Dismissed

Jhp Securities Pvt. Ltd. v. Nailesh Swarupchand Mehta

Bombay HC26 Jun 2014ARBP/35/2012

Case brief

AI extract

What is this about?

Court dismissed an arbitration petition challenging an award of Rs. 80 lakhs. It held that the arbitrators correctly applied limitation law and found the respondent denied authority for group adjustments, making debit entries unauthorized.

What did the court decide?

Petition dismissed; arbitral award dated 25th January 2011 and appeal award dated 25th August 2011 affirmed.

Jhp Securities Pvt. Ltd. Vs Nailesh Swarupchand Mehta — Arbitration | Bombay HC (2014)

ARBP.35/12(901)

mnm

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

¶5

ARBITRATION PETITION NO. 35 OF 2012

¶6

JHP Securities Pvt. Ltd. Vs.

¶7

Nailesh Swarupchand Mehta

¶8

...Petitioner

¶9

...Respondent

¶10

Mr. Mukesh Vashi a/w. Mr. Ajay Khandhar, Mr. Jayant Gaikwad i/b. Ajay Khandhar & Co., Advocates for Petitioner Mr. S. Purohit i/b. M/s. Purohit & Co., Advocate for Respondent

¶11

CORAM : MRS. ROSHAN DALVI, J.^TH JUNE, 2014

¶12

JUDGMENT :

¶13

The petitioner has challenged the arbitral award dated 25^th January, 2011 and the appeal award therefrom dated 25^th August, 2011 directing the petitioner to pay the respondent Rs.80 lakhs with interest @ 12% p.a from the date of the application till payment. The petitioner is the member of National Stock Exchange (NSE). The respondent is the Constituent of the petitioner. It was the case of the respondent that the petitioner made certain specific wrong journal entries (JEs) debiting the account of the respondent and crediting the account of one Prosperous Finvests represented by its partner Manish P. Ashar and one Payal Pandya who was the employee of Prosperous Finvests. Prosperous Finvests was a subbroker and introducer of the respondent to the petitioner. The

¶14

ARBP.35/12(901)

¶15

¶16

respondent was informed of his debit entries in his account by the petitioner herein under the petitioner's letter dated 26^th March, 2009. The respondent challenged those entries as unauthorised and untrue and called upon the petitioner to adjust his debits against the credits of other clients under his letter dated 8^th July, 2009.

¶17

The petitioner herein claimed that the claim of the respondent was time barred, it being more than six months after the letter of the petitioner sent to the respondent dated 26^th March, 2009, the entries of which he challenged.

¶18

The petitioner contended that the account was given on 26^th March, 2009, the claim was filed on 4^th February, 2010, Bye-law 3 of Chapter 11 of the bye-laws of NSE require claims to be filed within six months and hence the claim was barred by limitation.

¶19

The petitioner herein also claimed that the respondent had executed a letter along with the execution of the contract with the petitioner showing the investment in a group and an authority to the petitioner herein to set off/square off the outstanding positions of any account belonging to the group.

¶20

The respondent herein claimed that the letter did not bear his signature.

¶21

ARBP.35/12(901)

¶22

¶23

The learned Arbitrators considered the question of limitation which they held in favour of the claimant, the respondent herein. They considered the case of the forged signature and concluded that the debit entries were unauthorised and wrongful. Aside from 2 debit entries which were reversed, by the petitioner itself, they granted the claim of the respondent in a sum of Rs.80 lakhs with interest as aforesaid. The appeal has been dismissed on the above stated grounds.

¶24

The learned Arbitrators considered that the respondent sent his letter dated 8^th July, 2009 showing the discrepancies in his account after he considered his own documents and his account with the petitioner which the petitioner responded by accepting one of the JEs and one debit entry for delayed payments and reversed those entries on 11^th August, 2009. The respondent lodged his claim on 4^th February, 2009, a week before the claim was to expire on 11^th February, 2009 by the bar of limitation.

¶25

This reasoning is a plausible view. If the respondent had reversed all the entries there would have been no necessity of filing any claim. The reversal of one entry shows the specific denial of the case of the respondent for the other entries, necessitating him to refer the dispute to arbitration as per the agreement between the parties. The learned Arbitrators have rightly considered that this was the acknowledgment of part liability and hence the cause of action which initially may have been proved on 26^th March, 2009

¶26

ARBP.35/12(901)

¶27

¶28

came to be shifted to 11^th August 2009. This is a very possible view which cannot be interfered with in this Petition.

¶29

On the merits of the case the respondent contended that his signature on the letter giving authority for group adjustments did not match the admitted signatures of the respondent on the KYC form, the agreement between the parties as also the written statement. He relied upon his passport and PAN card. The petitioner contended that the respondent has put different signatures on various documents. The petitioner also contended that the separate letter given by the respondent to the petitioner's sub-broker who introduced the respondent to the petitioner was issued well after the agreement was signed between the parties. There are number of signatures of the respondent on the NSE agreement. In fact each page is signed by the respondent. The petitioner contended that these signatures themselves are different.

¶30

The learned Arbitrators saw and took into account the structure of the signature in the writing. They concluded that the signatures are different on the agreement and the aforesaid letter.

¶31

To satisfy this Court the parties have produced several documents. The Court has seen the signatures. There is no material difference in the structure and slant of all the admitted signatures of the respondent though they may slightly differ. The petitioner has produced before this Court, though not in

¶32

ARBP.35/12(901)

¶33

¶34

arbitration, several instruction slips for delivery signed by the respondent. They are stated to be countersigned by the respondent's banker. These documents are not the documents in arbitration. Yet they have been seen by the Court. The signatures are much the same. Each of the banker's verification does not show its date which is rather strange.

¶35

In any event this Court has seen that the signature only on the letter giving authority for group adjustments to be made bears the wholly different signature with entirely different slant in the name of the respondent. The respondent has only signed the letter which is pre-printed. Certain particulars are added with regard to the code number and the name of the persons in the group in the handwriting of some other.

¶36

The respondent has also contended that the group adjustments, if any, could have been made amongst the family members of the respondent. That is not the case. The respondent's group cannot be expected to contain the sub-broker through whom the respondent was introduced to the petitioner and an employee of the sub-broker. Mr. Purohit rightly questioned why the respondent would want adjustments with his broker or the broker's employee. It is reasonable to believe the respondent's case that he had given no authority for group adjustments.

¶37

The learned Arbitrators have considered the mismatch of the

¶38

6 ARBP.35/12(901)

¶39

signatures as also the fact that the partner of Prosperous Finvests was the remisor or introducer of the applicant and that Ms. Payal Pandya was also an outsider. Consequently their debit entries in the account of the respondent and the corresponding credit entries in the accounts of those parties have been held to be reversible entitling the respondent to Rs.80 lakhs which is the sum total of the 4 debit entries dated 26^th March, 2009.

¶40

The learned Arbitrators have correctly considered the limitation aspect as also the case on merits which cannot be interfered by this Court.

¶41

Hence the petition is dismissed.

¶42

(ROSHAN DALVI, J.)

Jhp Securities Pvt. Ltd. v. Nailesh Swarupchand Mehta

Case brief

What is this about?

What did the court decide?

Jhp Securities Pvt. Ltd. v. Nailesh Swarupchand Mehta

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

M/S. Rashtriya Chemicals and Fertilizers Ltd. Vs M/S. Continental Warehouding Corporation Ltd.

Sharekhan Ltd. Vs Rajesh Shah

Sharekhan Ltd. Vs Parul Shah

Nailesh S. Mehta Vs Jhp Securities Pvt. Ltd.

Akamai Technologies Solutions (India) Pvt.Ltd.and Anr. Vs Nimbus Communications Ltd.

M/S Reliance Corporation and 6 Ors. Vs Tilak Indrayani Co-Op Hsg Society Ltd.