Bangalore District Court
Destimoney Securities Pvt. Ltd vs Dr. Indira Saranath on 23 September, 2020
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Sri N.Sunil Kumar Singh, B.Com., LL.B.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 23rd day of September 2020
COM.A.S.No.76/2016
Plaintiff Destimoney Securities Pvt. Ltd.
Tech Web Centre, 6th Floor,
Oshiwara, Behram Baug,
Jogeshwari (West),
Mumbai400 102.
Represented by Prasad Narayan
Kambhale
[By Sri. M.K, Advocate]
/v e r s u s/
Defendants: 1. Dr. Indira Saranath
R/o 501, Janardhan Sun City,
Seenappa Layout, New BEL Road,
Bangalore560094.
2. Mr. G.V.Srinivasa Murthy,
Presiding Arbitrator,
National Stock Exchange of India
Limited, No.101, DBS House
26, Cunningham Road,
Bangalore560052.
2
CT 1390_Com.A.S.762016_Judgment .doc
3. Mr. M.P.Kunju,
Arbitrator,
National Stock Exchange of India
Limited, No.101, DBS House
26,Cunningham Road,
Bangalore560 052.
4. Mr. HMA Khan,
Arbitrator,
National Stock Exchange of India
Limited, No.101, DBS House
26, Cunningham Road,
Bangalore560 052.
(By Sri.H.D, Advocate)
Date of Institution of the suit : 17/05/2016
Nature of the suit : Arbitration Suit
Date of commencement of:
recording of the evidence
Date on which the Judgment: 23/09/2020
was pronounced.
: Year/s Month/s Day/s
Total duration
04 04 06
JUDGMENT
This suit is filed by plaintiff against the defendants U/S.34 of the Arbitration & Conciliation Act 1996 R/W Rule 4 of the High Court of Karnataka Arbitration (Proceedings before the courts) Rules, 2001.
2. The facts in brief of plaintiff's case is that the plaintiff is company incorporated under Companies Act, 1956 and plaintiff formerly known as Dawnay Day AV Securities 3 CT 1390_Com.A.S.762016_Judgment .doc Private Limited and the said name was subsequently changed as Destimoney Private Limited. In the year 2008, the defendant No.1 retired from her service with the Indian Railways and opened trading account with the plaintiff to trade in securities and securities derivatives in the various segments available on the National Stock Exchange and Bombay Stock Exchange as well as Demat Account. At the time of opening such Demat Account with the plaintiff, 1 st defendant read over and understood the terms and conditions and executed necessary applications, agreements, subscription schemes for such trading account. The defendants have submitted statements and power of attorney to the plaintiff. Thus the plaintiff has allotted unique ID No.ISP25 to the 1st defendant. The submission of application for opening Demat Account by the 1 st defendant to the plaintiff is voluntary who has chosen to trade in Capital Markets and Derivatives Segments. All the information available in the application is disclosed to the 1 st defendant by the plaintiff at the time of opening Demat Account. After understanding all the conditions stipulated therein, the 1 st defendant has signed to the said forms and documents with the plaintiff. On 29/3/2014, the 1 st defendant has communicated to the plaintiff categorically that she has personally scrutinized the forms and statements executed by her in favour of plaintiff for opening Demat Account and subscription fee of Rs.11,236/ was paid by 1st defendant to the plaintiff on 14/08/2008.
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3. The 1st defendant is highly educated person and she is medical doctor and after retirement from government service at Western Railways by serving in senior position as Chief Medical Officer voluntarily approached plaintiff for opening of Demat Trading Account. The conversation with the 1st defendant by the plaintiff discloses that the 1 st defendant had quite knowledge and having all information about the other securities market. Later the 1 st defendant has paid a sum of Rs.90,000/ to the plaintiff towards maintenance charges to discharge the obligations in Demat Account. The 1st defendant has commenced trading in September 2008 and continued till June 2009. The said transactions were authorized and conducted by the 1 st defendant through plaintiff and plaintiff has dispatched all transaction statements, contract notes, ledger statements and other documents to the 1st defendant by registered email address confirming the trade taken up by the 1 st defendant with the plaintiff. The said statements and other documents were received by 1st defendant and they never challenged by the 1st defendant at any point of time. The 1st defendant opened her account in the year 2008 and physical shares were sent for dematerialization in the year 2009. Multiple trades were taken place, for which, SMS alerts were sent to the contact address and email ID of defendant No.1 by the plaintiff. The receipt of which was confirmed by the 1 st defendant at the regular intervals.
