Case Note & Summary
The petitioner, India Infoline Limited, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 22 September 2009 passed by the Arbitral Tribunal constituted under the Rules, Byelaws and Regulations of the Bombay Stock Exchange Ltd. (BSE). The Tribunal had rejected the petitioner's claim solely on the ground of limitation, as per the then-existing Byelaw 252(2) which prescribed a limitation period of six months from the date of cause of action. The petitioner pointed out subsequent SEBI circulars dated 11 August 2010 and 9 February 2011, issued under Section 11(1) of the SEBI Act read with Section 10 of the Securities Contracts (Regulation) Act, 1956, which extended the limitation period for arbitration from six months to three years, effectively applying the Limitation Act, 1963. The circulars provided that where three years have not elapsed and parties have not filed for arbitration, or where arbitration was rejected solely on the ground of delay within the earlier six-month period, the new limitation period would apply. The court noted that the basic date as per the BSE Ledger was 30 January 2008, and the impugned award was dated 22 September 2009. The petition was filed on 23 December 2009 and was pending. The court held that the petitioner's case fell within the ambit of the circulars, and to give the petitioner another opportunity to submit its case, the impugned award was set aside. The matter was remitted back to the Arbitral Tribunal for reconsideration of the limitation issue in light of the circulars, with both parties to be given an opportunity to be heard. The petition was disposed of accordingly.
Headnote
A) Arbitration - Limitation - Extension of Limitation Period - Section 34 Arbitration and Conciliation Act, 1996 - SEBI circulars dated 11 August 2010 and 9 February 2011 extended limitation period for arbitration from six months to three years under BSE Byelaws - Held that the petitioner's claim, rejected earlier on limitation, falls within the ambit of the circulars and deserves reconsideration by the Arbitral Tribunal (Paras 2-4).
Issue of Consideration
Whether the arbitral award rejecting the claim solely on the ground of limitation under BSE Byelaws (six months) should be set aside in view of subsequent SEBI circulars extending the limitation period to three years.
Final Decision
The impugned award dated 22 September 2009 is set aside. The matter is remitted back to the Arbitral Tribunal for reconsideration of the limitation issue in light of the SEBI circulars dated 11 August 2010 and 9 February 2011. Both parties to be given an opportunity to be heard. Petition disposed of.
Law Points
- Limitation period for arbitration under BSE Byelaws extended from six months to three years by SEBI circulars
- Limitation Act 1963 applicable
- Section 34 Arbitration and Conciliation Act 1996
Case Details
2012 LawText (BOM) (02) 70
Arbitration Petition No. 204 of 2010
Mr. Ajay Khandhar a/w Mr. Jayant Gaikwad i/by M/s. Ajay Khandhar & Co. for the Petitioner, Ms. Prachi Mhatre i/by M/s. M.S. Bodhanwala & Co. for the Respondent
Shyamlal Daulatram Vachhani
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
Setting aside of the arbitral award dated 22 September 2009 rejecting the petitioner's claim on limitation grounds.
Filing Reason
The arbitral tribunal rejected the claim solely on the ground of limitation under BSE Byelaw 252(2) (six months), but subsequent SEBI circulars extended the limitation period to three years.
Previous Decisions
Arbitral award dated 22 September 2009 rejected the petitioner's claim on limitation.
Issues
Whether the arbitral award rejecting the claim on limitation should be set aside in light of SEBI circulars extending limitation period from six months to three years.
Submissions/Arguments
Petitioner argued that SEBI circulars dated 11 August 2010 and 9 February 2011 extended the limitation period for arbitration from six months to three years, and the claim falls within the ambit of these circulars.
Respondent's arguments not mentioned.
Ratio Decidendi
The SEBI circulars extending the limitation period from six months to three years for arbitration under BSE Byelaws apply to cases where the arbitration application was rejected solely on the ground of delay within the earlier six-month period, and three years have not yet elapsed. The court set aside the award to give the petitioner an opportunity to have its claim considered under the extended limitation period.
Judgment Excerpts
By the impugned award the learned Arbitral Tribunal rejected the claim of the Petitioner solely on the ground of limitation in view of the then existing provisions i.e. byelaws 252(2) of the Rules and Regulations of the BSE when the time period was of six months from the date of cause of action.
Considering the scope and purpose and to give an another opportunity to the Petitioner to submit his case, as it falls within the ambit of this circulars/provisions, I am inclined to grant the same.
Procedural History
The petitioner filed a claim before the Arbitral Tribunal under BSE Byelaws. The Tribunal rejected the claim on 22 September 2009 on limitation grounds (six-month period). The petitioner filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 23 December 2009. The petition was pending when SEBI issued circulars on 11 August 2010 and 9 February 2011 extending the limitation period to three years. The court set aside the award and remitted the matter for reconsideration.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
- Securities and Exchange Board of India Act, 1992: Section 11(1)
- Securities Contracts (Regulation) Act, 1956: Section 10
- Limitation Act, 1963:
