Arbitration Petition No. 47, 48, 56, 57 of 2009 Alongwith Arbitration Petition No. 1148 of 2012. Case: Kritika Nagpal & Ors. Vs Geojit Financial Services Ltd.. High Court of Bombay (India)
| Case Number | Arbitration Petition No. 47, 48, 56, 57 of 2009 Alongwith Arbitration Petition No. 1148 of 2012 |
| Counsel | For Appellant: Mr. Simil Purohit, a/w. Mr. Faran Khan, i/b. Purohit & Co. and For Respondents: Mr. Dipan Merchant, Senior Advocate, a/w. Mr. Vaibhav Bajpai, a/w. Mr. Gaurav Jangle, i/b. I.V. Merchant & Co. |
| Judges | R. D. Dhanuka, J. |
| Issue | Arbitration and Conciliation Act, 1996 - Section 34; Companies Act, 1956 |
| Judgement Date | July 14, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
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By these five petitions, the petitioners have impugned the five separate arbitral awards rendered by the arbitral tribunal constituted under the provisions of bye-laws, the rules and regulations of National Stock Exchange of India Limited (NSE) thereby allowing the claims made by the respondent and rejecting the counter claims made by the petitioners. In view of the fact that the facts in all the aforesaid matters are identical, learned counsel appearing for the parties have agreed to make submissions in the Arbitration Petition No.47 of 2009 and state that the judgment in the said arbitration petition would conclude the issues raised in the other four petitions. By consent of parties, all the five petitions were heard together and are being disposed of by a common order. Since the learned counsel have made submissions in the Arbitration Petition No.47 of 2009, some of the relevant facts for the purpose of deciding the petitions based on the facts of the said petition setout are as under:-
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The respondent herein is one of the broker registered with the National Stock Exchange of India Ltd. (hereinafter referred to as the Stock Exchange). It is the case of the petitioner that he was one of the high networth client of the respondent for last several years and had been carrying on trading in various transactions through the Chembur branch office of the respondent. The petitioner started effecting the transaction through the said Chembur office w.e.f. April 2007 on the F&O segment. The petitioner had provided 6500 shares of Reliance Petroleum Ltd. with the respondent as a security.
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It is the case of the petitioner that in the evening of 16th January, 2008, the respondent informed the petitioner that there was a shortfall of approximately Rs.3,50,000/- in her account. To meet the said shortfall, the petitioner immediately issued a cheque in favour of the respondent for a sum of Rs.4,00,000/-. In the morning of 18th January, 2008, the respondent informed the petitioner that the said cheque of Rs.4,00,000/-was misplaced in their office. The petitioner accordingly instructed her bankers to mark stop payment of the said cheque and issued another cheque for Rs.4,00,000/- in the name of the respondent. The said cheque had been encashed by the respondent.
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It is the case of the petitioner that during the course of the day on 18th January, 2008 the respondent informed the petitioner that there was a margin shortfall in her account and asked the petitioner to pay a sum of Rs.5,00,000/-. The petitioner accordingly paid a sum of Rs.5,00,000/- to the respondent on 18th January, 2008 to meet the margin shortfall in her account. The said cheque of Rs.5,00,000/- had been admittedly encashed by the respondent.
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It is the case of the petitioner that in the afternoon on 21st January, 2008 Mr.Sabreesh from Chembur branch of the respondent informed the petitioner that the market had been souring, however assured the petitioner that in past also, although in the morning the market had been soured, however, during the course of the day and before markets closed the position had recovered. The petitioner accordingly instructed the said Mr.Sabreesh not to square off her outstanding position and assured him to pay whatever shortfall in her account immediately on the next day. It is the case of the petitioner that in the evening of 21st January, 2008, when the petitioner called the office of the respondent to know the shortfall in her account if any, the petitioner was informed that the respondent had not received the margin position from the Exchange and therefore the shortfall if any, in her account would be intimated to the petitioner in the morning of 22nd January, 2008.
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It is the case of the petitioner that in the morning of 22nd January, 2008, when the petitioner called the office of the respondent, the petitioner did not receive any proper reply. The petitioner was informed that the market had witnessed a drastic fall and they were in the process of obtaining shortfall in the accounts of all their clients. The petitioner was however informed that there is a margin shortfall of approximately Rs.15,00,000/- in her account. The petitioner requested the office of the respondent not to square off the outstanding position in her account and assured that the petitioner would be forwarding a cheque of Rs.15,00,000/- immediately and assured the respondent that whatever would be the shortfall in her account would be paid in the evening of 22nd January, 2008 herself. The petitioner forwarded a cheque of Rs.15,00,000/- immediately and the same had been received and encashed by the respondent.
