Gujarat High Court
Niketu Jashwantlal Shah vs Religare Securities Ltd on 23 July, 2025
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/FA/1153/2013 ORDER DATED: 23/07/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 1153 of 2013
With
R/FIRST APPEAL NO. 1154 of 2013
With
R/FIRST APPEAL NO. 1155 of 2013
With
R/FIRST APPEAL NO. 1156 of 2013
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NIKETU JASHWANTLAL SHAH
Versus
RELIGARE SECURITIES LTD
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Appearance:
MS KJ BRAHMBHATT(202) for the Appellant(s) No. 1
MS VARSHA BRAHMBHATT(3145) for the Appellant(s) No. 1
MR CHAITANYA S JOSHI(5927) for the Defendant(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE
SUNITA AGARWAL
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 23/07/2025
COMMON ORAL ORDER
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard Ms.K.J.Brahmbhatt, learned advocate with Ms. Varsha Brahmbhatt, learned advocate for the appellants and Mr. Chaitanya S. Joshi, learned advocate for the respondent.
2. A batch of appeals involving identical facts and prayers has been filed. For the sake of convenience, First Appeal No. 1153 of 2013 is treated as the lead matter and the facts thereof are referred to for the purpose of discussion. The decision rendered in this appeal shall govern the outcome of Page 1 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined the connected First Appeals as well.
3. Brief facts of the case are as under:-
3.1 In August 2006, the appellant became a client of M/s Religare Securities Ltd. (hereinafter "the respondent") after being approached by Mr. Anup P. Shah, who introduced himself as the Relationship Manager representing the respondent. In compliance with instructions from the respondent, the appellant transferred his securities from his personal demat account to the Respondent's beneficiary account from time to time. Since April 2007, the appellant did not make any further monetary transfers to the Respondent and contends that payouts were received during this period.
3.2 It is the case of the appellant that his trading activity, both in equity and derivatives, was limited in scope, and he did not avail of any margin trading facilities. The appellant contends that, up until 20.08.2007, the appellant did not suspect any irregularities in the operation of his trading account. The appellant alleges that several transactions, particularly in the Futures & Options (F&O) segment, were undertaken without his knowledge or consent. On 20.08.2007, Page 2 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined two officials from the respondent's Ahmedabad branch visited the appellant's office and disclosed that Mr. Anup P. Shah had abruptly left the organization and was allegedly involved in unauthorized and discretionary trading activities in several client accounts. The officials further indicated that losses arising from such activities had been settled through the unauthorized sale of client securities held in the respondent's beneficiary account.
3.3 During this visit, the appellant was shown a summary of trades undertaken in his account, where he claims to have immediately identified a number of transactions not authorized or known to him. A copy was eventually provided on 29.08.2007, along with the ledger. On discovering the unauthorized transactions and the resultant losses, the appellant contacted NSE, BSE, SEBI, and the respondent through email on 22.08.2007 and 23.08.2007. A request for suspension of his trading account and the return of his securities, was made. Subsequently, a formal letter dated 23.08.2007 was addressed to the Managing Director of the respondent.Page 3 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025
NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined 3.4 In response, a letter dated 05.08.2007 (signed on 10.08.2007) was received by the appellant on 19.09.2007 from the respondent's Ahmedabad office. On 21.09.2007, the appellant issued another letter to the respondent and various regulatory bodies seeking the immediate transfer of his securities and reimbursement of securities sold without his consent. The appellant filed a complaint before the NSE, which was responded to by the respondent through a compact disc containing soft copies of certain bills and the same were received in January 2008. Upon reviewing and comparing the contents of the compact disc with his own records, the appellant alleges that multiple discrepancies were observed, including variations in bill numbers, contract dates, branch codes, and the sale of securities without matching demat account holdings.
3.5 The appellant has maintained a client relationship with the respondent under Client Code No. NS-1141, linked to Branch Code No. 5017, since August 2006, consequent to the respondent's membership with the National Stock Exchange of India Limited (NSE) in both the Cash and Derivative Segments. Pursuant thereto, the appellant duly submitted the Page 4 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined prescribed Know Your Client (KYC) documentation, which, at the relevant point of time, was procured and presented by a representative of the respondent. In furtherance thereof, a Broker-Client Agreement was executed between the parties, a copy whereof was furnished by the said representative. It is asserted that the appellant carried out transactions on the NSE trading platform, both in the Cash and Derivative Segments, during the period spanning April 2007 to August 2007, not only for his own account but also on behalf of certain family members.
3.6 Having regard to the fact that the impugned trades were executed on the NSE platform and that the respondent is a registered member thereof, the present dispute is governed by the Rules, Regulations, and Bye-laws of the NSE. Consequently, the arbitration proceedings arising out of the said transactions are amenable to the jurisdiction of the learned Arbitrator in terms of the Arbitration Mechanism stipulated under the NSE framework.
3.7 Accordingly, Appellant preferred a reference before the learned Sole Arbitrator. In Arbitration Matter No. F&O/M- Page 5 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025
NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined 083/2008, the learned Sole Arbitrator, vide award dated 25.11.2008, directed the Respondent to pay to the Appellant a sum of ₹1,52,461/- .
3.8 Aggrieved by the aforesaid award, the Appellant instituted Civil Miscellaneous Application No. 265 of 2009 before the City Civil and Sessions Court, Ahmedabad. The learned Judge, vide order dated 18.07.2012, upheld and confirmed the award rendered by the learned Sole Arbitrator.
4. Aggrieved by the Judgment and Order dated 18.07.2012, the appellant preferred the present first appeal under Section 37 of the Arbitration and Conciliation Act, 1996 ("the Act"), with the following prayer:
"In the circumstances mentioned hereinabove the Applicant most humbly prays that the award for the claim prayed by the Applicant for such amount under clause 6 of the statement of case and mentioned herein above as also such further amount as may deem fit by the learned Arbitrators considering the facts and circumstances of the case and act and conduct of the Respondent be passed by the Learned Arbitrators in the interest of justice."
5. Ms. Kalpana J.Brahmbhatt, learned counsel appearing on behalf of the appellants has submitted that the award is bristling with errors and the case of the appellant has not Page 6 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined been considered at all. She has further contended that, as will be apparent from the written statement of the respondent against the application under Section 34 of the Act, the respondent had never agitated the point of jurisdiction and having acquiesced with the same, it was incorrect for the learned Judge, City Civil Court to have dismissed the application on the ground of territorial jurisdiction.
6. From the record, we find that the award dated 25.11.2008 is categorically stated to have been pronounced/delivered at Mumbai, as will be apparent from Page No.56 of the paper-book of First Appeal No. 1153 of 2013. When the appellants had filed an application under Section 34 of the Act for setting aside the said award before the City Civil Court at Ahmedabad, the opponents in their written statement had not categorically taken an objection to the territorrial jurisdiction. However, from the impugned judgment and order, it is seen that the respondent during the hearing had categorically contended as under :-
"The main contention raised by the opponent, is that the arbitral proceedings were conducted at Mumbai, and therefore, this Court has no jurisdiction to try and entertain the matter.Page 7 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025
NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined
7. The learned Judge, City Civil Court has eventually gone on to conclude as under :-
"8. Thus, considering the fact that the award has been passed by the sole arbitrator and the proceedings thereof were conducted at Mumbai, and therefore, the Court alone shall have jurisdiction over the arbitral proceedings, wherein such arbitral proceedings have been conducted. Even all the subsequent applications arising out of that agreement, the arbitral proceedings should be made in that Court and no other court is having jurisdiction to entertain the same. In view of the aforesaid facts, I am in complete agreement with the submissions made by the learned advocate for the opponent. The present application suffers from lack of jurisdiction, and therefore, the same is devoid of merits and accordingly deserves to be rejected. Hence, I pass the following order:-
ORDER The Civil Miscellaneous Application filed by the applicant, is hereby dismissed. "
8. In view of the fact that the entire proceedings were conducted in Mumbai and the award was pronounced in Mumbai, we are of the view that the Courts of Mumbai alone would have had jurisdiction in an application under Section 34 of the Act, unless it could be demonstrated by the appellants that there was some other trigger to activate the jurisdiction at Ahmedabad in view of Section 42 of the Act. Section 42 of the Act reads as under :-
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NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined "42. Jurisdiction.--Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
9. Thus, unless an application under Section 9 or Section 11(6) or Section 27 or 29A(4) of the Act has been preferred before any other Court prior to the passing of the award by any party, only under such circumstances can the said other Court have jurisdiction in an application under Section 34, in view of the provision of Section 42 of the Act. In the present case, there is no evidence of there being any court proceedings at Ahmedabad prior to pronouncement of the award at Mumbai. Hence, Courts in Mumbai alone will have jurisdiction under Section 34 of the Act.
