Remanded

Atul K. Shah v. Ventura Securities Ltd.

Bombay HC17 Sept 2012ARBP/609/2009

Case brief

AI extract

What is this about?

This petition challenged an arbitral award regarding a securities dispute. The court held that since the tribunal decided the counter-claim only on limitation without addressing merits on interconnected facts, the award suffered from compounding errors. The court set aside the award and remanded it for reconsideration of all points.

What did the court decide?

The impugned award dated 4 May 2009 was quashed and set aside; the matter was remanded back for reconsideration of all points by the Arbitral Tribunal.

Atul K. Shah Vs Ventura Securities Ltd. — Arbitration | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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ARBITRATION PETITION NO. 609 OF 2009

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Atul Kishorbhai Shah an adult of Mumbai, Indian Inhabitant, residing at 12-501, Siddharth Nagar, Western Express Highway, Borivali (E), Mumbai-400 023.

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......Petitioner.

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Vs.

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Ventura Securities Limited, a company having its office at C-112, Building No.1, Kailash Industrial Complex, Park Site, Vikhroli (W), Mumbai-400 079 ......Respondent.

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Mr. Harvinder Toor i/by Mr. Nandu Pawar for the Petitioner. Mr. Simil Purohit with Ms. Rinku Mistry i/by M/s. Purohit & Co. for the Respondent.

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CORAM :- ANOOP V. MOHTA, J.

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JUDGMENT RESERVED ON :- 24 JULY 2012.

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JUDGMENT PRONOUNCED ON :- 17 SEPTEMBER, 2012.

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JUDGMENT:-

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The Petitioner-Original Respondent, has challenged award dated

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4 May 2009, by invoking Section 34 of the Arbitration and

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Conciliation Act, 1996 (for short, the Arbitration Act).

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2 On 30 May 2007, the Petitioner enter into Member-ClientAgreement (Complainant) market and future and option Segment of National Stock Exchange of India Limited (for short, “NSEIL”) with the Respondent for trading in Securities. On 6 June 2007, the actual dealing in NSEIL Future and option Segment through the Respondent started. On 18 January 2008, the sub-broker of Respondent informed the Petitioner that sum of Rs.3,68,542.98 was due to be paid in his cash segment account. He paid Rs.2,98,500/- leaving debit balance of Rs.54,343.36.

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3 On 15 July 2008, the NSEIL served upon a Notice of Arbitration Application as filed by the Respondent against the Petitioner for the claim of Rs.4,16,063.81 with interest thereon as payable due to transactions made on 18 January 2008 and 21 January 2008. The Petitioner, as alleged, has came to know for the first time about the claim as he never instructed to trade on 18 January 2008 and 21 January 2008 and he never received the contract notes/bills for the same till the Notice the Arbitration Application was received. He denied the claim and filed reply, the rejoinder was filed by the Respondent.

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4 On 4 May 2009, the impugned award was passed, thereby

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allowing the claim of the Respondent. Hence the present petition.

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5 The operative part of the award is as under:-

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“AWARD

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a) The Respondent is directed to pay to the Applicant a sum of Rs.4,16,063.81, along with interest at 10% per annum on the outstanding amount from March 2008, till realization;

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b) So far as the Counter claim is concerned, the same stands rejected;

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c) Each party to bear their own costs;

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d) I authorize the National Stock Exchange of India Limited, to file the Original Award and forward a copy of the Award to the parties.”

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6 The counter-claim filed by the Respondent was dismissed on the ground of limitation as per clause 3 of Chapter-11 of the Bye-laws of the NSEIL, as the same was filed after a lapse of six months and also on merits, as not proved. The cause of action accrued on 19 January 2008. The counter-claim was filed on 27 January 2009.

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7 In India Infoline Limited Vs. Shyamlal Daulatram Vachhani1,

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1 2012(3) All MR. 206

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I have already dealt with the facet and aspect of limitation in such

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matters in the following words:-

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“3 By this, the SEBI has intended to change the mechanism of settling the dispute instead of six months to three years by extending the provisions of limitation Act 1963 which are available in normal transactions. The relevant clause is as under:-

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“i. Where three years have not yet elapsed and the parties have not filed for arbitration with the stock exchange, or

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ii. where the arbitration application was filed but was rejected solely on the ground of delay in filing within the earlier limitation period of six months; and three years have not yet elapsed;”

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4 Therefore, taking over all view of the matter and if the provisions of Limitation Act are extended, the learned Arbitral Tribunal has to re-consider this facet by giving the opportunity to both the parties.”

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8 The Arbitral Tribunal once held and disposed of the award on the basis of limitation, there is no question of deciding the issue /matter on merits. This creates further complications. In the present case, as recorded above, the claim and the counter-claim need to be adjudicated on similar facts and material on record, those are interconnected and inter-linked. Therefore, as I have already observed in

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M/s. Gulraj Engineering Construction Co. Vs. Hotel Corporation of India Ltd. (Arbitration Petition No. 341 of 2009, dated 7

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September 2012), that the Court under Section 34 of the Arbitration Act, has power to remand the matter. In the present facts and circumstances, by keeping all points open, I am inclined to set aside the award for re-consideration.

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