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It is the case of the petitioner that she was shocked and surprised when in the evening of 22nd January, 2008 she received a call from the office of the respondent and was informed that all the outstanding position in her account had been squared off directly by the head office of the respondent on the instructions of the Stock Exchange alleged to have been received in the noon on 22nd January, 2008. It is the case of the petitioner that she protested the purported squaring off effected by the head office of the respondent on the alleged instructions of the Exchange and called upon the respondent to provide the proof regarding the Exchange having given such alleged instructions to its member brokers, to enable the petitioner to take up the matter with the Exchange. The respondent however avoided to provide the details of such alleged instructions to the petitioner on one or the other pretext.
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It is the case of the petitioner that on 29th January, 2008, the petitioner came across an electronic contract note forwarded by the respondent to her e-mail ID. The petitioner came to know from the said e-mail that the respondent had sold her collateral security on 28th January, 2008.
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By her letter dated 1st February, 2008 to the respondent, the petitioner raised strong protest in respect of the transactions carried out by the respondent in the account of the petitioner and called upon the respondent to restore her outstanding position. Vide her letter dated 2nd February, 2008 the petitioner reiterated her contentions which were raised in the letter dated 1st February, 2008.
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On 8th February, 2008,the respondent replied to the letters dated 1st February 2008 and 2nd February 2008 addressed by the petitioner. In the said letter it was alleged by the respondent that the Branch Manager of the respondent at her Chembur branch had informed the petitioner regarding outstanding position in her account, however, the petitioner had failed to pay the alleged shortfall in her account which compelled the respondent to square off all her transactions. In the said reply the respondent alleged that a sum of Rs.35,82,216.64 was due and payable by the petitioner to the respondent and called upon the petitioner to pay the said amount.
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The respondent vide their letter dated 12th February, 2008 called upon the petitioner to pay an amount of Rs.36,01,536/-. The petitioner thereafter made a complaint on 26th February, 2008 with the National Stock Exchange of India Ltd. against the respondent. The respondent thereafter invoked the arbitration agreement and made a claim against the petitioner for recovery of Rs.35,19,225.42 togetherwith interest at the rate of 12% per annum from the date of accrual of alleged debit till realization and cost. The said statement of claim was resisted by the petitioner by filing a written statement. The petitioner also made a counter claim against the respondent for a sum of Rs.9,17,203.72 with interest thereon at the rate of 18% per annum from the date of filing of the counter claim till payment and/or realization togetherwith costs.
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The learned arbitrator made an award on 24th September, 2008 and directed the petitioner herein to pay a sum of Rs.35,19,225.42 to the respondent with interest at the rate of 12% per annum from 25th April, 2008 till the date of payment. The arbitral tribunal rejected the counter claim made by the petitioner and directed that both the parties shall bear their cost of arbitration. Being aggrieved by the said arbitral award, the petitioner filed the Arbitration Petition No.47 of 2009.
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The arbitral tribunal allowed the claims made by the respondent in other four arbitration proceedings and rejected the counter claims made by the petitioner. Those awards are subject matter of the Arbitration Petition No.46 of 2009, Arbitration Petition No.48 of 2009, Arbitration Petition No.57 of 2009 and Arbitration Petition No.1148 of 2012. By an order and judgment dated 17th September, 2012, the learned Single Judge of this court was pleased to set aside the impugned award dated 24th September, 2008 and remanded all the aforesaid petitions for reconsideration on all the issues and keeping all the points open. This court also directed the arbitral tribunal to reconsider the case after giving opportunity to all the parties.
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Being aggrieved by the said order and judgment dated 17th September, 2012 passed by the learned Single Judge of this court, the respondent preferred five separate appeals before the Division Bench of this court. By a common judgment dated 25th June, 2013, the Division Bench held that once the arbitral award was set aside by the learned Single Judge by taking a view on merits, it was impossible to comprehend as to why the proceedings should be remanded back to the arbitral tribunal for reconsideration of all issues and keeping all points open. The Division Bench held that once an arbitral award is set aside under section 34, that brings to a conclusion to the proceeding before the court. It is held that section 34(4) does not contemplate or vest a power in the court to remand proceedings back to the arbitral tribunal once the court has set aside the award. The Division Bench accordingly set aside the impugned judgment of the learned Single Judge dated 17th September, 2012 and...
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