Case Note & Summary
The petitioner, Shankarlal V. Keswani, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 7th January, 2011 passed by the Appellate Bench of the Bombay Stock Exchange Limited. The respondent, India Infoline, a trading cum clearing member of the Stock Exchange, had a Member Client Agreement with the petitioner executed on 27th November, 2006. The petitioner alleged that he deposited 20,000 shares of Opto Circuit India Limited as collateral security and that on 28th February, 2008, he met Mr. R. Venkatraman, a Director of the respondent, who informed him of a debit of approximately Rs. 75 lacs in his sister-in-law's account and instructed him to transfer 18,000 shares, which he did on 1st March, 2008. The petitioner claimed that his last instruction to trade was on 12th February, 2008, and that he neither placed nor authorized any trades thereafter. He contended that as of 12th February, 2008, his account showed a debit of Rs. 1,11,40,487.51, but he held shares worth Rs. 1,94,20,764.80. The respondent allegedly disposed of shares in October 2008 without demand. The Arbitral Tribunal and the Appellate Bench rejected the petitioner's claims, leading to this petition. The Court examined the submissions and found that the petitioner failed to prove that the trades after 12th February, 2008 were unauthorized. The Court noted that the petitioner did not object to the contract notes or statements of account at the relevant time. The Court held that the findings of the Arbitral Tribunal were not perverse and that the scope of interference under Section 34 is limited. Consequently, the petition was dismissed.
Headnote
A) Arbitration Act - Challenge to Arbitral Award - Section 34 of Arbitration and Conciliation Act, 1996 - Grounds for Setting Aside - The petitioner challenged the appellate arbitral award on grounds that the trades were unauthorized and shares were misappropriated. The Court held that the petitioner failed to discharge the burden of proof and that the findings of the Arbitral Tribunal were not perverse. The petition was dismissed. (Paras 1-10) B) Evidence - Burden of Proof - Client-Broker Relationship - The petitioner alleged unauthorized trades after 12th February, 2008. The Court noted that the petitioner did not object to contract notes or statements of account at the relevant time. The burden to prove lack of authorization was on the petitioner, which was not discharged. (Paras 5-8) C) Arbitration Act - Appellate Award - Finality - Section 34 of Arbitration and Conciliation Act, 1996 - The Court reiterated that the scope of interference under Section 34 is limited. The appellate award, being a reasoned award, could not be set aside merely because another view was possible. (Paras 9-10)
Issue of Consideration
Whether the impugned arbitral award dated 7th January, 2011 passed by the Appellate Bench of the Bombay Stock Exchange Limited is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds that the petitioner did not authorize the trades and that the respondent misappropriated shares.
Final Decision
The petition is dismissed. The impugned award dated 7th January, 2011 passed by the Appellate Bench of the Bombay Stock Exchange Limited is upheld.
Law Points
- Burden of proof on petitioner to establish unauthorized trades
- Arbitral Tribunal not bound by strict rules of evidence
- Appellate award can be challenged only on grounds under Section 34
- No interference with findings of fact unless perverse