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4. On 25/6/2009, the 1st defendant made her first application to the plaintiff for conversion of some shares which were held in physical form into dematerialized form. Thereafter, the 1st defendant has submitted share certificates of various companies for conversion into dematerialized form. The 1st defendant has continued her stock business and securities from June 2009 till August 2012. All transactions were authorized and conducted by the 1 st defendant through the plaintiff. As such the 1st defendant is aware of the said transactions and she never disputed nor made claims with respect to said transactions. For transactions conducted through plaintiff by the 1st defendant, the contract notes, margin statements, DP transaction cum holding statements as well as ledger statements are sent through electronic media to the 1st defendant. But on 14/5/2009, 1 st defendant has sent an application to the plaintiff requesting not to send any trade confirmations or communication pertaining to her trade activities directly and same shall sent and communicated through relationship manager. Later 1st defendant continued her trading account with the plaintiff till August 2012 and stopped conducting transactions for the reasons best known to her. At the relevant point of time, the plaintiff has furnished complete details and particulars of transactions carried out by the plaintiff on behalf of the 1 st defendant to the email ID of 1st defendant. The National Stock Exchange and even Central Depository Services Limited send SMS alerts directly to customers about transactions 6 CT 1390_Com.A.S.762016_Judgment .doc taken place in the Demat Account. Further plaintiff sent Demat statement monthly to the customers which shows all the transactions take place in their Demat Account. The 1 st defendant received information from more than one source about the transactions taken place in her Demat Account. On 20/3/2012, the 1st defendant has paid Rs.3,98,000/ towards the ledger account and said transaction was disclosed in the Demat Account of the 1st defendant.
5. But the 1st defendant during November 2013 falsely claimed that there is some discrepancies in the number of shares held by 1st defendant in the Demat Account and sought for statement of Demat Account and directed the plaintiff to stop trading in her shares. The plaintiff has provided information required by the 1st defendant with respect to her Demat Account on 27/11/2013. After receipt of said details, the 1st defendant has filed false complaint before Securities and Exchange Board of India on 28/3/2014 and claimed a sum of Rs.1,06,00255/ towards alleged value of shares sold, Rs.25,00,000/ towards dividend lost, Rs.25,00,000/ towards mental trauma and Rs.10,00,000/ towards legal fees and SEBI has forwarded the said complaint to Bombay Stock Exchange and further the 1st defendant has filed similar complaint before National Stock Exchange. Thereafter the Bombay Stock Exchange has closed the complaint since National Stock Exchange has hearing the complaint of 1st defendant.
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6. The 1st defendant has filed such complaint before National Stock Exchange on 22/5/2014 which was forwarded to the plaintiff for response. But plaintiff has submitted his reply in response to the complaint of 1st defendant stating that the 1st defendant has used the shares as margin purpose for trading activities and some of the shares have been liquidated towards her settlement obligations arising out of her trading activities. Plaintiff also stated that there was no such wrongful activities taken place by plaintiff in the Demat Account of 1st defendant.
