Dismissed

Hiteshkumar Narsinghdas Daga v. M/S Gaseonline India Pvt. Ltd.

Bombay HC30 Jul 2014ARBP/514/2013

Case brief

AI extract

What is this about?

The High Court upheld the award of the BSE Appellate Tribunal dismissing the petitioner's arbitration challenge. The Court held that the setting aside of an underlying NSE award did not grant a ground for interference with the BSE award under Section 34.

What did the court decide?

The petition challenging the award is dismissed with no order as to costs.

Hiteshkumar Narsinghdas Daga Vs M/S Gaseonline India Pvt. Ltd. — Arbitration | Bombay HC (2014)

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

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ARBITRATION PETITION No.514 OF 2013

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Hiteshkumar Narsinghdas Daga ...Petitioner (Original Petitioner) V/s. M/s. Gasesonline India Pvt. Ltd ...Respondent

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(Original Respondent)

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Mr. Rajesh Khandelwal, i/b. Shikhir Grover, for the Petitioner.

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Mr. Chetan Kapadia along with Mr. Rohan Kelkar and Mr. Deepan Dixit, i/b. M/s. Kartikeya & Associates, for the Respondent.

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CORAM : S.C. GUPTE, J.

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RESERVED ON : MARCH 4, 2014 PRONOUNCED ON : JULY 30, 2014.

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P.C. :

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. The arbitration petition challenges an award passed by the Appellate Arbitral Tribunal of the Bombay Stock Exchange (BSE) in an appeal against the award of a sole arbitrator under the Rules, Bye-laws and Regulations of BSE.

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The Petitioner is a trading member of BSE, whilst the Respondent was one of the constituents of the Petitioner. The Respondent constituent was the original Applicant, who had filed an arbitration reference before the sole arbitrator, claiming an amount of Rs.1,12,645.35 from the Petitioner broker comprising of (i) reversal of late pay-in charges and (ii) ledger balance as per the Trading Member.

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The case of the Respondent before the sole arbitrator was that

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it had opened an account with the Petitioner for dealing in NSE cash and F & O market and BSE cash market; that it regularly sold shares in BSE cash market and throughout had a positive ledger balance with the Petitioner; that since the Petitioner was not regular in sending ledger statements and was not reversing the debit of late pay-in charges contrary to the promises held out, the Respondent decided to withdraw business from the Petitioner and shift business elsewhere; and that it was accordingly entitled to receive payment from the Petitioner towards its credit balance and reversal of late payment charges. The Petitioner did not dispute the credit balance in the Respondent's ledger account, but claimed to be entitled to withhold and adjust the same against the debit balance in the associated companies. It was common ground that the Petitioner had offered to the Respondent constituent a facility of combined ledger balance of the constituent and its associate entities with different entities of the Petitioner trading member. There were other arbitration references filed by the Respondent in NSE against the associate companies of the trading member as well and there were counterclaims filed by the associated companies of the trading member against the Respondent. After the matter was closed for the award before the sole arbitrator, the Petitioner also filed a counter-claim in the present arbitration reference, claiming a revised ledger balance after adjusting the original ledger balance against late payment charges which were inadvertently not charged earlier.

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The sole arbitrator allowed the claim of the Respondent and granted an award of the ledger balance of Rs.64,108/- as also an award for reversal of the purported late payment charges for Rs.48,563/- with interest. The arbitrator inter alia took into account the admission of the trading member that various accounts of the constituent were considered as

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a group and that while charging late pay-in charges, the overall position of the group of accounts had to be taken into consideration. The arbitrator observed that the Petitioner had failed to establish any debit balance in the overall position of the Respondent.

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The Petitioner challenged the award before the Appellate Tribunal of the BSE. The case of the Petitioner in appeal was that the Petitioner was entitled to withhold the amount claimed by the associate company of the Petitioner in the proceedings before the NSE. On the other hand, it was submitted by the Respondent that the Petitioner can adjust the amount lying to the credit of the constituent if he was legally entitled to do so, but cannot withhold the amount against doubtful claims. The NSE tribunal had held against the Petitioner and merely because the Petitioner was in the process of filing an appeal, he could not withhold the amount.

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The Appellate Tribunal agreed with the Respondent, holding that the associate company of the Petitioner had no outstanding against the constituent as claimed in the counter claim before the NSE, since the same was not allowed by the NSE arbitral tribunal. As regards the reversal of late pay-in charges, the Appellate Tribunal held that the Petitioner had not shown any provision or agreement under which he could have charged late pay-in charges. It held that assuming that he was so entitled, such charges could have been levied only if there was an overall debit in all accounts considered together, and which was not established by the Petitioner. The Petitioner's appeal was accordingly dismissed by the Appellate Tribunal.

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The Petitioner challenges the impugned award mainly on the ground that the NSE award, which was the basis of disallowing the

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Petitioner's withholding of the amount claimed in the counter-claim filed before the NSE arbitral tribunal by the associate company of the Petitioner, has since been quashed and set aside and the matter remanded and that the counter-claim of the associated company still persists and is greater than the balance of the Respondent awarded to it. The Petitioner also challenges the impugned award on merits.

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The particular clause, namely, Clause No.6.1 of the agreement between the trading member and the constituent relied upon by the Petitioner for adjusting the dues of the associated company, authorizes the Petitioner/associate company to adjust any amount that may be overdue in any other group/affiliate account. This clause has been held by the Appellate Tribunal of BSE to entitle the Petitioner to adjust any credit against any debit in another account of the constituent. Such debit amount must be due and payable to the trading member. The Appellate Tribunal held that this clause did not entitle the Petitioner to withhold the amount towards any counter-claim not found to be due to it. The interpretation so applied is a plausible interpretation which was within the jurisdiction of the Appellate Tribunal. This position is not changed by setting aside of the NSE award in favour of the Respondent by the NSE Appellate Tribunal and remand of the arbitration reference before NSE Arbitral Tribunal. There is no amount due as yet to the Petitioner in respect of the purported counterclaim. Besides, the Appellate Tribunal, in the impugned award, was concerned with the correctness of the original arbitration award as at its date. No ground is made out for interference with the impugned award of the Arbitral Tribunal under Section 34 of the Arbitration and Conciliation Act, 1996.

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On merits, the Tribunal has taken a possible view and no interference can be made under any of the grounds available to this Court in a challenge under Section 34 of the Act.

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There is, thus, no merit in the Petition. The Petition is dismissed with no order as to costs.

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( S.C.GUPTE, J. )

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Hiteshkumar Narsinghdas Daga v. M/S Gaseonline India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

Hiteshkumar Narsinghdas Daga v. M/S Gaseonline India Pvt. Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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