Case Note & Summary
The petitioner, M/s. Actal, a sole proprietorship concern engaged in trading in shares, insurance, bonds, mutual funds, etc., was associated with the respondent, M/s. India Infoline Limited, a registered broker and member of the Bombay Stock Exchange (BSE), as a sub-broker since 20th January 2007. The petitioner claimed that the respondent did not pay the full brokerage due and that on 12th September 2008, the respondent illegally blocked the trading terminal and back office software provided to the petitioner. After a notice and reference to the Investors Grievance Committee of BSE, the petitioner filed a statement of claim on 1st April 2009 before BSE claiming Rs.59,19,003/- towards arrears of share of brokerage. The respondent filed a counterclaim. The arbitral tribunal by award dated 14th March 2011 rejected the petitioner's claim and partly allowed the respondent's counterclaim. Both parties appealed to the appellate bench of BSE, which by award dated 16th December 2011 dismissed the petitioner's appeal and partly allowed the respondent's appeal. The petitioner then filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court challenging the appellate award. The court heard the parties by consent at the admission stage. The court examined the findings of the arbitral tribunal and the appellate bench, noting that the petitioner had failed to prove its claim for brokerage and that the respondent's counterclaim was partly allowed based on evidence. The court held that the findings of fact were based on evidence and were not perverse, and that the scope of interference under Section 34 is limited to grounds of patent illegality or being contrary to public policy. The court found no such grounds and dismissed the petition, upholding the appellate award.
Headnote
A) Arbitration - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered whether the arbitral award and appellate award were liable to be set aside on grounds of patent illegality or being contrary to public policy. The court held that the findings of fact recorded by the arbitral tribunal and the appellate bench were based on evidence and were not perverse, and thus no interference was warranted under Section 34. (Paras 2-28) B) Arbitration - Appreciation of Evidence - Sub-Brokerage Dispute - The dispute pertained to claims for unpaid brokerage by a sub-broker against a broker. The arbitral tribunal and appellate bench had concurrently found that the sub-broker had not proved its claim for brokerage and that the broker's counterclaim for amounts due from the sub-broker was partly allowed. The court held that the appreciation of evidence by the arbitral tribunal was not perverse and did not warrant interference. (Paras 3-28) C) Arbitration - Public Policy - Section 34 of the Arbitration and Conciliation Act, 1996 - The court held that the award did not violate the public policy of India as the findings were based on evidence and were not arbitrary or capricious. The court reiterated that the public policy ground is a narrow ground and does not permit reappreciation of evidence. (Paras 28-30)
Issue of Consideration
Whether the arbitral award and the appellate award suffer from patent illegality or are contrary to the public policy of India, warranting interference under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The petition is dismissed. The appellate award dated 16th December 2011 passed by the appellate bench of the Bombay Stock Exchange Limited is upheld. No order as to costs.
Law Points
- Section 34 of the Arbitration and Conciliation Act
- 1996
- scope of interference with arbitral awards
- findings of fact not to be reappreciated
- public policy ground
- perversity
- appreciation of evidence by arbitral tribunal