7. After submission of such reply to the complaint of 1 st defendant to the National Stock Exchange, the Investor Grievance Resolution Panel heard the matter on 18/7/2014 and passed an order in favour of 1 st defendant and directed the plaintiff to pay Rs.63,60,153/ towards claim of the 1 st defendant. Thus the 1st defendant as per byelaws of National Stock Exchange initiated arbitral proceedings No.CM/B 0004/2015 challenging the finding of Investor Grievance Resolution Panel. The arbitral tribunal appreciating the complete facts passed an award on 16/7/2015 directing the plaintiff to pay sum of Rs.79,50,191/ to the 1 st defendant. Aggrieved by the said award, the plaintiff has preferred an appeal which was heard by the panel of arbitrators and passed an award on 22/12/2015 confirming the orders passed by earlier arbitral tribunal and some of the claims of the 1st defendant was rejected by the panel of arbitrators in 8 CT 1390_Com.A.S.762016_Judgment .doc the said award. Aggrieved by the said award, the plaintiff has preferred an appeal before the Appellate Tribunal contending that the 1st defendant voluntarily opened Demat Account and trading on her own and 1st defendant being highly educated medical professional dealing with the said account on her own and deposited margin money of Rs.90,000/ to meet the obligations of trade and there is no such trade taken place without the instructions of the 1st defendant by the plaintiff. After appreciating the evidence of both the sides, the Appellate Tribunal has passed an award on 16/2/2016 and upheld the award passed by the Panel of Arbitrators on 22/12/2015 and rejected some claims of the 1 st defendant and not set aside the award passed on 22/12/2015. Thus aggrieved by the award of Appellate Tribunal the present suit is filed by the plaintiff on the following grounds.
8. The impugned award passed by the Appellate Tribunal is perverse and suffers from patent errors which are not sustainable. The award passed by the Appellate Tribunal is against to the Public Policy of India and the said award is passed in mechanical manner without considering the pleadings and material evidence available on record. It is also contended by the plaintiff that the Tribunal has failed to provide any reasons in appreciating the evidence and documents of both the sides. It is also contended that the Tribunal has applied the wrong test for determining the validity or otherwise of the decision challenged by the 9 CT 1390_Com.A.S.762016_Judgment .doc plaintiff. In the finding of the Appellate Tribunal no such fault is found in trading the plaintiff in Demat Account of the 1st defendant. The Tribunal has failed to appreciate that the defendant No.1 has received multiple fund payments from plaintiff through her bank account. Without concluding the finding the claim of the plaintiff was dismissed by the Arbitral Tribunal is not justifiable. The tribunal has not considered the evidence of plaintiff in the right prospective. The Appellate Tribunal has failed to appreciate that the defendant No.1 has held shares and securities over several years and she is fully aware of transactions taken place in her Demat Account through the plaintiff. The tribunal has failed to consider that 1st defendant is submitting annual accounts to the Income Tax Department, wherein she has submitted transaction taken place in her Demat Account and she has knowledge about the transaction taken place in her Demat Account through the plaintiff. Thus the award passed by the Appellate Tribunal dated 16/2/2016 is opposed to pubic policy as well as fundamental policy of India. Thus the arbitral award passed by Appellate Tribunal dated 16/2/2016 is liable to be set aside and prayed to set aside the impugned award dated 16/2/2016 passed by Appellate Tribunal in respect to Arbitration Case No.CM/B0004/2015 and prayed to decree the suit of the plaintiff.
9. The brief averments of written objections and statement filed by 1st defendant in the present suit is that the 10 CT 1390_Com.A.S.762016_Judgment .doc present suit is misconceived and not maintainable. The award passed by Arbitral Tribunal dated 16/2/2016 is not opposed to the public policy as challenged by the plaintiff. The suit is motivated for a litigation and not to protect the statutory rights of plaintiff and it is to harass the 1 st defendant herein and abuse the process of law. The 1 st defendant is aged 68 years and she is doctor by profession and she was in senior position as Medical Officer in Indian Railways and she is senior citizen. The Appellate Tribunal has confirmed the award of Arbitral Tribunal and awarded Rs.79,50,191/ against claim of the 1 st defendant in sum of Rs.1,66,00,255/. The plaintiff has filed present suit to set aside the said award on several false statement and misleading averments which is not sustainable. The complaint lodged by 1st defendant before SEBI itself shows that there is violation of various regulations by the 1st defendant. The Investor Grievance Resolution Panel has awarded sum of Rs.63,60,153/ on 18/8/2014 and directed the plaintiff to pay said sum along with interest. Later the National Stock Exchange has referred the matter to Arbitral Tribunal, which has also confirmed that the plaintiff is liable to pay a sum of Rs.79,50,191/ to the 1 st defendant. The said award was confirmed by Appellate Tribunal by order dated 16/2/2016 and directed the plaintiff to pay Rs.79,50,191/. since there is violation of circular of SEBI by the plaintiff. The various circulars of SEBI discloses that they shall follow procedures prescribed under SEBI, otherwise it will lead to 11 CT 1390_Com.A.S.762016_Judgment .doc violation of the said circulars and they are liable for the consequences. The National Stock Exchange notification prohibits the fraudulent and unfair trade practice relating to securities in the market and also prohibits fraudulent and unfair trade practice by the brokers of stock exchange.