10. In the case of BGS SGS SOMA JV Vs. NHPC Limited. reported (2020) 4 SCC 234, wherein, the Hon'ble Apex Court has held as under :-
The relevant portion of paragraph No.33 :-Page 9 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025
NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined "96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
2. Definitions.-(1) In this Part, unless the context otherwise requires.-
(e) "Court" means 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.' We are of the opinion, the term "subject-matter of the arbitration cannot be confused with "subject-matter of the suiť". The term "subject-matter" in Section 2 (1)(e) is confined to Part I. It has a reference and connection with the process of dispute resolution. Its purpose is to identify the courts having supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially be a court of the seat of the arbitration process. In our opinion, the provision in Section 2(1)(e) has to be construed keeping in view the provisions in Section 20 which give recognition to party autonomy. Accepting the narrow construction as projected by the learned counsel for the appellants would, in fact, render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts i.e. the court which would have jurisdiction where the cause of action is located and the courts where the arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of arbitration at a place which would be neutral to both the parties. Therefore, the courts where the arbitration takes place would be required to exercise supervisory control over the arbitral process. For example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the tribunal sitting in Delhi passes an interim order Under Section 17 of the Arbitration Act, 1996, the appeal against such an interim order under Section 37 must lie to the courts of Delhi being the courts having supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of the fact that the obligations to be performed under the contract were to be performed either at Mumbai or at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the courts would have Page 10 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined jurisdiction i.e. the court within whose jurisdiction the subject-matter of the suit is situated and the courts within the jurisdiction of which the dispute resolution i.e. arbitration is located."
11. Therefore, once the place of arbitration is Mumbai, then in the absence of the jurdictional trigger to the contrary, under Section 42 of the Act, only Mumbai Court will have jurdiction to entertain an application under Section 34 of the Act.
12. In any case, while the question of territorial jurisdiction of a Court, unlike the jurisdiction regarding subject matter/inherent jurisdiction can be waived by acquiscence, in the facts of the present case, we find that the objection to jurisdiction has been taken even before the framing of issues and in any case, being certainly taken and argued prominently at the very outset without entering into the merits of the case.
13. Besides, the issue of territorial jurdiction under Section 21 of the Code of Civil Procedure, 1908 (CPC) is different from the issue of jurisdiction under the Arbitration and Conciliation Act, 1996 as held in SOMA JV (Supra). As far as the territorial jurisdiction for suits are concerned, the Page 11 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025 NEUTRAL CITATION C/FA/1153/2013 ORDER DATED: 23/07/2025 undefined objections to the same have to be taken at the very outset, as mandated by Section 21 of the CPC. Section 21 of the CPC reads as under :-
"21. Objections to jurisdiction. -(1) No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice.
(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and, in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice."
14. The argument of Ms. Brahmbhatt may have been relevant in the context of a suit. However, as far as the present proceedings under Section 34 of the Act are concerned, the territorial jurisdiction is provided exclusively under the Arbitration and Conciliation Act, 1996, as elaborated in the decision of the Hon'ble Apex Court in BGS SGS SOMA JV (Supra).
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15. Therefore, the submission of Ms. Brahmbhatt that the respondent could not have been permitted to urge the question of territorial jurisdiction without taking the same as an objection in his written statement, does not find favour with us. In these circumstances, we find no reason to interfere with the impugned judgment and order dated 18.07.2012 and consequently dismiss the present appeals, however, with no order as to costs.
(SUNITA AGARWAL, CJ ) (D.N.RAY,J) BINA SHAH Page 13 of 13 Uploaded by BINA SHAH(HC00353) on Thu Aug 07 2025 Downloaded on : Fri Aug 08 23:16:01 IST 2025