AC CHOKSHI SHARE BROKER PRIVATE LIMITED versus JATIN PRATAP DESAI & ANR.

Citation: [2025] 2 S.C.R. 1545 · Decided: 10-02-2025 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2025] 2 S.C.R. 1545 : 2025 INSC 174
AC Chokshi Share Broker Private Limited 
v.  
Jatin Pratap Desai & Anr.
(Civil Appeal No. 2227 of 2025)
10 February 2025
[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]
Issue for Consideration
If a wife owes a stock market debt, can the registered stock broker 
invoke arbitration against her husband under BSE Bye-Laws, 
1957 and hold him jointly and severally liable for debt based on 
an oral agreement.
Headnotes†
Arbitration – On husband’s oral instructions the registered 
stock broker transferred former’s credit balance to wife’s 
account to offset her losses – 2001 market crash – Debit 
balance in wife’s account increased exponentially – Stock 
broker invoked arbitration under BSE bye-laws to recover the 
amount – Arbitral Award held wife and husband jointly and 
severally liable – Upheld by Single Judge of High Court u/s.34 
of A&C Act – Division Bench set aside Award re husband u/s.37 
of A&C Act – Impugned before Supreme Court – Maintainability 
of arbitration:
Issue 1: The arbitration against the husband was maintainable.
Held: While interpreting contracts, courts must shun hyper-
technical approach and adopt a practical approach taking into 
consideration the conduct and intention of the Parties – In case 
at hand, the joint and several liability of both the Respondents 
was evident from their oral contract with the stock broker and also 
from the transactions undertaken together by them – The fact of 
them maintaining separate client registration agreements, having 
separate client codes and accounts was immaterial – Even in 
institutional arbitrations (as in case at hand) as opposed to those 
based on parties’ consent, the following factors laid down in ONGC v. 
Discovery Enterprise and affirmed in Cox and Kings, are relevant 
in ascertaining whether a non-signatory can be made party to an 
* Author
1546
[2025] 2 S.C.R.
Supreme Court Reports
arbitration: (a) the mutual intention of the parties; (b) relationship 
between signatory and non-signatory; (c) commonality of subject-
matter; and (d) composite nature of transaction. [Paras 14-15]
Bye-law 248(a) is broadly worded which allows for reference to 
arbitration of any dispute “arising out of, in relation to, incidental 
to or in pursuance of” transactions, contracts, and dealings and 
hence the oral contract between the Appellant and Respondent 
No.1 (husband) cannot be termed as a “private” transaction as held 
by the High Court – Further, issues regarding jurisdiction of arbitral 
tribunal or scope of Bye-law 248(a) could be raised only before the 
Arbitral Tribunal as per s.16 of A&C Act and by failing to do so, the 
objecting party is deemed to have waived his right, in terms of s.4 
of the A&C Act, to raise such an issue at a later stage – Hence, 
High court erred in entertaining such a plea u/s.37 of A&C Act which 
was not raised before the Arbitrator. [Paras 20, 21]
Arbitration and Conciliation Act, 1996 – s.37 – Scope of s.37 
of A&C Act is limited to determining whether s.34 court has 
exercised its jurisdiction properly and rightly:
Held: High Court’s division bench erred not only by re-appreciating 
the evidence – A domain reserved solely for the arbitrator but 
also by applying ground of ‘perversity’ which is available at the 
stage of s.34 – Award did not suffer from any patent illegality as 
adjustment of accounts was done in accordance with the BSE 
bye-Laws and SEBI Guidelines – Arbitral Award was upheld in 
entirety. [Paras 22-31]
Case Law Cited
Bombay Stock Exchange v. Jaya I. Shah [2003] Supp. 4 SCR 892 : 
(2004) 1 SCC 160; Stock Brokers Pvt Ltd v. B.H.H. Securities Pvt. 
Ltd. [2011] 16 SCR 87 : (2012) 1 SCC 594; ONGC v. Discovery 
Enterprise [2022] 4 SCR 926 : (2022) 8 SCC 42; Cox and Kings v. 
SAP India Pvt. Ltd. [2023] 15 SCR 621 : (2024) 4 SCC 1 – relied on.
Syntrex Corporation v. Rajkumar Keshardev, 2007 SCC OnLine 
Bom 620 – relied on.
List of Acts
Arbitration and Conciliation Act, 1996; Bombay Stock Exchange 
Bye-Laws, 1957; SEBI Guidelines.
[2025] 2 S.C.R. 
1547
AC Chokshi Share Broker Private Limited v. 
Jatin Pratap Desai & Anr.
List of Keywords
Arbitration; Joint and several liability; Stock market; Stock broker; 
Debit balance; Oral contract; Judicial intervention; Section 34; 
Section 37; Arbitration and Conciliation Act; SEBI; BSE; Patent 
illegality; Perversity; Marital relationship; Wife; Husband; Spouse; 
Section 16; Public policy.
Case Arising From
CIVIL APPELLATE JURISDICTIO

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