Holding

An exclusive jurisdiction clause in the parties’ agreement and NSE bye‑laws makes the Mumbai courts the only proper forum for a Section 34 application, and such applications are summary proceedings that need not involve oral evidence or issue‑framing.

Summary

The dispute arose between M/s Emkay Global Financial Services Ltd., a broker on the National Stock Exchange (NSE), and its client Giradhar Sondhi over securities transactions. An arbitration under NSE bye‑laws was held in Delhi, resulting in an award rejecting Sondhi’s claim. Sondhi filed a Section 34 application in the Delhi District Court, which was dismissed on the ground that the parties’ agreement and NSE bye‑laws conferred exclusive jurisdiction on the courts in Mumbai. The Delhi High Court remanded the matter for a full‑fledged hearing on the question of territorial jurisdiction, allowing parties to lead oral evidence. The Supreme Court held that the exclusive jurisdiction clause makes the Mumbai courts the sole forum for a Section 34 application, that Section 34 proceedings are summary and need not involve oral evidence or issue‑framing, and that proof is to be established on the arbitral record or by affidavits. The Court also discussed the proposed amendment to replace “furnishes proof” with “establishes on the basis of the arbitral tribunal’s record”. Consequently, the High Court’s order was set aside and the District Court’s dismissal restored.

Issues considered

The appropriate forum for a Section 34 application when the parties’ agreement and NSE bye‑laws provide exclusive jurisdiction to the courts in Mumbai.
Whether a Section 34 proceeding requires framing of issues and taking oral evidence, or can be decided on the arbitral record and affidavits.
The interpretation of the phrase “furnishes proof” in Section 34(2)(a) in view of the proposed 2018 amendment.

Legislation cited

Arbitration and Conciliation Act, 1996s. 20, s. 2(1)(e), s. 31(4), s. 34
Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015
Depositories Act, 1996

Subjects

ArbitrationSection 34Exclusive jurisdiction clauseSummary proceedingsProof on arbitral recordAmendment Bill 2018Territorial jurisdictionAffidavitsCross‑examination

Judgment

[2018] 10 S.C.R. 937 937

M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. A
v.
GIRDHAR SONDHI
(Civil Appeal No. 8367 of 2018)
AUGUST 20, 2018 B
[R.F. NARIMAN AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996: s.34 – Territorial
jurisdiction – Dispute arose between the registered broker of the
National Stock Exchange (NSE) and its client regarding certain
C
transactions in securities and shares – Agreement between the
parties contained a jurisdiction clause whereby the parties were to
submit to the exclusive jurisdiction of the courts in Mumbai – Matter
was referred by the NSE to the arbitrator having sittings at Delhi –
Respondent’s claim was rejected by the sole arbitrator – Respondent
then filed s.34 application before Delhi District Court – District D
Court dismissed s.34 application referring to the exclusive
jurisdiction clause in the agreement – By impugned order, High
Court remitted the matter to the Delhi District Court to decide the
disputed questions of fact as regards the existence of territorial
jurisdiction of the courts at Delhi after framing issue to that effect
E
and permitting the parties thereafter to lead evidence on the same –
On appeal, Held: Once courts in Mumbai have exclusive jurisdiction
in terms of agreement read with the NSE bye-laws then it is the
Mumbai courts alone, before which s.34 application was to be filed
– High Court erred in remanding the matter for a full-dressed hearing
on what he referred to as a ‘disputed question of fact’ relating to F
jurisdiction – The object of enactment of 1996 Act is speedy
resolution of arbitral disputes – However, if issues are to be framed
and oral evidence taken in a summary proceeding under s.34, this
object will be defeated – An application for setting aside an arbitral
award will not ordinarily require anything beyond the record that
G
was before the Arbitrator – However, if there are matters not
contained in such record, and are relevant to the determination of
issues arising under s.34(2)(a), they may be brought to the notice
of the Court by way of affidavits filed by both parties – Cross-
examination of persons swearing to the affidavits should not be
H
937
938 SUPREME COURT REPORTS [2018] 10 S.C.R.

