MADAN MOHAN RAJGARHIA versus M/S. MAHENDRA R. SHAH & BROS. AND ANR.

Citation: [2003] SUPP. 2 S.C.R. 52 · Decided: 31-07-2003 · Supreme Court of India · Bench: V.N. KHARE, K.G. BALAKRISHNAN, S.B. SINHA · Disposal: Dismissed

Judgment (excerpt)

A 
MADAN MOHAN RAJGARHIA 
v. 
M/S. MAHENDRA R. SHAH & BROS. AND ANR. 
JULY31,2003 
B 
[V.N. KHARE, CJ., K.G. BALAKRISHNAN AND S.B. SINHA, JJ.] 
Arbitration Act, 1940: 
S. 34-Stay of suit-Stock exchange-Non-member filing a recovery suit 
C against a member-Member filing an application before trial court for stay of 
suit contending that the dispute was covered under the arbitration clause-
Contention of plaintiff that as he was a non-member, arbitration clause does 
not apply to the case-Held, a reading of the relevant clause in the Bill, as 
a whole, would clearly.show that the clause is quite wide and comprehensive 
D enough to cover the cause of the plaintiff-Contract-Clause in a Bill-Effect 
of 
Words and Phrases-'any other person '-Meaning of 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 12645 of 
E 1996. 
F 
From the Judgment and Order dated 4.8.1995 of the Delhi High Court 
in F.A.O. (OS). No. 188 of 1995. 
Arun K. Sinha, Rakesh K. Sinha for the Appellant. 
M.D. Adkar, S.D. Singh, Vijay Kumar and Anurag Kishore for the 
Respondents. 
The following Order of the Court was delivered: 
The appellant herein was engaged in the business of purchase and sale 
G of shares and for that purpose he had been utilizing the services of the 
defendant, who is a broker at the Bombay Stock Exchange. The appellant 
herein filed a suit for recovery of Rs. 5,63,334 against M/s. Mahendra R. 
Shah & Bros., who are the respondents herein. The respondents herein on 
receipt of the summons in the suit, filed an application under Section 34 of 
H 
52 
I 
} 
M. M. RAJGARHIA v. MAHENDRA R. SHAH & BROS. 
53 
the Indian Arbitration Act, 1940 for staying the proceeding on the ground A 
that there is a provision for arbitration as regards the dispute in the suit. The 
learned Single Judge of the High Court accepted the contention of the 
respondents herein and directed the stay of proceedings of the suit. Aggrieved, 
the appellant filed the First Appeal from the said order, which was dismissed. 
It is against the said order of the High Court, the appellant has filed this B 
appeal by way of special leave petition. 
Learned counsel appearing for the appellant urged that the arbitration 
clause printed on the bills does not include the persons like plaintiff and, 
therefore, the appellant being a non-member is not required to seek arbitration. 
We do not find any merit in the contention. One clause of the Bill, which is C 
printed on the front, reads as under : 
"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 remisier, authorized clerk or employee 
or any other person with whom the members shares brokerage) arising D 
out of or in relation to dealing transactions and contracts made subject 
to the rules and bye-laws and regulations or the Exchange or with 
reference to anything incidental thereto or in pursuance thereof or 
relating their construction, fulfillment or validity or relating to the 
rights, obligation and liabilities ofremisier authorised clerk, employetis 
or any other person with whom the member shares brokerage in E 
relation to such dealing, transactions and contracts shall be referred 
to and decided by arbitration as provided in the rules, bye-laws and 
regulations of the Exchange." 
Another clause of the Bill, which is printed on the back side, reads as 
under; 
"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." 
The learned counsel appearing for the appellant urged that a non-member 
will only be covered if he falls under the definition of a non-member. Since 
the appellant is neither a remisier or authorised clerk or employee or shares 
F 
G 
any brokerage with the member, he cannot be covered by the said definition 
and, therefore, the said rules, definition and bye-laws do not apply to him. H 
54 
SUPREME COURT REPORTS (2003] SUPP. 2 S.C.R. 
A In fact, the argument is that the words 'any other person' should take colour 
from the preceding words, namely, remisier, authorised clerk or employee' 
and since the appellant is not one of those mentioned, he does not fallwithin 
the expression 'any other person'. The reading of clause quoted above, as a 
whole, would clearly show that this clause is quite

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