Case Note & Summary
The appeal arises from a judgment of the Learned Single Judge dated 17 April 2012 dismissing a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award. The appellant, Way2 Wealth Brokers Pvt. Ltd., a stock broking firm, and the respondent, Amar Walmiki, entered into a member-client agreement on 4 December 2008. Between 9 April 2008 and 29 August 2008, the appellant transacted on behalf of the respondent by purchasing 50,000 shares of Refex Refrigerants, resulting in a debit of Rs.1.52 crores in the respondent's account. On 4 September 2008, the respondent made a part payment of Rs.15 lakhs, leaving a debit of Rs.77.15 lakhs. The appellant sent letters of demand on 8 September and 17 October 2008, and eventually an advocate's notice on 28 November 2008 demanding Rs.80.34 lakhs. The respondent disputed liability, claiming that on 23 September 2008, it had provided an additional 15,000 shares, making a total of 65,000 shares held by the appellant, and that it had orally instructed the appellant to sell those shares to square off the debit balance, resulting in a credit of Rs.17.35 lakhs. The appellant made a claim before the arbitral tribunal of the Bombay Stock Exchange for Rs.81.24 lakhs, and the respondent filed a written statement and counterclaim. The arbitral tribunal awarded the appellant Rs.12.79 lakhs with interest at 9% per annum from the date of filing the reference. The appellant challenged the award under Section 34, which was dismissed by the Learned Single Judge. In appeal, the appellant argued that the arbitral tribunal erred in holding that the appellant ought to have mitigated damages by selling the shares within a reasonable period of a fortnight from 23 September 2008. The court held that the finding of the arbitral tribunal on mitigation of damages is a finding of fact based on evidence and is not perverse. The court noted that the arbitral tribunal considered the evidence and came to a plausible conclusion that the appellant failed to mitigate damages within a reasonable period. The court further held that the scope of interference under Section 34 is narrow and does not permit reappreciation of evidence. The appeal was dismissed, and the impugned order of the Learned Single Judge was affirmed.
Headnote
A) Arbitration - Mitigation of Damages - Section 34 Arbitration and Conciliation Act, 1996 - The arbitral tribunal held that the appellant failed to mitigate damages by not selling shares within a reasonable period of a fortnight from 23 September 2008. The court held that this is a finding of fact based on evidence and not perverse, hence not open to interference under Section 34. (Paras 4-6) B) Arbitration - Interference with Arbitral Award - Section 34 Arbitration and Conciliation Act, 1996 - The court reiterated that the scope of interference under Section 34 is narrow and does not permit reappreciation of evidence. The arbitral tribunal's view being a plausible one, the award cannot be set aside on the ground of failure to mitigate damages. (Paras 5-6)
Issue of Consideration
Whether the arbitral tribunal's finding that the appellant failed to mitigate damages within a reasonable period of a fortnight from 23 September 2008 is a finding of fact that can be interfered with under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The appeal is dismissed. The impugned order of the Learned Single Judge dated 17 April 2012 is affirmed.
Law Points
- Mitigation of damages
- Reasonable period for mitigation
- Interference with arbitral award under Section 34
- Findings of fact not open to review
- Public policy ground for setting aside award