A allowed unless absolutely necessary, as the truth will emerge on a
reading of the affidavits filed by both parties – High Court erred in
referring back the parties to the District Court to first frame an
issue and then decide on evidence including the opportunity to cross
examine witnesses who give depositions – Order of High Court is
set aside and that of District Court is restored – Jurisdiction.
B
Allowing the appeal, the Court
HELD: 1. The Arbitration and Conciliation (Amendment)
Bill of 2018, being Bill No.100 of 2018, contains an amendment
to Section 34(2)(a) of the principal Act, which states that in section
C 34 of the principal Act, in sub-section (2), in clause (a), for the
words “furnishes proof that”, the words “establishes on the basis
of the record of the arbitral tribunal that” shall be substituted.
The object of enactment of 1996 Act was speedy resolution of
arbitral disputes and it continues to be the reason for adding
amendments to the said Act to strengthen this object. However,
D if issues are to be framed and oral evidence taken in a summary
proceeding under Section 34, this object will be defeated. It is
also on the cards that if Bill No.100 of 2018 is passed, then
evidence at the stage of a Section 34 application will be dispensed
with altogether. [Paras 19, 22] [950-B-C; 951-E-F]
E Fiza Developers & Inter-Trade Pvt. Ltd. v. AMCI (India)
Pvt. Ltd. and Anr. (2009) 17 SCC 796 : [2009] 12 SCR
1 – relied on.
M/s Punjab State Industrial Development Corporation
v. Mr. Sunil K. Kansal 2012 SCC OnLine P&H 19641
F – overruled.
WEB Techniques and Net Solutions Pvt. Ltd. v. M/s. Gati
Ltd. and Anr. 2012 SCC OnLine Cal 4271 – approved.
Sandeep Kumar v. Dr. Ashok Hans (2004) 3 Arb LR
306; Sial Bioenergie v. SBEC Systems AIR 2005 Del
G
95; Cochin Shipyard Ltd. v. Apeejay Shipping Ltd.
(2015) 15 SCC 522 : [2009] 12 SCR 1; State of Bihar
and Ors. v. Bihar Rajya Bhumi Vikas Bank Samiti 2018
(9) SCALE 291 – referred to.

H
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 939
GIRDHAR SONDHI

2. An application for setting aside an arbitral award will not A
ordinarily require anything beyond the record that was before
the Arbitrator. However, if there are matters not contained in
such record, and are relevant to the determination of issues
arising under Section 34(2)(a), they may be brought to the notice
of the Court by way of affidavits filed by both parties. Cross-
B
examination of persons swearing to the affidavits should not be
allowed unless absolutely necessary, as the truth will emerge on
a reading of the affidavits filed by both parties. [Para 22] [952-A-
C]
Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc. (2012) 9 SCC 552 : [2012] 12 SCR 327 C
– followed
Indus Mobile Distribution Pvt. Ltd. v. Datawind
Innovations Pvt. Ltd. and Ors. (2017) 7 SCC 678:
[2017] 4 SCR 744 – referred to.
D
Case Law Reference
[2017] 4 SCR 744 referred to Para 6
[2012] 12 SCR 327 following Para 9
(2004) 3 Arb LR 306 referred to Para 12
E
AIR 2005 Del 95 referred to Para 13
[2009] 12 SCR 1 relied on Para 14
2012 SCC OnLine P&H 19641 overruled Para 15
2012 SCC OnLine Cal 4271 approved Para 16 F
2018 (9) SCALE 291 referred to Para 21
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8367
of 2018
From the Judgment and Order dated 11.10.2017 of the High Court
G
of Delhi at New Delhi in F.A.O. No. 222 of 2017.
Divyakant Lahoti, Ms. Amrita Grover, Parikshit Ahuja, Advs. for
the appellant.
T.P.S. Kang, Vivek Sharma, Arup Banerjee, Advs. for the
respondent. H
940 SUPREME COURT REPORTS [2018] 10 S.C.R.

