00 against M/s Mahendra R.Shah &: Bros. & Ors. Suit is based on the ground that he utilised the services of the defendant for sale and purchase of shares, debentures, etc. of various companies. The parties were maintaining statement of accounts and as per the sale and purchase of shares/ debentures etc. debit/credit entries were made. Statement of accounts were existing between the parties as per final accounts after giving due credit to amounts due from one to the other. A sum of Rs.4,14,582.10 Paise was found due from the defendant. Basing his claim on these facts the suit has been filed by the plaintiff.

(2) Summons in the suit were issued in response to which, the defendant instead of filing the written statement has filed present application under Section 34 of the Indian Arbitration Act (in short the Act). The main plea of the defendant is that the suit at Delhi is not maintainable, it is liable to be stayed because there exists an arbitration agreement which confer jurisdictioin to the Court at Bombay.

(3) I have perused the record and heard the learned counsel at the Bar. So far as the question of jurisdiction is concerned, admittedly on the bills it has been mentioned that the dispute would be subject to Bombay Court's jurisdiction. Whereas according to plaintiff he wrote a letter on 12th July,1991, clarifying his position that he was not agreeable to the said condition that only Bombay Courts will have the jurisdiction. Moreover, the order was placed for the sale and purchase of the shares and debentures at New Delhi. Transactions took place at New Delhi, even the payments were received by the plaintiff and paid to him at New Delhi i.e. within the territorial jurisdiction of this Court. Since the cause of action arose at Delhi, hence this court has the jurisdiction. By an application for stay of suit on account of there being an arbitration agreement subsisting between the parties, at this stage this Court is not called upon to decide the question of jursidiction. I am leaving this issue open to be adjudicated in a appropriate proceedings. At this stage, I am primarily concerned as to whether there exist a valid agreement containing an arbitration clause? And whether the claim made in the suit are such disputes which are covered by that clause' and hence are liable to be referred to Arbitrator? Whether the plaintiff being a non-member can be covered under the Rules, Bye-laws and Regulations of the Stock Exchange, Bombay and hence covered under the Arbitration Clause?

(4) So far as entering into various transactions by the defendant on behalf of the plaintiff are concerned, these are not disputed. Plaintiff has not disputed that he had been receiving bills from the defendant. It is not in dispute that the said bills contained following clauses namely;

"THIS contract is made subject to the Rules, Bye-laws and Regulations and usages of the Stock Exchange, Bombay.

BROKERAGE has been charged at rates not exceeding the official scale of brokerage and is included in the price.

THIS contract is subject to the jurisdiction of the Court of Bombay.

IN the event of any claim (whether admitted or not) difference or dispute arising between you and us out of these transactions the matter shall be referred to arbitration in Bombay as provided in the Rules, Bye-laws, and Regulations of the Stock Exchange, Bombay.

THIS contract constitutes and shall be deemed to constitute as provided overleaf an agreement between you and me/us that all claims (whether admitted or not) differences and disputes in respect of any disputes in respect of any dealings transactions and contracts of a date prior-or subsequent to the date of this contract ( including any question whether such dealings, transactions or contracts have been entered into or not) shall be submitted to and decided by arbitration in Bombay as provided in the Rules, Bye-laws and Regulations of the 9tock Exchange, Bombay.

THE provisions printed overleaf form part of the contract.

REFERENCE to Arbitration

A)All the claims (whether admitted or not) difference and disputes between a member and a non-member or a non-member (the terms "non-member" shall include a remiser authorised clerk or employee or any other person with whom the members shares brokerage) arising out of or in relation to dealing transactions and contracts made subject to the Rules and Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating their construction, fulfilllment or validity or relating to the rights, obligation and liabilities of remiser, authorised clerk, employees or any other persons with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the Rules, bye-laws and Regulations of the Exchange."

THE main thrust of Mr.Raman Kapur's arguments had been that the arbitration clause printed on the bills was not applicable to a non- member. The arbitration clause was to apply only if the plaintiff had been a member of the said Stock Exchange or had shared brokerage with a member of the Exchange. But that is not the case in hand. Plaintiff is neither an employee nor authorised clerk or remiser nor even shared any brokerage with a member. Hence the plaintiff does not fall in the definition of nonmember as, given in the clause under the heading "Reference to Arbitration". I am afraid this argument of Mr.Kapur has no force. Firstly, this bill containing Arbitration Clause would be binding agreement between the parties. This arbitration clause printed on the bill would be applicable even to a non-member. It was so held by this Court in the case of M/s Krishan Chander Ramesh Chander and Bros. V. Sohan Lal, , as well as by the Supreme Court in the case of Banwari Lal Kotiya, V. P.C. Aggarwal . Being even a non-member, he would be covered by the arbitration clause because he accepted that in the event of further dispute between him and defendant those be referred to arbitration and parties would be governed by the Rules, bye-laws and Regulations of the Exchange. Having accepted the printed clauses of the agreement i.e. the arbitration clause which formed part of the contract, the contract is to be governed by the rules, bye-laws and regulations of the Stock Exchange, Bombay. Therefore, even if the plaintiff is a non-member he will still be governed by these regulations, rules & bye-laws.

(5) The second limb of Mr.Kapur's arguments had been that a non-member will only be covered he falls in the definition of non-member. Since the plaintiff is never remiser nor authorised clerk nor employee nor shares any brokerage with the Member, he cannot be covered by the said definition and, therefore, the Rules, bye-laws and Regulations of the Exchange would not apply to him. I have given my thoughtful consideration to these clauses. The reading of the clauses quoted above as a whole would clearly show that this clause is quite wide and comprehensive enough to cover the case of the plaintiff. In order to make it comprehensive, the drafter included in the definition of non-member persons authorised clerk or employees and even other persons like Remisers, who are or have been receiving brokerage from members of the Exchange. The word "shall include" does not mean that the definition of the words "non-member" was restricted to only remiser, authorised clerk, employee or any person with whom the member shares brokerage. In fact by including these categories, the definition of non- member has been widened. By inclusion of such like persons in the definition of non-member does not mean that no other person like the plaintiff who is not a member of exchange has been excluded from the definition of non-member. The common meaning to the definition of non-member would be that such a person is not member as required under the Rules, Regulations and Byelaws of the Stock Exchange, but including others as quoted above by no stretch of imagination would mean curtailing in common prudence the definition of non-member. Sharing of the brokerage is not the criteria applicable to the facts of this case. Plaintiff was simply a non-member and being so has to be governed by the clauses printed in the bills. He explicitly agreed with the defendant that in case any dispute between him and defendant that would be referred to arbitration. What procedure, therefore, has to be followed has been prescribed in the Rules, bye-laws and Regulations. That stage has yet to come. Suffice it to say that at this stage, the plaintiff even being a non-member agreed to the arbitration clause printed on the bills. Hence, he is bound by the same. He now cannot turn around and say that being a non- member, the arbitration clause is not applicable on him. Even at the sake of repetition, it can be said that the "non-member" in the ordinary meaning would be a person who is not a member of the Stock Exchange, irrespective of the fact whether he is or is not a remiser, authorised clerk or employee or a person with whom member shares brokerage. Therefore, the interpretation which Mr.Kapur wants this Court to hold. I am afraid, cannot be appreciated.

(6) Since, there exists an agreement between the parties containing an arbitration clause, therefore, the suit cannot continue. The same is liable to be stayed. Ordered accordingly.