Case Note & Summary
The petitioner, Rajendra A. Shah (H.U.F.), a constituent, challenged an arbitral award dated 17th February 2009 passed by the Arbitral Tribunal constituted under the Byelaws, Rules and Regulations of the National Stock Exchange of India Limited (NSEIL). The respondent, M/s. Angel Capital & Debt Market Ltd., a trading member, had filed a claim for recovery of Rs.9,16,685/- being the debit balance in the NSE F&O segment. The petitioner filed a reply to the statement of claim, which included a counter claim seeking compensation for financial loss and mental agony. The arbitral tribunal passed an award in favor of the respondent for the claimed amount but did not consider the counter claim raised by the petitioner. The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award. The court found that the arbitral tribunal had not dealt with the counter claim at all, which amounted to legal misconduct and violation of principles of natural justice. The court set aside the award and remitted the matter back to the arbitral tribunal for fresh consideration, including the counter claim.
Headnote
A) Arbitration Law - Setting Aside Award - Non-Consideration of Counter Claim - Section 34 of the Arbitration and Conciliation Act, 1996 - The petitioner challenged the arbitral award on the ground that the arbitral tribunal failed to consider the counter claim raised by the petitioner in the reply to the statement of claim. The court held that the failure to consider the counter claim amounts to legal misconduct and violation of principles of natural justice, and set aside the award. (Paras 4-8)
Issue of Consideration
Whether the arbitral award is liable to be set aside for non-consideration of the counter claim raised by the petitioner.
Final Decision
The court set aside the arbitral award dated 17th February 2009 and remitted the matter back to the arbitral tribunal for fresh consideration, including the counter claim.
Law Points
- Arbitral award must consider all claims and counter claims
- Failure to consider counter claim is legal misconduct
- Natural justice requires consideration of all pleadings
- Section 34 of Arbitration and Conciliation Act
- 1996
Case Details
2012 LawText (BOM) (09) 62
Arbitration Petition No.425 of 2009
Mr. P. S. Gidwani for the Petitioner, Mr. Deepak Dhane with Mr. Shantibhushan Nirmal for the Respondent
Rajendra A. Shah (H.U.F.)
M/s. Angel Capital & Debt Market Ltd.
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside an arbitral award.
Remedy Sought
The petitioner sought to set aside the arbitral award dated 17th February 2009.
Filing Reason
The arbitral tribunal failed to consider the counter claim raised by the petitioner in the reply to the statement of claim.
Previous Decisions
The arbitral tribunal passed an award in favor of the respondent for the claimed amount without considering the counter claim.
Issues
Whether the arbitral award is liable to be set aside for non-consideration of the counter claim.
Submissions/Arguments
The petitioner argued that the arbitral tribunal did not consider the counter claim raised in the reply to the statement of claim.
The respondent did not seriously dispute that the counter claim was not considered.
Ratio Decidendi
An arbitral tribunal must consider all claims and counter claims raised by the parties. Failure to consider a counter claim amounts to legal misconduct and violation of principles of natural justice, rendering the award liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
The relevant aspect is of non consideration of the counter claim raised by the Petitioner.
The Petitioner has placed on record the compilation of documents which are stated to be part and parcel of the original proceeding. There is no serious dispute about the same.
In the prayer it is mentioned as under: 'I may be compensated for financial loss and mental agony.'
Procedural History
The respondent filed a claim before the Arbitral Tribunal constituted under NSEIL Byelaws. The petitioner filed a reply with a counter claim. The tribunal passed an award on 17th February 2009 in favor of the respondent without considering the counter claim. The petitioner filed Arbitration Petition No.425 of 2009 under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