A The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Leave granted.
2. The present appeal arises out of a dispute between the
Appellant, who is a registered broker with the National Stock Exchange,
and the Respondent, its client, regarding certain transactions in securities
B and shares. The Respondent had initiated an arbitration proceeding against
the Appellant, claiming an amount of Rs.7,36,620/-, which was rejected
by the Sole Arbitrator vide an Arbitration Award dated 08.12.2009.
3. The appeal arises out of an agreement dated 03.07.2008, which
contains the following clauses:
C
“General Clause
1. The parties hereto agree to abide by the provisions of the
Depositories Act, 1996, SEBI (Depositories and Participants)
Regulation, 1996 Bye-Laws and Operating Instructions issued
D by CDSL from time to time in the same manner and to the same
extent as if the same were set out herein and formed part of this
Agreement.”
xxx xxx xxx
“Arbitration
E 11. The parties hereto shall, in respect of all disputes and
differences that may arise between them, abide by the provisions
relating to arbitration and conciliation specified under the Bye-
Laws.”
xxx xxx xxx
F
“Jurisdiction
12. The parties hereto agree to submit to the exclusive jurisdiction
of the courts in Mumbai in Maharashtra (India).”
4. Though the bye-laws referred to in the agreement are under
G the provisions of the Depositories Act, 1996, it is common ground that
the arbitration proceeding took place under the National Stock Exchange
bye-laws. Under these bye-laws, Chapter VII speaks of dealings by
trading members and grants exclusive jurisdiction to the civil courts in
Mumbai in relation to disputes that arise under the bye-laws as follows:
H
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 941
GIRDHAR SONDHI [R. F. NARIMAN, J.]

“CHAPTER VII A
DEALINGS BY TRADING MEMBERS.
Jurisdiction.
(1) (a) Any deal entered into through automated trading system
of the Exchange or any proposal for buying or selling or any B
acceptance of any such proposal for buying and selling shall be
deemed to have been entered at the computerised processing
unit of the Exchange at Mumbai and the place of contracting as
between the trading members shall be at Mumbai. The trading
members of the Exchange shall expressly record on their contract
note that they have excluded the jurisdiction of all other Courts C
save and except, Civil Courts in Mumbai in relation to any dispute
arising out of or in connection with or in relation to the contract
notes, and that only the Civil Courts at Mumbai have exclusive
jurisdiction in claims arising out of such dispute. The provisions
of this Byelaw shall not object the jurisdiction of any court deciding D
any dispute as between trading members and their constituents
to which the Exchange is not a party.”
5. The bye-laws go on to describe the relevant authority
prescribing regulations for creation of seats of arbitration for different
regions, or prescribing geographical locations for conducting arbitrations, E
and prescribing the courts which shall have jurisdiction for the purpose
of the Act – see Chapter XI dealing with Arbitration – clause 4(a)(iv).
Equally, under sub-clause (xiv), the place of arbitration for each reference
and the places where the Arbitrator can hold meetings have also to be
designated. It is common ground that the National Stock Exchange
referred the dispute to one Shri Mahmood Ali Khan, who held sittings in F
Delhi, and delivered an award dated 08.12.2009, whereby the
Respondent’s claim was rejected. The Respondent then filed a Section
34 application under the Arbitration and Conciliation Act, 1996 on
17.03.2010 before the District Court, Karkardooma, Delhi. By a judgment
dated 22.09.2016, the learned Additional District Judge referred to the G
exclusive jurisdiction clause contained in the agreement, and stated that
he would have no jurisdiction to proceed further in the matter and,
therefore, rejected the Section 34 application filed in Delhi. In an appeal
filed before the High Court, a learned Single Judge of the Delhi High
Court held as follows:
H
942 SUPREME COURT REPORTS [2018] 10 S.C.R.

A “4. Accordingly, since the impugned judgment decides the
disputed question of fact without allowing parties to lead evidence
i.e. depositions supported by documentary evidence, and without
opportunity to the other side to cross-examine the witnesses who
give depositions, it is necessary that the disputed questions of
fact as regards existence of territorial jurisdiction of the courts
B
at Delhi be decided by the court below after framing an issue to
this effect and permitting the parties thereafter to lead evidence
on the same.
5. I may hasten to add that I have not made any observations
one way or the other, for or against any of the parties herein, on
C the aspect of territorial jurisdiction, and this issue of territorial
jurisdiction will be decided by the courts below after parties have
led evidence keeping in mind that if part of cause of action is
proved to have arisen in Mumbai and there is an exclusivity clause
conferring territorial jurisdiction of the Mumbai courts, then even
D if Delhi courts otherwise have jurisdiction, possibly the courts at
Delhi would not exercise territorial jurisdiction.
6. Parties to appear before the District and Sessions Judge, East
Karkardooma Courts, Delhi on 7th November, 2017 and the
District and Sessions Judge will now mark the objections under
E Section 34 of the Arbitration and Conciliation Act to a competent
court for disposal in accordance with law and the observations
made in the present order.”1
6. Learned counsel appearing on behalf of the Appellant has relied
upon the exclusive jurisdiction clause contained both in the agreement
F as well as the bye-laws of the National Stock Exchange. According to
him, this case is squarely covered by a recent judgment of this Court in
Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt.
Ltd. and Ors., (2017) 7 SCC 678. He also referred to Section 34 and
stated that, given the conspectus of judgments of the High Courts and
one judgment of this Court, when Section 34(2)(a) speaks of a party
G making an application who “furnishes proof” of one of the grounds in
the sub-section, such proof should only be by way of affidavit of facts
not already contained in the record of proceedings before the Arbitrator.
Further, a mini-trial at this stage is not contemplated, as otherwise, the
1
Girdhar Sondhi v. M/s. Emkay Global Financial Services Ltd., FAO 222 of 2017
H (decided on 11.10.2017).
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 943
GIRDHAR SONDHI [R. F. NARIMAN, J.]

whole object of speedy resolution of arbitral disputes would be stultified. A
Consequently, the learned Single Judge was incorrect in referring back
the parties to the District Judge to first frame an issue, and then decide
on evidence, including the opportunity to cross-examine witnesses who
give depositions.
7. Learned counsel for the Respondent, on the other hand, B
supported the impugned judgment, and argued that as the seat of arbitration
was at Delhi, the courts at Delhi would have jurisdiction, even though
there is an exclusive jurisdiction clause vesting such jurisdiction only in
the courts at Mumbai.
8. Section 34(2)(a) states as follows: C
“34. Application for setting aside arbitral award.— (1)
Recourse to a Court against an arbitral award may be made
only by an application for setting aside such award in accordance
with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if— D
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to
which the parties have subjected it or, failing any indication E
thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper
notice of the appointment of an arbitrator or of the arbitral
proceedings or was otherwise unable to present his case;
or F
(iv) the arbitral award deals with a dispute not contemplated
by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond the
scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to G
arbitration can be separated from those not so submitted,
only that part of the arbitral award which contains decisions
on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral
H
944 SUPREME COURT REPORTS [2018] 10 S.C.R.

