Bombay High Court
Karvy Stock Broking Limited vs Securities Exchange Board Of India And ... on 7 September, 2021
Bench: A.A. Sayed, Riyaz Iqbal Chagla
Digitally
signed by
UDAY
UDAY PRABHAKAR
PRABHAKAR KAMBLI 1/8
KAMBLI Date: wp-1230-16.doc
2021.09.07
19:37:14
+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.1230 OF 2016
...
M/s. Karvy Stock Broking Limited ....Petitioner
V/S
Securities Exchange Board of India & Anr. ....Respondents
...
Mr. N.S. Nappinai a/w Navin P. Sachanandani i/b Mr. Noelle Park for the
Petitioner.
Mr. Shiraz Rustumjee, Senior Counsel with Mr. Arnav Mishra i/b M/s. K.
Ashar & Co. for Respondent No.1/SEBI.
Mr. Sanaya Dadachanji a/w Shantanu Ray i/b M/s. Manilal Kher Ambalal &
Co. for Respondent No.2.
...
CORAM : A.A. SAYED &
RIYAZ IQBAL CHAGLA, JJ.
DATED : 07 SEPTEMBER 2021
ORDER:
This Petition is filed invoking Article 226 of the Constitution. It seeks the following reliefs:
"a. That this Hon'ble Court may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ in the nature of a certiorari mandamus or any other appropriate writ, order or direction:-
i. Declaring Clause 9.3(c) of the SEBI Circular (Circular Ref No: CIR/MRD/DSA/24/2010), dated August 11, 2010 being Exhibit"B" issued by Respondent No.1 and Clause 13C(b)
(iii) of the Bye-laws issued by Respondent No.2, as being illegal and void ab initio with respect to Arbitration Uday.P.Kambli 1/8 2/8 wp-1230-16.doc proceedings initiated under the Arbitration and Conciliation Act, 1996 (prior to the amendment of 2015) and thus consequently unconstitutional;
ii. Directing the Respondents, their servants, agents and successors in office to recall and rescind Clause 9.3(c) of the SEBI Circular (Circular Ref.No.: CIR/ MRD/ DSA/ 24/ 2010), dated August 11, 2010 and Clause 13C(b)(iii) of the Bye-laws of the Respondent No.2 and forthwith cease and desist from enforcing the said provisions against the Petitioner;"
2. In paragraph 18 of the Petition, the Petitioner has averred as follows:
"18. The Petitioner submits that whilst it has initiated suitable proceedings for contesting Arbitration awards, including with respect to the case of Ashim Chaterjee, and the same is pending before various Courts, this Petition is filed only for the limited purpose of contesting the vires of the SEBI Circular and the NSE Byelaws and the illegal acts of the Respondents pursuant thereto of enforcing awards despite pendency of Arbitration Petition under S.34 of the Act of 1996, filed by the Petitioner."
3. Clause 9 of the Circular dated 11 August 2010 of the Respondent No.1-SEBI reads as under:
"9. Implementation of Arbitral Award in favour of Clients 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.Uday.P.Kambli 2/8 3/8
wp-1230-16.doc 9.2 The stock exchange shall implement the 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 period of three months from the date on which the party making that application had received the appellate arbitral award."
Clause 13C (b) of the bye-laws of Respondent No.2-National Stock Exchange reads as under:
13C(b) The Exchange shall make payment of the Appellate Arbitral Award to the awardee along with the interest earned on the amount that has been set aside as soon as
(i) the time for making an application to a court to set aside Uday.P.Kambli 3/8 4/8 wp-1230-16.doc such Appellate Arbitral Award under Section 34 of Act has expired and no application has been made, or
(ii) an application to a court to set aside such Appellate Arbitral Award under section 34 of the Act, having been made, has been refused by such Court, or
iii) an application to a court to set aside such Appellate Arbitral Award under Section 34 of the Act, having been made, but where no stay has been granted by such court within a period of three months from the date on which the party making that application had received the Appellate Arbitral Award."
