MTI Share and Stock Brokers Ltd. vs Arun Kumar M. Jain and Others

Vinod K. Sharma, J.—This petition u/s 34 of Arbitration and Conciliation Act, 1996, has been filed to challenge the arbitral award dated 25.3.2011 in the Arbitration Matter No. 3A of 2011. The 1st respondent/claimant filed claim petitioner before the Arbitration Tribunal on 6.7.2010 against the petitioner company, seeking compensation at the market value of the shares sold by the petitioner company without the consent of the 1st respondent.

The admitted facts are, that Mr. Arun Kumar M. Jain was the registered owner of 6950 shares of Hasti Finance Limited, which were in custody of MTL Share and Stock Brokers Limited/petitioner company.

The Branch Office of MTL Share and Stock Brokers Limited at Chennai was closed with effect from 1.4.2008 and the person, who was in charge of the Chennai Branch surrendered the shares to its Delhi branch with the request to transfer the shares standing in the name of respondent No. 1 to his another DP account. As the claimant did not hear anything from the petitioner company for long time about his shares, a request was made to the petitioner company to transfer the shares to his DP account.

The petitioner company failed to take any action on the request of respondent No. 1, which forced him to file a complaint with the Bombay Stock Exchange regarding inaction of the petitioner company to transfer the share to his DP account. In the counter filed by the petitioner company, it was admitted, that there was no debit balance of respondent No. 1.

On the failure of petitioner company to accept the request of respondent No. 1 to transfer the shares in his DP account, he invoked the Arbitration clause. On the appointment of learned Arbitrator, respondent No. 1 filed a claim petition before the learned Arbitrator. The Arbitration was conducted as per the rules and regulations of the Bombay Stock Exchange.

Learned Arbitrator, taking note of the averments made in the claim petition and also evidence led before him, recorded a finding of fact, that MTL Share and Stock Brokers Limited transferred the shares of respondent No. 1 without his consent or authority, therefore, it was liable to pay the listed price of shares wrongly transferred.

The price of shares was calculated at Rs. 1,78,657/- (Rupees One Lakh Seventy Eight Thousand Six Hundred and Fifty Seven only). This amount was directed to be paid along with interest @ 12% p.a. from the date of reference till realization under the award.

Under the Rules of Bombay Stock Exchange, remedy of appeal is provided against the award of the learned Arbitrator. In the appeal, the award was upheld and the order passed by the learned Arbitrator was confirmed, but interest was reduced from 12% to 9%.

The impugned award is challenged by the learned counsel for the petitioner, on the ground, that the claim petition filed by respondent No. 1 was beyond the period of limitation, as it was open to the respondent to seek reference of dispute within six months of filing of the complaint under Rule 252(ii) of the Bombay Stock Exchange, but learned Arbitrator entertained the claim petition, which was barred by limitation.

Therefore, the award suffers from error apparent on the face of record. It was also contended by the learned counsel for the petitioner, that the impugned award cannot be sustained, as the delay in filing of the complaint was condoned by the learned Arbitrator by placing reliance on the circular of Bombay Stock Exchange, which had no force of law, having not been notified in the gazette. Furthermore, the circular did not have any retrospective effect, thus, was not applicable to respondent No. 1.

The contention of learned counsel for the petitioner further was that entertainment of claim, which was barred by limitation shows, that the award suffers from error apparent on the face of record, therefore, is against the public policy, thus, liable to be set aside.

Learned counsel for the respondents opposed the petition by contending, that the contentions raised by the learned counsel for the petitioner are totally misconceived. That reading of arbitral award shows, that the claim petition was filed by respondent No. 1 within six months of filing of complaint, therefore, could not be said to be time barred. Therefore, there was no question of condoning any delay or making reference to the circular, alleged to be having only prospective operation.

In the alternative, it was contended by the learned counsel for the respondents, that the circular dealt with the procedural right, therefore, was applicable to the proceedings, which were initiated after coming into force of circular. This circular gave power to the learned Arbitrator to condone the delay.

It was also contended, that the decision of the learned Arbitrator to condone the delay cannot be a ground u/s 34 of the Arbitration and Conciliation Act, to challenge the award, though in the present case, this question does not arise, as the claim petition filed by the respondent No. 1, was within limitation of six months, as held in appeal.

Learned counsel for the respondents also referred to the award, which is a speaking award, dealing with the contentions of the parties. A positive finding of fact was recorded, that the petitioner company was guilty of transferring shares of the respondent No. 1 without his consent, therefore, liable to pay the present price of the shares. The amount calculated and price fixed is not challenged, whereas interest stands reduced to 9% from 12% in appeal.

On consideration, I find no force in this petition. The positive finding of fact has been recorded, that the petitioner is guilty of transferring shares of the respondent No. 1 without his consent for which it is liable to pay the present market value along with interest. It has also been recorded, that the claim petition was filed within six months of the knowledge of the sale, therefore, the contention of learned counsel for the petitioner that the order suffers from error apparent on the face of record or is in violation of public policy, cannot be accepted.

It cannot be said, that the impugned award is hit by Section 34(ii)(iv) of the Act, nor the award is against the public policy. No other point was urged before this Court. Consequently, this petition, being devoid of any merit, is ordered to be dismissed. No costs.