A procedure was not in accordance with the agreement of
the parties, unless such agreement was in conflict with a
provision of this Part from which the parties cannot
derogate, or, failing such agreement, was not in accordance
with this Part; or……
B xxx xxx xxx”
9. The effect of an exclusive jurisdiction clause was dealt with
by this Court in several judgments, the most recent of which is the
judgment contained in Indus Mobile Distribution Pvt. Ltd. (supra).
In this case, the arbitration was to be conducted at Mumbai and was
C subject to the exclusive jurisdiction of courts of Mumbai only. After
referring to the definition of “Court” contained in Section 2(1)(e) of the
Act, and Section 20 and 31(4) of the Act, this Court referred to the
judgment of five learned Judges in Bharat Aluminium Co. v. Kaiser
Aluminium Technical Services Inc., (2012) 9 SCC 552, in which, the
concept of juridical seat which has been evolved by the courts in England,
D has now taken root in our jurisdiction. After referring to several judgments
and a Law Commission Report, this Court held:
“19. A conspectus of all the aforesaid provisions shows that the
moment the seat is designated, it is akin to an exclusive jurisdiction
clause. On the facts of the present case, it is clear that the seat
E of arbitration is Mumbai and Clause 19 further makes it clear
that jurisdiction exclusively vests in the Mumbai courts. Under
the Law of Arbitration, unlike the Code of Civil Procedure which
applies to suits filed in courts, a reference to “seat” is a concept
by which a neutral venue can be chosen by the parties to an
F arbitration clause. The neutral venue may not in the classical
sense have jurisdiction — that is, no part of the cause of action
may have arisen at the neutral venue and neither would any of
the provisions of Sections 16 to 21 of CPC be attracted. In
arbitration law however, as has been held above, the moment
“seat” is determined, the fact that the seat is at Mumbai would
G vest Mumbai courts with exclusive jurisdiction for purposes of
regulating arbitral proceedings arising out of the agreement
between the parties.
20. It is well settled that where more than one court has
jurisdiction, it is open for the parties to exclude all other courts.
H
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 945
GIRDHAR SONDHI [R. F. NARIMAN, J.]

For an exhaustive analysis of the case law, see Swastik Gases A
(P) Ltd. v. Indian Oil Corpn. Ltd. [Swastik Gases (P) Ltd. v.
Indian Oil Corpn. Ltd., (2013) 9 SCC 32 : (2013) 4 SCC (Civ)
157]. This was followed in a recent judgment in B.E. Simoese
Von Staraburg Niedenthal v. Chhattisgarh Investment Ltd.
[B.E. Simoese Von Staraburg Niedenthal v. Chhattisgarh
B
Investment Ltd., (2015) 12 SCC 225 : (2016) 1 SCC (Civ) 427].
Having regard to the above, it is clear that Mumbai courts alone
have jurisdiction to the exclusion of all other courts in the country,
as the juridical seat of arbitration is at Mumbai. This being the
case, the impugned judgment [Datawind Innovations (P) Ltd. v.
Indus Mobile Distribution (P) Ltd., 2016 SCC OnLine Del 3744] C
is set aside. The injunction confirmed by the impugned judgment
will continue for a period of four weeks from the date of
pronouncement of this judgment, so that the respondents may
take necessary steps under Section 9 in the Mumbai Court. The
appeals are disposed of accordingly.”
D
10. Following this judgment, it is clear that once courts in Mumbai
have exclusive jurisdiction thanks to the agreement dated 03.07.2008,
read with the National Stock Exchange bye-laws, it is clear that it is the
Mumbai courts and the Mumbai courts alone, before which a Section 34
application can be filed. The arbitration that was conducted at Delhi
was only at a convenient venue earmarked by the National Stock E
Exchange, which is evident on a reading of bye-law 4(a)(iv) read with
(xiv) contained in Chapter XI.
11. However, the matter does not rest here. The learned Single
Judge went on to remand the matter for a full-dressed hearing on what
he referred to as a ‘disputed question of fact’ relating to jurisdiction. F

12. What is meant by the expression “furnishes proof” in Section
34(2)(a)? In an early Delhi High Court judgment, Sandeep Kumar v.
Dr. Ashok Hans,2 a learned Single Judge of the Delhi High Court
specifically held that there is no requirement under the provisions of
Section 34 for parties to lead evidence. The record of the Arbitrator was G
held to be sufficient in order to furnish proof of whether the grounds
under Section 34 had been made out.

2
(2004) 3 Arb LR 306
H
946 SUPREME COURT REPORTS [2018] 10 S.C.R.

