Case Note & Summary
The appeal arose from a judgment of a learned Single Judge dismissing a petition under Section 34 of the Arbitration and Conciliation Act, 1996. The appellant, Munish Madanlal Bumb (HUF), was a constituent of the first respondent, M/s Joindre Capital Services Ltd., which carried out share transactions on behalf of the appellant. A debit balance of Rs.16,76,892/- remained unpaid despite a demand notice dated 26 September 2009. The first respondent referred the matter to arbitration before the National Stock Exchange of India Limited, and the arbitral tribunal allowed the claim with interest at 12% per annum from 29 February 2008. The appellant challenged the award under Section 34, arguing that the claim was barred by limitation because the byelaws of the National Stock Exchange required a claim to be submitted within six months, and the last transaction was on 28 February 2008, while the reference was made on 20 December 2010. The court considered SEBI circulars dated 11 August 2010 and 9 February 2011, which clarified that the limitation period for filing an arbitration reference shall be governed by the Limitation Act, 1963. The court held that these circulars, issued under statutory powers, override the exchange byelaws. Since the claim was filed within three years from the date of the cause of action (the demand notice dated 26 September 2009), it was not barred by limitation. The appeal was dismissed, and the judgment of the learned Single Judge was upheld.
Headnote
A) Arbitration Law - Limitation - Applicability of Limitation Act, 1963 - SEBI Circulars - The issue was whether the claim was barred by limitation under stock exchange byelaws requiring filing within six months, or whether SEBI circulars prescribing the Limitation Act, 1963 applied. The court held that SEBI circulars, issued under statutory powers, override exchange byelaws, and the claim filed within three years under the Limitation Act was not barred. (Paras 1-6)
Issue of Consideration
Whether the claim of the First Respondent was barred by limitation under the byelaws of the National Stock Exchange, given that the SEBI circulars mandated that limitation for arbitration references be governed by the Limitation Act, 1963.
Final Decision
The appeal was dismissed. The court held that the SEBI circulars, issued under statutory powers, override the byelaws of the National Stock Exchange, and the claim filed within three years under the Limitation Act was not barred by limitation. The judgment of the learned Single Judge was upheld.
Law Points
- Limitation period for arbitration reference governed by Limitation Act
- 1963
- SEBI circulars override stock exchange byelaws
- claim not barred by limitation if filed within three years from date of cause of action
Case Details
2013 LawText (BOM) (07) 68
Appeal No. 147 of 2013 in Arbitration Petition No. 554 of 2012
Dr. D.Y. Chandrachud, S.C. Gupte
Ms. Arti Bhide for the Appellant
Munish Madanlal Bumb (HUF)
M/s. Joindre Capital Services Ltd. & Anr.
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Nature of Litigation
Appeal against dismissal of petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
The appellant sought to set aside the arbitral award on the ground that the claim was barred by limitation.
Filing Reason
The appellant contended that the claim was barred by limitation under the byelaws of the National Stock Exchange, which required a claim to be submitted within six months.
Previous Decisions
The learned Single Judge dismissed the petition under Section 34 of the Arbitration and Conciliation Act, 1996.
Issues
Whether the claim of the First Respondent was barred by limitation under the byelaws of the National Stock Exchange, given that the SEBI circulars mandated that limitation for arbitration references be governed by the Limitation Act, 1963.
Submissions/Arguments
The appellant argued that the claim was barred by limitation because the byelaws of the National Stock Exchange required a claim to be submitted within six months, and the last transaction was on 28 February 2008, while the reference was made on 20 December 2010.
The respondent relied on SEBI circulars dated 11 August 2010 and 9 February 2011, which provided that the limitation period for filing an arbitration reference shall be governed by the Limitation Act, 1963.
Ratio Decidendi
SEBI circulars issued under statutory powers override stock exchange byelaws regarding limitation for arbitration references. The limitation period for filing an arbitration reference is governed by the Limitation Act, 1963, and not by the byelaws of the stock exchange.
Judgment Excerpts
The limitation period for filing an arbitration reference shall be governed by the law of limitation i.e. The Limitation Act, 1963.
This Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of the investors in securities and to promote the development of, and to regulate the securities market and shall come into effect from September 1, 2010.
Procedural History
The First Respondent submitted a reference to arbitration on 20 December 2010. The arbitral tribunal allowed the claim with interest. The appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, which was dismissed by the learned Single Judge on 25 September 2012. The appellant then filed the present appeal.
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:
