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2012 DIGILAW 722 (BOM)

Indiabulls Securities Ltd. v. Suresh N. Patel

2012-03-31

ANOOP V.MOHTA

body2012
Judgment Heard finally by consent. 2. The petitioner has invoked section 34 of the Arbitration and Conciliation Act (for short "the Arbitration Act") and thereby challenge is made to the arbitral award passed by the arbitrators in the matter of arbitration and rules and regulations of National Stock Exchange (NSE). The arbitral tribunal considering the transactions between the parties and material placed on record held that : "The Panel of Arbitrators therefore concludes that the open position of the Applicant ought to have been squared off on 21st January 2008 due to shortfall in margin requirement at the end of the day on 18.01.2008 which the Applicant was unable to recoup by the commencement of trading on the next following day i.e. 21.01.2008." 3. The learned arbitrator has passed the award in following terms: "I. The Respondent Indiabulls Securities Limited (Trading Member) to pay the sum of Rs.8,33,514/-(Rs. Eight lakhs thirty three thousand five hundred four only) to the Applicant Mr. Suresh N. Patel (Constituted). II. The Respondent to pay interest @ 12% p.a. On Rs. 8,33,514/-from the date of filing arbitration application i.e. July 18, 2008. III. The counter-claim of the Respondent for Rs. 6,23,374.79 is rejected. IV. The cost of Arbitration to be borne equally by the Applicant and the Respondent. V. No award in respect of other costs and expenses." 4. The learned counsel appearing for the petitioner raised challenge on merit also but basically contended that the counter claim of Rs.6,23,734.79, dismissed by an unreasoned order by observing as under: "Having worked out the above figure on the basis of what is stated hereinabove, the counter-claim of the Respondent for Rs.6,23,734.79 does not survive. Moreover, the Respondent has preferred the counterclaim vide submission dated 20th May 2008 as against its Statement of Defence filed on 28th November 2008 is considered as an afterthought. Accordingly the counter-claim of the Respondent for Rs.6,23,374.79 stands rejected." It is clear that while deciding the counter claim of the petitioner the learned tribunal rejected the said claim on limitation without assigning sufficient reason, but by touching the merit of the same. 5. Accordingly the counter-claim of the Respondent for Rs.6,23,374.79 stands rejected." It is clear that while deciding the counter claim of the petitioner the learned tribunal rejected the said claim on limitation without assigning sufficient reason, but by touching the merit of the same. 5. The learned counsel appearing for the respondent relied on clause 5.9 (g) of NSE regulations, which is as under: "5.9 (g) The Respondent(s) shall within 15 days from the date of receipt of Form No.I from the Exchange, submit to the Exchange in Form No.III three copies in case of sole arbitrator and five copies in case of panel of arbitrators along with the following enclosures: (i) The Statement of Reply (containing all available defences to the Claim) (ii) The Statement of Accounts (iii) Copies of Member Constituent Agreement, (iv) Copies of the relevant Contract Notes and Bills (v) Statement of the set-off or counter claim alongwith statements of accounts and copies of relevant contract notes and bills." He, therefore, contended that admittedly the counter claim was raised by the petitioner only for the first time in the rejoinder, therefore, in view of rules itself, the learned tribunal rejected the counter claim. As noted, the tribunal failed even to consider the above rules to reject the counter claim of the petitioner. There is no mention about the same. 6. Admittedly, there is no procedure in NSE regulations similar to that of provisions of Civil Procedure Code (CPC) and as relevant, order VIII Rule 9 is reproduced as under: "Subsequent Pleading :-No pleading subsequent to the written statement of a defendant other than by way of defence to set-off or counter-claim shall be presented except by the leave of the Court and upon such terms as the Court thinks fit; but the Court may at any time require a written statement or additional written statement from any of the parties and fix a time of not more than 30 days for presenting the same." Though CPC and Evidence Act are not strictly applicable to the arbitration proceedings but the general principle are relevant and as are necessary to adjudicate the dispute between the parties. The arbitral tribunal even otherwise, is required to consider the basic principles of equal opportunity and natural justice, if that is so, the rejection of the counter claim, in such circumstances, is unsustainable. 7. The arbitral tribunal even otherwise, is required to consider the basic principles of equal opportunity and natural justice, if that is so, the rejection of the counter claim, in such circumstances, is unsustainable. 7. The award so passed, therefore, without considering the counter claim, is unsustainable, needs to be quashed and set aside. The contention that the award passed by the arbitral tribunal on merit need not be interfered with and matter be remanded only for the counter claim, is also unsustainable. If the counter claim is accepted and/or allowed in full and/or in part, the amount already awarded need adjustment. 8. The award and so also the grant of interest on the awarded amount, therefore, is set aside. The matter is remanded back to the arbitral tribunal for rehearing. The tribunal shall re-hear the matter, after giving full opportunity to the parties, as expeditiously as possible. All points are kept open. Resultantly, the award is quashed and set aside. The petition is disposed of accordingly. No costs.