A 13. Again, a learned single Judge of the Delhi High Court in Sial
Bioenergie v. SBEC Systems,3 stated:
“5. In my view the whole purpose of the 1996 Act would be
completely defeated by granting permission to the applicant/JD
to lead oral evidence at the stage of objections raised against an
B arbitral award. The 1996 Act requires expeditious disposal of
the objections and the minimal interference by the Court as is
evident from the Statement of Objects and Reasons of the Act
which reads as follows:—
“4. The main objectives of the Bill are as under:—
C (ii) To make provision for an arbitral procedure which is fair,
efficient and capable of meeting the needs of the specific
arbitration.”
xxx xxx xxx

D xxx xxx xxx
(v) to minimize the supervisory role of courts in the arbitral
process.
6. At the stage of the objections which are any way limited in
scope due to the provisions of the Act to permit oral evidence
E would completely defeat the objects underlying the 1996 Act.
The process of oral evidence would prolong the process of hearing
objections and cannot be countenanced.
7. Furthermore the Supreme Court in FCI v. Indian Council for
Arbitration, 2003 (6) SCC 564 had summarized the ethos
F underlying the Act as follows:—
“The legislative intent underlying the 1996 Act is to minimize the
supervisory role of the Courts in the arbitral process and nominate/
appoint the arbitrator without wasting time leaving all contentious
issues to be urged and agitated before the arbitral tribunal itself.”
G 8. Accordingly, I see no merit in these applications and the prayer
made therein is rejected.”
14. We now come to a judgment of this Court in Fiza Developers
& Inter-Trade Pvt. Ltd. v. AMCI (India) Pvt. Ltd. and Anr., (2009)
3
H AIR 2005 Del 95.
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 947
GIRDHAR SONDHI [R. F. NARIMAN, J.]

17 SCC 796. In this case, the question that was posed by the Court was A
whether issues as contemplated under Order XIV Rule 1 of the Code of
Civil Procedure, 1908 should be framed in applications under Section 34
of the Arbitration and Conciliation Act, 1996. This Court held:
“14. In a summary proceeding, the respondent is given an
opportunity to file his objections or written statement. Thereafter, B
the court will permit the parties to file affidavits in proof of their
respective stands, and if necessary permit cross-examination by
the other side, before hearing arguments. Framing of issues in
such proceedings is not necessary. We hasten to add that when
it is said issues are not necessary, it does not mean that evidence
is not necessary.” C

xxx xxx xxx
“17. The scheme and provisions of the Act disclose two
significant aspects relating to courts vis-à-vis arbitration. The
first is that there should be minimal interference by courts in D
matters relating to arbitration. Second is the sense of urgency
shown with reference to arbitration matters brought to court,
requiring promptness in disposal.
18. Section 5 of the Act provides that notwithstanding anything
contained in any other law for the time being in force, in matters E
governed by Part I of the Act, no judicial authority shall intervene
except where so provided in the Act.”
xxx xxx xxx
“21. We may therefore examine the question for consideration
by bearing three factors in mind. The first is that the Act is a F
special enactment and Section 34 provides for a special remedy.
The second is that an arbitration award can be set aside only
upon one of the grounds mentioned in sub-section (2) of Section
34 exists. The third is that proceedings under Section 34 requires
to be dealt with expeditiously.”
G
xxx xxx xxx
“24. In other words, an application under Section 34 of the Act
is a single issue proceeding, where the very fact that the
application has been instituted under that particular provision
H
948 SUPREME COURT REPORTS [2018] 10 S.C.R.

A declares the issue involved. Any further exercise to frame issues
will only delay the proceedings. It is thus clear that issues need
not be framed in applications under Section 34 of the Act.”
xxx xxx xxx
“31. Applications under Section 34 of the Act are summary
B proceedings with provision for objections by the respondent-
defendant, followed by an opportunity to the applicant to “prove”
the existence of any ground under Section 34(2). The applicant
is permitted to file affidavits of his witnesses in proof. A
corresponding opportunity is given to the respondent-defendant
C to place his evidence by affidavit. Where the case so warrants,
the court permits cross-examination of the persons swearing to
the affidavit. Thereafter, the court hears arguments and/or
receives written submissions and decides the matter. This is of
course the routine procedure. The court may vary the said
procedure, depending upon the facts of any particular case or
D the local rules. What is however clear is that framing of issues
as contemplated under Rule 1 of Order 14 of the Code is not an
integral part of the process of a proceedings under Section 34 of
the Act.”
15. A Punjab and Haryana High Court judgment in M/s Punjab
E State Industrial Development Corporation v. Mr. Sunil K. Kansal,4
after referring to our judgment in Fiza Developers (supra) held:
“30. In view of the above, we answer the question of law framed
as follows:

F (i) The issues, as required under Order XIV Rule 1 of the
Code as in the regular suit, are not required to be mandatorily
framed by the Court. However, it is open to the Court to frame
questions which may arise for adjudication.
(ii) The Court while dealing with the objections under Section
34 of the Act is not bound to grant opportunities to the parties
G
to lead evidence as in the regular civil suit. The jurisdiction of
the Court being more akin to the appellate jurisdiction;
(iii) The proceedings before the Court under Section 34 of the
Act are summary in nature. Even if some questions of fact or
4
H 2012 SCC OnLine P&H 19641 [CR No. 4216 of 2011 (decided on 11.10.2012)].
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 949
GIRDHAR SONDHI [R. F. NARIMAN, J.]

mixed questions of law and/or facts are to be decided, the A
court while permitting the parties to furnish affidavits in
evidence, can summon the witness for cross-examination, if
desired by the other party. Such procedure is keeping in view
the principles of natural justice, fair play and equity.”
16. The Calcutta High Court in WEB Techniques and Net B
Solutions Pvt. Ltd. v. M/s. Gati Ltd. and Anr.,5 after referring to
Fiza Developers (supra), held that oral evidence is not required under
a Section 34 application when the record before the Arbitrator would
show whether the petitioners had received notice relating to his
appointment.
C
17. In Cochin Shipyard Ltd. v. Apeejay Shipping Ltd., (2015)
15 SCC 522, this Court, in a case arising out of the Arbitration Act, 1940,
did not follow the decision in Fiza Developers (supra), as objections to
be filed under Sections 30 and 33 of the 1940 Act did not require any
kind of oral evidence to be led.
D
18. A recent report of the Justice B.N. Srikrishna Committee to
review the institutionalization of the arbitration mechanism in India has
found:
“5. Amendment to Section 34(2)(a) of the ACA
Sub-section (2)(a) of section 34 of the ACA provides for the E
setting aside of arbitral awards by the court in certain
circumstances. The party applying for setting aside the arbitral
award has to furnish proof to the court. This requirement to
furnish proof has led to inconsistent practices in some High
Courts, where they have insisted on section 34 proceedings being F
conducted in the manner as a regular civil suit. This is despite
the Supreme Court ruling in Fiza Developers & Inter-Trade P.
Ltd. v. AMCI (I) Pvt. Ltd. & Anr. that proceedings under section
34 should not be conducted in the same manner as civil suits,
with framing of issues under Rule 1 of Order 14 of the CPC.
G
In light of this, the Committee is of the view that a suitable
amendment may be made to section 34(2)(a) to ensure that
proceedings under section 34 are conducted expeditiously.

5
2012 SCC OnLine Cal 4271 [C.O. No. 1532 of 2010 (decided on 02.05.2012)].
H
950 SUPREME COURT REPORTS [2018] 10 S.C.R.

