Bombay High Court
Reliance Securities Limited vs Mr. Badrinath M. Bodhai & Ors on 10 March, 2011
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
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dgm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 107 OF 2011
Reliance Securities Limited .... Petitioner
vs
Mr. Badrinath M. Bodhai & ors. .... Respondents
Mr. Deepak Dhane for the petitioner.
Mr. Vikas Takalkar for respondent.
CORAM: ANOOP V. MOHTA, J.
DATE : March 10, 2011
ORAL JUDGMENT:
Heard finally.
The Petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, Arbitration Act) pending the Section 34 Petition filed in this Court i.e. Arbitration Petition No.90/2011.
The Court has admitted the same. In the result, the Award dated 18.08.2010 passed by the Arbitrator of National Stock Exchange (NSE) rendered unenforceable as contemplated under Section 36 of the Arbitration Act.
::: Downloaded on - 09/06/2013 17:04:44 :::2 arbp-107-11.sxw 2 Section 34 contemplates that an arbitral award shall be final and binding on the parties subject to Chapter VIII, that includes Section 36, which provides that where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (CPC) in the same manner as if it were a decree of the Court. One cannot overlook the fact that even after disposal of Section 34 Petition, there is remedy of an appeal available under Section 37 of the Arbitration Act.
Therefore, unless the award attains finality, there is no question of enforcement of the award which is passed by the NSE.
3 In this background, the present petition as filed under Section 9 for stay of operation of the award dated 18.08.2010 in question has become infructuous.
4 The learned counsel for the Petitioner has strongly relied on letter dated 9th July, 1999 issued by the Securities and Exchange Board of India (SEBI), the relevant portion of which reads as under:
"1 The Stock Exchange should on receipt of the arbitration ::: Downloaded on - 09/06/2013 17:04:44 ::: 3 arbp-107-11.sxw award, debit the amount of the arbitration award from the security deposit or any other monies of the member (against whom an award has been passed) and keep the amount in a separate account. Thereafter, a confirmation may be obtained from the concerned member that he has not filed any appeal within the stipulated time under Section 34 of the Arbitration and Conciliation Act and only then the payment may be made to the awardee. If an appeal is filed and the same is pending in a Court of law, the amount so kept in the separate account be paid to the awardee in accordance with the court orders.
2 At the time of debiting the amount, the Stock Exchange may if so desire inform him that the Exchange will not be liable for loss of interest, business, etc., in case the award is modified by the Court. The Exchange may also indicate that if any amount of interest is still payable to the awardee e.g. From the date of debiting the member's account till the date of payment of the award amount to the awardee, the same be recoverable from the concerned member and the Stock Exchange shall not be liable in this regard."
5 The Petitioner has also pointed out clauses 9.1 to 9.3 of Circular dated 11.08.2010 of SEBI which is reproduced as under:-
9.1 In case the arbitral/appellate arbitral award is in favour of the client, the stock exchange shall, on receipt of the same, debit the amount of the award from the security deposit or any other monies of the member (against whom an award has been passed) and keep it in a separate escrow account.
9.2 The stock exchange shall implement the ::: Downloaded on - 09/06/2013 17:04:44 ::: 4 arbp-107-11.sxw arbitral award, by making payment to the client, along with interest earned on the amount that has been set aside, as soon as the time for preferring an appeal before the appellate panel of arbitrators has expired and no appeal has been preferred.
9.3 The stock exchange shall implement the appellate arbitral award, by making payment to the client, along with interest earned on the amount that has been set aside, as soon as a. the time for making an application to a Court to set aside such appellate arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996 has expired, and no application has been made, or b. when an application to a Court to set aside such appellate arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, having been made, it has been refused by such Court, or c. an application to a Court to set aside such appellate arbitral award under section 34 of the Arbitration and Conciliation Act, 1996, having been made, but where no stay has been granted by such Court within a ::: Downloaded on - 09/06/2013 17:04:44 ::: 5 arbp-107-11.sxw period of three months from the date on which the party making that application had received the appellate arbitral awardee."
6 By a letter dated 3.01.2011 the NSE also intimated the Petitioner to get the stay order from the High Court within 90 days from the date of filing the petition, otherwise the amount awarded would be released to the constituent as per the arbitral award. The provisions which are not available under the Arbitration Act just cannot be imposed by SEBI by putting such clauses and/or by threatening the parties to get the order of stay of arbitral award from the Court.
7 Strikingly, as per the SEBI Circular, it is made compulsory that the party must intimate to the SEBI the stay order, if any, granted by the Court within a period of three months from the date on which the party makes such application. This is not the requirement under the Arbitration Act to obtain the specific stay of the impugned award from the Court. The admission of the Petition under Section 34 of the Arbitration Act itself rendered the award unenforceable.::: Downloaded on - 09/06/2013 17:04:44 :::
6 arbp-107-11.sxw 8 In view of the fact that the petition under Section 34 against the same award has been admitted, that itself resulted into the invocation of Section 37 as well as Section 35 of the Arbitration Act.
It means, as the award has not attained finality, there is no question of enforcement of the award by any party. The admission of Petition under Section 34 itself is a clear indication and intention that it is unenforceable unless it attains finality. In view of the above, though there is a circular issued as referred above, but it is sufficient for the SEBI/NSE to take note of the fact that Section 34 Petition against the impugned award has been admitted by the Court and that resulted into stay and implementation of the award for all the purposes. This order of admission need to be treated as an order of stay of the award for the purposes of further order of enforcement and/or execution proceedings. The amount lying in the escrow account therefore need not be released by Respondent no.3 to Respondent no.1 unless the award attains finality.
9 In view of this, the present Petition is disposed of. No order as to costs.
(ANOOP V. MOHTA, J.) ::: Downloaded on - 09/06/2013 17:04:44 :::