(emphasis supplied)
4. The Writ Petition was filed on 2-03-2016. During the pendency of the Petition, the Supreme Court has delivered the judgment dated 15 March 2018 in the case of Board of Control for Cricket in India v/s. Kochi Cricket Pvt.Ltd.,1. In paragraphs 2,3,6,53 and 58 of the judgment, the Supreme Court has observed as follows:
"2. The present batch of appeals raises an important question as to the construction of Section 26 of the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as the "Amendment Act"), which reads as follows:
"Section 26. Act not to apply to pending arbitral proceedings. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this 1 2018 SCC OnLine SC 232 Uday.P.Kambli 4/8 5/8 wp-1230-16.doc Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."
3. The questions raised in these appeals require the mentioning of only a few important dates. In four of these appeals, namely, Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. and Ors.(SLP(C)No.19545-19546 of 2016), Arup Deb & Ors. v. Global Asia Venture Company (SLP(C) No. 20224 of 2016),M/sMaharashtra Airports Development Company Ltd. v. M/s.PBA Infrastructure Ltd. (SLP(C) No.5021 of 2017)and UB Cotton Pvt. Ltd. v. Jayshri Ginning and Spinning Pvt. Ltd. (SLP(C) No.33690 of 2017), Section 34 applications under the Arbitration and Conciliation Act,1996 (hereinafter referred to as the"1996 Act")were all filed prior to the coming into force of the Amendment Act w.e.f. 23 October, 2015. In the other four appeals, the Section 34 applications were filed after the Amendment Act came into force. The question with which we are confronted is as to whether Section 36, which was substituted by the Amendment Act, would apply in its amended form or in its original form to the appeals in question.
6. Section 36, which is the bone of contention in the present appeals, is set out hereinbelow:
PRE-AMENDED PROVISION "Section 36. Enforcement.
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 (5 of 1908) in the same manner as if it were a decree of the Court."Uday.P.Kambli 5/8 6/8
wp-1230-16.doc AMENDED PROVISION "Section 36. Enforcement.
(1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court.
(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub- section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:
Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908)."
53. From a reading of Section 26 as interpreted by us, it thus becomes clear that in all cases where the Section 34 petition is filed after Uday.P.Kambli 6/8 7/8 wp-1230-16.doc the commencement of the Amendment Act, and an application for stay having been made under Section 36 therein, will be governed by Section 34 as amended and Section 36 as substituted. But, what is to happen to Section 34 petitions that have been filed before the commencement of the Amendment Act, which were governed by Section 36 of the old Act? Would Section 36, as substituted, apply to such petitions? To answer this question, we have necessarily to decide on what is meant by "enforcement"
in Section 36. On the one hand, it has been argued that "enforcement" is nothing but "execution", and on the other hand, it has been argued that "enforcement" and "execution" are different concepts, "enforcement" being substantive and "execution" being procedural in nature."
58. Since it is clear that execution of a decree pertains to the realm of procedure, and that there is no substantive vested right in a judgment debtor to resist execution, Section 36, as substituted, would apply even to pending Section 34 applications on the date of commencement of the Amendment Act."
(emphasis supplied)
5. The principle of law laid down by the aforesaid decision is that not only Section 34 Applications which are filed after the date of 23 rd October, 2015 but also Section 34 Applications which are filed before 23 rd October, 2015 and which are pending as on 23 rd October, 2015 would be governed by Section 36, as amended/substituted. In the circumstances, the issues raised in the instant Petition are squarely covered by the decision of the Supreme Court in BCCI judgment (supra). We also note that the Supreme Court in paragraph 60 of the judgment dated 27 November, 2019, in Uday.P.Kambli 7/8 8/8 wp-1230-16.doc Hindustan Construction Company Ltd. vs. UoI, 2019 SCC Online 1520, has reiterated that the BCCI judgment (supra) continues to apply and holds the field. We do not find merit in the distinction sought to be made by learned Counsel for the Petitioner on the ground that the Section 34 Applications filed by the Petitioner were admitted matters, whereas before the Supreme Court in BCCI judgment (supra) that was not the case. What is said by the Supreme Court in the said judgment is that the Section 34 Application should be pending. Whether the same was admitted or not, is immaterial.
6. In light of the above, the Writ Petition is dismissed. There shall be no order as to cost.
(RIYAZ IQBAL CHAGLA,J.) (A.A.SAYED, J.)
Uday.P.Kambli 8/8