A Recommendation: An amendment may be made to Section
34(2)(a) of the Arbitration and Conciliation Act, 1996, substituting
the words “furnishes proof that” with the words “establishes on
the basis of the arbitral tribunal’s record that”.”
19. We have been informed that the Arbitration and Conciliation
B (Amendment) Bill of 2018, being Bill No.100 of 2018, contains an
amendment to Section 34(2)(a) of the principal Act, which reads as
follows:
“In section 34 of the principal Act, in sub-section (2), in clause
(a), for the words “furnishes proof that”, the words “establishes
C on the basis of the record of the arbitral tribunal that” shall be
substituted.”6
20. One more recent development in the law of arbitration needs
to be adverted to. After the decision in Fiza Developers (supra), Section
34 was amended by Act 3 of 2016, by which sub-sections (5) and (6)
D were added to the principal Act with effect from 23.10.2015. Section
34(5) and 34(6) reads as under:
“34. Application for setting aside arbitral award.—
xxx xxx xxx
(5) An application under this section shall be filed by a party only
E
after issuing a prior notice to the other party and such application
shall be accompanied by an affidavit by the applicant endorsing
compliance with the said requirement.
(6) An application under this section shall be disposed of
expeditiously, and in any event, within a period of one year from
F
the date on which the notice referred to in sub-section (5) is
served upon the other party.”
21. In a recent judgment of this Bench in The State of Bihar
and Ors. v. Bihar Rajya Bhumi Vikas Bank Samiti, SLP (Civil) No.
4475 of 2017 (decided on 30.07.2018), this Court, after holding that the
G period of one year mentioned in the aforesaid sub-section is directory,
went on to hold:
“27. We are of the opinion that the view propounded by the
High Courts of Bombay and Calcutta represents the correct state
6
H Bill No.100 of 2018, THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2018, p. 3.
M/S EMKAY GLOBAL FINANCIAL SERVICES LTD. v. 951
GIRDHAR SONDHI [R. F. NARIMAN, J.]

of the law. However, we may add that it shall be the endeavour A
of every Court in which a Section 34 application is filed, to stick
to the time limit of one year from the date of service of notice to
the opposite party by the applicant, or by the Court, as the case
may be. In case the Court issues notice after the period mentioned
in Section 34(3) has elapsed, every Court shall endeavour to
B
dispose of the Section 34 application within a period of one year
from the date of filing of the said application, similar to what has
been provided in Section 14 of the Commercial Courts,
Commercial Division and Commercial Appellate Division of High
Courts Act, 2015. This will give effect to the object sought to be
achieved by adding Section 13(6) by the 2015 Amendment Act. C
28. We may also add that in cases covered by Section 10 read
with Section 14 of the Commercial Courts, Commercial Division
and Commercial Appellate Division of High Courts Act, 2015,
the Commercial Appellate Division shall endeavour to dispose
of appeals filed before it within six months, as stipulated. Appeals D
which are not so covered will also be disposed of as expeditiously
as possible, preferably within one year from the date on which
the appeal is filed……”
22. It will thus be seen that speedy resolution of arbitral disputes
has been the reason for enacting the 1996 Act, and continues to be the E
reason for adding amendments to the said Act to strengthen the aforesaid
object. Quite obviously, if issues are to be framed and oral evidence
taken in a summary proceeding under Section 34, this object will be
defeated. It is also on the cards that if Bill No.100 of 2018 is passed,
then evidence at the stage of a Section 34 application will be dispensed
with altogether. Given the current state of the law, we are of the view F
that the two early Delhi High Court judgments, cited by us hereinabove,
correctly reflect the position in law as to furnishing proof under Section
34(2)(a). So does the Calcutta High Court judgment (supra). We may
hasten to add that if the procedure followed by the Punjab and Haryana
High Court judgment (supra) is to be adhered to, the time limit of one G
year would only be observed in most cases in the breach. We therefore
overrule the said decision. We are constrained to observe that Fiza
Developers (supra) was a step in the right direction as its ultimate
ratio is that issues need not be struck at the stage of hearing a Section
34 application, which is a summary procedure. However, this judgment
H
952 SUPREME COURT REPORTS [2018] 10 S.C.R.

A must now be read in the light of the amendment made in Section 34(5)
and 34(6). So read, we clarify the legal position by stating that an
application for setting aside an arbitral award will not ordinarily require
anything beyond the record that was before the Arbitrator. However, if
there are matters not contained in such record, and are relevant to the
determination of issues arising under Section 34(2)(a), they may be
B
brought to the notice of the Court by way of affidavits filed by both
parties. Cross-examination of persons swearing to the affidavits should
not be allowed unless absolutely necessary, as the truth will emerge on a
reading of the affidavits filed by both parties. We, therefore, set aside
the judgment of the Delhi High Court and reinstate that of the learned
C Additional District Judge dated 22.09.2016. The appeal is accordingly
allowed with no order as to costs.
Devika Gujral Appeal allowed.

D

E

F

G

H