Case Note & Summary
The Petitioner, Reliance Securities Limited, a stock broker and member of the National Stock Exchange, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award dated 18 August 2010. The award directed the Petitioner and Respondent No.2 (a sub-broker) to pay Rs.4,13,867/- with 12% interest per annum from 1 July 2007 to Respondent No.1, a resident of Nashik who ran a medical shop. Respondent No.1 had opened a trading account with the Petitioner on 28 December 2006 and opted for digital communication. On 20 May 2007, certain transactions occurred in his account. The Petitioner claimed it furnished a contract note on 28 May 2007. On 23 June 2009, Respondent No.1 filed a complaint with the Investor Grievance Redressal Cell of NSE, which was disposed of on 12 January 2010. On 19 April 2010, he filed a Statement of Claim before an arbitrator appointed under NSE rules. The Arbitrator held that the claim was within limitation, relying on a SEBI Circular dated 2 December 2009, and found that fraud was played on Respondent No.1 as transactions were routed through his account without his authority. The Petitioner's appeal to the NSE appellate bench was dismissed as not maintainable. In the present petition, the Petitioner argued that the claim was barred by limitation and that Respondent No.1 had executed an online agreement and was supplied a security token key. The Court, after hearing both sides, found no merit in the petition. The Court noted that the Arbitrator's findings on limitation and fraud were plausible and not perverse, and that the petition did not disclose any ground for interference under Section 34. The petition was dismissed with no order as to costs.
Headnote
A) Arbitration - Challenge to Award - Section 34 of Arbitration and Conciliation Act, 1996 - Court dismissed petition challenging arbitral award - Held that the Arbitrator's findings on limitation and fraud were plausible and not perverse, and the petition lacked merit (Paras 1-6).
Issue of Consideration
Whether the arbitral award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of limitation and merits.
Final Decision
The petition is dismissed. No order as to costs.
Law Points
- Limitation for arbitration claims under NSE bye-laws
- SEBI Circular dated 2 December 2009
- Fraud in stock trading transactions
- Scope of Section 34 of Arbitration and Conciliation Act
- 1996
Case Details
2014 LawText (BOM) (01) 53
Arbitration Petition No. 90 of 2011
Mr. Deepak Dhane for Petitioner; Mr. Vibhor D. Barla i/b Mr. Vikas J. Takalkar for Respondents
Reliance Securities Limited
Mr. Badrinath M. Bodhai and Principle Investments
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
Petitioner sought to set aside the arbitral award dated 18 August 2010.
Filing Reason
Petitioner challenged the award on grounds of limitation and merits.
Previous Decisions
Arbitral award dated 18 August 2010 directed Petitioner and Respondent No.2 to pay Rs.4,13,867/- with interest; appeal to NSE appellate bench dismissed as not maintainable.
Issues
Whether the claim of Respondent No.1 was within limitation.
Whether the Arbitrator's finding of fraud was correct.
Submissions/Arguments
Petitioner argued that the claim was barred by limitation and that the SEBI Circular dated 2 December 2009 was not applicable; also argued that Respondent No.1 had executed an online agreement and was supplied a security token key.
Respondents supported the award, contending that the Arbitrator's findings were plausible and not perverse.
Ratio Decidendi
The Court held that the Arbitrator's findings on limitation and fraud were plausible and not perverse, and the petition did not disclose any ground for interference under Section 34 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
By this petition, the Petitioner seeks to challenge the Award passed by the Sole Arbitrator appointed under the bye-laws, rules and regulations of the National Stock Exchange of India Limited.
The learned Arbitrator came to the conclusion that the claim filed by the Respondent No.1 is within limitation.
The learned Arbitrator also held that fraud was played upon the Respondent No.1 in as much as he was kept in the dark about the transactions routed through the account of Respondent No.1 without authority of Respondent No.1.
Procedural History
On 28 December 2006, Respondent No.1 opened a trading account with Petitioner. On 20 May 2007, transactions occurred. On 23 June 2009, Respondent No.1 filed complaint with NSE IGRC, disposed on 12 January 2010. On 19 April 2010, Respondent No.1 filed Statement of Claim before arbitrator. On 18 August 2010, arbitrator passed award. Petitioner appealed to NSE appellate bench, dismissed as not maintainable. Thereafter, Petitioner filed present petition under Section 34 on 2011.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 34
- Securities and Exchange Board of India Act, 1992:
