Gujarat High Court
Vipulbhai Piyushkumar Choliya vs Motilal Oswal Securities Ltd on 19 September, 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
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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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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
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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
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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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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
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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
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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.]
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(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.
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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.
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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
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plaintiff can avail the remedy of arbitration if so advised. Rule
is discharged.
(MAULIK J.SHELAT,J)
MOHD MONIS
