Notice of Motion No. 1028 of 2016 in Appeal No. 732 of 2005 in Arbitration Petition No. 237 of 2003. Case: Rahul Bajaj Vs Mangal Keshav Securities Limited and Anr.. High Court of Bombay (India)
| Case Number | Notice of Motion No. 1028 of 2016 in Appeal No. 732 of 2005 in Arbitration Petition No. 237 of 2003 |
| Counsel | For Appellant: Ms. Sonal i/by Das Associates and For Respondents: Mr. Janak Dwarkadas, Senior Advocate, Mr. Astad Runderia, Mr. Mihir Nerurkar i/by Mulla & Mulla |
| Judges | Anoop V. Mohta and A. S. Gadkari, JJ. |
| Issue | Arbitration and Conciliation Act, 1996 - Sections 37, 34; Code of Civil Procedure, 1908 - Sections 144, 151, 107(2); Order 23 Rule 1(1) |
| Judgement Date | July 15, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
Anoop V. Mohta, J.
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The present Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, "the Arbitration Act"), against impugned Judgment and order dated 2 February 2005 passed by the learned Single Judge under Section 34 of the Arbitration Act and thereby, maintained the award passed by the Arbitral Tribunal of National Stock Exchange dated 13 December 2002, arising out of Rules, Byelaws and Regulations of the National Stock Exchange (for short, "NSC Rules").
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The matter was listed at the instance of Appellant for withdrawal of the Appeal itself, on 25 February 2016. Respondent No.1, however, resisted/opposed even the withdrawal and therefore, sought time to file affidavit to show how the withdrawal would cause hardship and injustice to them. Respondent No.1 thereby, had taken out Notice of Motion No. 1028 of 2016. However, during the course of argument, on instructions, Respondent No.1 did not press the Motion, but opposed the withdrawal of Appeal on various grounds and made the submission with details, in support of the same opposition. It is stated that apart from the background of litigation, in view of fluctuations of the price of 11,000 shares of ARBL in the market, how Respondent No.1 would suffer great injustice and hardship, apart from financial losses to the tune of Rs.13.48 crores, though operative part of the award which was in favour of Respondent No.1, reflected the situation otherwise. The operative part of Award dated 13 December 2002, reads thus:
" 8. THE AWARD
The Panel of Arbitrators directs (a) the Respondent Shri Rahul Bajaj to pay to the Applicant Mangal Keshav Securities Ltd., a sum of Rs. 29,21,976.85 (Rupees twenty nine lakh twenty one thousand nine hundred seventy six and paise eighty five) and (b) the Applicant to deliver to the Respondent 11000 shares of Amara Raja Batteries Ltd., upon receipt of the said payment.
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Costs
There is no order as to costs."
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In view of peculiarity of the case and how the delay in Arbitration proceedings decision would cause great injustice and hardship to Respondent No.1, as the award, at the relevant time/stage could not be executed because of pendency before the Court initially of Section 34 Application and later on because of the present Appeal arising out of the same. After hearing the parties and considering the submissions so made, we are inclined to deal with the issue of withdrawal of the Appeal and so also the resistance of the same in the background of effect of fluctuations of share prices in the share market.
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The background of the case is as under:
In January 2001, a MemberClient Agreement was executed between the Appellant and Respondent No.1. On 2 March 2001, the Appellant deposited with Respondent No.1 a margin sum amounting to Rs.5 lacs to the credit of Respondent No.1. On 7 March 2001, the subject contract note was issued by Respondent No.1 for purchase of 11,000 shares of Amara Raja Batteries Ltd. (ARBL) by Respondent No.1 on the instructions of and on behalf of the Appellant @ Rs.315.71 per share, amounting to purchase price of Rs.34,91,465/. The contract note is not acknowledged by the Appellant, but he did not deny that he had placed the order for purchase of 11,000 shares of ARBL in settlement No.10.
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On 12 March 2001, a sum of Rs.69,406.80/being the credit towards settlement No.9 was credited to the Appellant. The Appellant had a credit balance of Rs.5,69,489.80 with Respondent No.1 as on 12 March 2001, being the date on which the previous settlement, i.e. Settlement No.9, had ended. On 19 March 2001, the billed amount, after deducting Rs.5 lacs margin paid by the Appellant and credit amount of Rs.69,506.80/made in Settlement No. 9, was debited to the running account of the Appellant, being the payin date for Settlement No.10. This gave rise to a debit balance of Rs.29,21,976.85/. In the month of September 2001, the Appellant had not cleared the outstanding amount of Rs.29,21,976.85/, in spite of various demands by Respondent No.1. Respondent No.1 made an application for arbitration of its claim of Rs.29,21,976.85/. During the period from 4 and 8 February 2002, the Appellant filed his statement of defence to the said claim made by Respondent No.1, and also filed a counter claim, claiming payment from Respondent No.1 of a sum of Rs.5,69,506.80/and interest thereon at the rate of 18% per annum from 12 March 2001. The amount was claimed by the Appellant, being the margin money plus Rs.69,506.80/, lying to his credit.
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On 13 December 2002, the Arbitral Tribunal adjudicating upon the said claim and counterclaim, passed an award. The Arbitral Tribunal, in paragraph No.6 of the Award, comes to the finding that the amount claimed by the Appellant in its Counter claim had been accounted for and set off by the Respondent in arriving at the amount claimed in its statement of claim. Accordingly, the Arbitral Tribunal held that the question of entertaining the counterclaim did not arise. As on the date of the Award, the Market Value/Price of share of ARBL was Rs.64.30 per share. Under the Award, there would have been the position and obligations of the parties (i) Respondent No.1 was to receive a sum of Rs.29,21,976.85/from the Appellant and (ii) after the receipt of the aforesaid amount, Respondent No.1 would be required to purchase and deliver 11,000 shares of ARBL, which then had an aggregate market value of Rs.7,07,300/Respondent No.1 would have thus been entitled to receive from the Appellant a net sum of Rs.22,14,676.85/.
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On 24 March 2003, the Appellant preferred an Arbitration Petition under Section 34 of the Arbitration Act and sought reliefs; (a) the Arbitral Award be set aside and, (b) to allow the Appellant's counterclaim and direct the Respondent to make payment to the Appellant of Rs.5,69,506.80/, along with interest thereon at the rate of 18% per annum from 12 March 2001. In paragraph No.2 of the Arbitration Petition, the Appellant has categorically stated that the Appellant was seeking to have the Award set aside "both to the extent that it dismissed the Petitioner's Counterclaim as also to the extent to which 1st Respondent's claim is allowed." The same statement also from the part of ground (y) of the Petition. Further, as can be seen from ground (1) of the Petition, the Appellant was aware that for the Award to be complied with, Respondent No.1 would be required to purchase 11,000 shares of ARBL since it was an admitted position that the said shares were not in possession of Respondent No.1. The learned Single Judge, by order dated 2 February 2005, dismissed the Arbitration Petition.
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On 31 March 2005, the Appellant preferred the present Appeal under Section 37 of the Arbitration Act. The Appeal was admitted on 4 October 2005. On 25 September 2007, each share of ARBL of face Value of Rs.10 was split to a face value of Rs. 2 per share. Thus, 11,000 shares of face value of Rs.10 would have become 55,000 shares of face value of Rs. 2. On 15 October 2008, bonus of 1:2 was issued by ARBL. Thus, 11,000 shares of face value Rs.10 would have become 82,500 shares of face value of...
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