Case Note & Summary
The petitioner, Sytematix Shares & Stocks (India) Ltd., a stockbroker, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award passed by a sole arbitrator appointed by the National Stock Exchange of India Limited (NSEIL). The dispute arose from trading in the Futures and Options segment. The respondent, Vimal Agarwal, had opened a trading account with the petitioner in December 2007. The petitioner claimed that on 31/12/2007, after a telephonic conversation, the respondent instructed a purchase of 9636 shares of Sterlite Industries Ltd. at Rs.1042.53, resulting in a debit of Rs.23,49,000. The respondent allegedly agreed to pay but only sent a cheque for Rs.15 lacs. The petitioner squared off part of the shares and rolled over the position. The respondent denied giving any instructions and alleged unauthorized trades. The arbitrator found that the petitioner failed to prove that the respondent gave telephonic instructions for the trades, and that the contract notes were not properly served. The arbitrator awarded the respondent a sum of Rs.15 lacs with interest. The petitioner challenged the award on grounds of being contrary to public policy, perverse, and based on no evidence. The court held that the scope of interference under Section 34 is limited and that the arbitrator's findings were based on evidence. The court found no patent illegality or perversity in the award and dismissed the petition.
Headnote
A) Arbitration - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered the limited grounds for setting aside an arbitral award under Section 34, including patent illegality and contravention of public policy. Held that the court cannot reappreciate evidence or substitute its own view if the arbitrator's view is plausible (Paras 1-10). B) Arbitration - Appreciation of Evidence - The arbitrator's findings on facts, including the absence of proof of telephonic instructions and the validity of contract notes, were based on evidence. Held that the court cannot interfere unless the findings are perverse or based on no evidence (Paras 11-20). C) Arbitration - Public Policy - The award was challenged as being contrary to public policy. Held that the award does not shock the conscience of the court and is not in conflict with the basic notions of justice (Paras 21-30).
Issue of Consideration
Whether the arbitral award dated 15/09/2008 and 21/10/2008 is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds of being contrary to public policy, perverse, or based on no evidence.
Final Decision
The court dismissed the Arbitration Petition No. 142 of 2009, upholding the arbitral award.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- scope of interference with arbitral award
- public policy
- appreciation of evidence by arbitrator
- no reappreciation of evidence
- no error apparent on face of award
