Case Note & Summary
The petitioners, Intex Financial Services Pvt. Ltd. and its director Dinesh Mehta, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 14.11.2008 and an order dated 23.12.2008 passed by the Arbitral Tribunal constituted under the Byelaws, Rules and Regulations of the National Stock Exchange of India Ltd. (NSEIL). The dispute arose from a telephonic instruction on 1st November 2007 by the petitioners to the respondent's dealer Rikesh to execute the sale of 40000 NIFTY on their behalf. The petitioners claimed that the respondent instead made an unauthorized purchase of 40000 NIFTY for a sum of Rs.5,935/-, which they objected to on 2nd November 2007. The respondent issued a Credit Note No.2000700003483 on 5th February 2008 giving credit of Rs.12,11,080/- for 50% of the loss on the NIFTY trade. The petitioners rejected the credit note by letters dated 11th and 14th February 2008 and demanded revision based on the closing price of NIFTY on the expiry date. On 25th April 2008, the petitioners filed a statement of claims before the Arbitral Tribunal. The respondent filed a separate application on 30th April 2008 for recovery of Rs.42,21,127.26 from the petitioners. The Arbitral Tribunal dismissed the petitioners' claim and allowed the respondent's counterclaim. The petitioners challenged the award under Section 34, arguing that the tribunal ignored evidence and that the award was contrary to law. The court held that the scope of interference under Section 34 is limited and that the tribunal's findings of fact, based on the material on record, cannot be reappreciated. The court found that the petitioners failed to prove that the trade was unauthorized or that the credit note was not accepted. The petition was dismissed with no order as to costs.
Headnote
A) Arbitration - Section 34 of the Arbitration and Conciliation Act, 1996 - Scope of Interference - The court cannot reappreciate evidence or substitute its own findings for those of the arbitral tribunal unless the award is patently illegal or perverse. The petitioners failed to establish that the trade was unauthorized or that the credit note was not accepted. (Paras 1-7) B) Evidence - Burden of Proof - Unauthorized Trade - The petitioners alleged an unauthorized purchase of 40000 NIFTY but did not produce any contemporaneous written objection or evidence to support their claim. The credit note was issued and retained without timely protest, indicating acceptance. (Paras 3-5) C) Arbitration - Findings of Fact - Finality - The arbitral tribunal's findings of fact, based on material on record, are binding and cannot be interfered with under Section 34 unless they are so perverse that no reasonable person could have arrived at them. (Para 7)
Issue of Consideration
Whether the arbitral award dated 14.11.2008 and order dated 23.12.2008 are liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds of being contrary to law and evidence.
Final Decision
The petition is dismissed. No order as to costs.
Law Points
- Section 34 of the Arbitration and Conciliation Act
- 1996
- scope of interference with arbitral award
- burden of proof
- appreciation of evidence
- findings of fact by arbitral tribunal not to be reappreciated
