Case Note & Summary
The petitioner, Harinarayan Bajaj, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 28th May 2003. The dispute arose out of share trading transactions between the petitioner (constituent) and respondent No.1 (trading member of NSE). The petitioner had placed orders for purchase of shares of Amaraja Battery Ltd. in settlement number 10 and issued cheques for Rs.19 lakhs and Rs.35 lakhs towards margin on 12th March 2001. Respondent No.1 purchased the shares and issued contract notes. However, the petitioner stopped payment of the cheques, which were returned unpaid. Respondent No.1 initiated proceedings under Section 138 of the Negotiable Instruments Act and also invoked arbitration as per NSE Bye-Laws. The arbitral tribunal allowed the claims of respondent No.1 and rejected the petitioner's counterclaim. The petitioner challenged the award on grounds that the contract notes were not served, the claims were barred by limitation, and the award was contrary to the NSE Bye-Laws. The court examined the scope of Section 34 and held that the arbitral tribunal's findings on facts, including the service of contract notes and the petitioner's failure to object, were not perverse. The court noted that under NSE Bye-Laws, failure to object to contract notes within a reasonable time amounts to acceptance. The court also found that the petitioner had not raised the issue of limitation before the arbitral tribunal and could not raise it for the first time in the petition. The court dismissed the petition, upholding the award.
Headnote
A) Arbitration Law - Challenge to Arbitral Award - Section 34 of the Arbitration and Conciliation Act, 1996 - Scope of Interference - The court considered whether the arbitral award could be set aside on grounds of patent illegality or perversity. The court held that the arbitral tribunal's findings on facts and law are final and not open to reappraisal under Section 34 unless the award is contrary to the public policy of India or suffers from a patent illegality on the face of the award. The court found no such infirmity and dismissed the petition. (Paras 1-39) B) Contract Law - Acceptance of Contract Notes - NSE Bye-Laws - The court examined whether the petitioner's failure to object to the contract notes within the stipulated time under NSE Bye-Laws constituted acceptance. The court held that under the NSE Bye-Laws, if a constituent does not object to a contract note within a reasonable time, the contract note is deemed to be accepted. The arbitral tribunal's finding that the petitioner had not objected to the contract notes was a finding of fact not open to challenge. (Paras 2-10) C) Evidence - Burden of Proof - The court considered the burden of proof regarding the delivery of contract notes. The court held that the respondent had discharged its burden by producing copies of contract notes and ledger accounts, and the petitioner failed to rebut the same. The arbitral tribunal's appreciation of evidence was not perverse. (Paras 11-20)
Issue of Consideration
Whether the arbitral award dated 28th May 2003 passed by the learned arbitrators allowing the claims of the respondents and rejecting the counterclaim of the petitioner is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The court dismissed the petition, upholding the arbitral award dated 28th May 2003.
Law Points
- Arbitration award
- Section 34 challenge
- contract notes
- acceptance by silence
- NSE Bye-Laws
- limitation for objection
- concurrent findings
- no interference