10. In the year 2008, the plaintiff being the Stock Exchange Broker persuaded defendant No.1 to open Demat Account to trade in shares and securities and plaintiff has deputed one of their relationship manager to execute such documents. Accordingly executed documents and opened Demat Account in her name and she has paid Rs.90,000/ believing the words of the plaintiff to maintain the Demat Account on 24/6/2008. The 1 st defendant has paid Rs.3,98,000/ to the plaintiff for purchase of shares of various companies in her name and she was dealing in the shares and securities in the Demat Account through plaintiff and purchased some shares in March 2012. But 1 st defendant did not authorized the plaintiff to sell shares without her consent. Without having any instructions from the 1st defendant, plaintiff has transacted in Demat Account and made some trading, due to which plaintiff has sustained loss. Plaintiff never sent any proposed contract notes to the 1st defendant physically nor have got any instructions for trade on behalf of 1st defendant in the Demat Account. The Power of Attorney dated 12/8/2008 relied upon by the plaintiff was granted by 1st defendant herein only to facilitate 12 CT 1390_Com.A.S.762016_Judgment .doc the completion of transaction in Demat Account. There was no such specific instructions given by 1st defendant to the plaintiff to deal with the Demat Account of 1 st defendant independently. Since there is some irregularities in the Demat Account of 1st defendant maintained by plaintiff, she has lodged complaint before SEBI on 28/3/2014 and SEBI registered complaint and after receiving the explanation by plaintiff passed an award directing the plaintiff to pay sum of Rs.63,60,153/ against the claim of 1 st defendant in a sum of Rs.1,66,00,255/. The plaintiff could not have traded in Demat Account without the instructions of 1st defendant. Aggrieved by the said order of arbitration mechanism of National Stock Exchange in Arbitral Case No.CM/B 0004/2015, the plaintiff has preferred an appeal before Arbitral Tribunal which has passed an award on 16/7/2015 directing the plaintiff to pay sum of Rs.79,50,191/ to the 1 st defendant and aggrieved by the said order of Arbitrators, plaintiff has preferred an appeal before Appellate Tribunal which has confirmed the orders of Arbitral Tribunal vide Order dated 16/2/2016. Hence the plaintiff is liable to pay said amount along with interest awarded to the 1 st defendant and present suit is not maintainable. Considering all the relevant aspects and evidence on record, the Appellate Tribunal passed an award which has to be honoured by the plaintiff and present suit is not maintainable to set aside the award passed by the Appellate Tribunal on 16/2/2016 and prayed to dismiss the suit of the plaintiff with cost.
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11. Heard arguments of both the sides.
12. The points that arise for consideration are:
1. Whether the plaintiff has made out sufficient grounds to set aside the award passed by the Appellate Tribunal in Appeal No.CM/B0004/2015 dated 16/2/2016 U/S.34 of Arbitration & Conciliation Act 1996?
2. What order?
13. My answer to the above points are as follows:
POINT No.1 : Negative.
POINT No.2 : As per final order for the following:
REASONS
14. POINT No.1 : Facts of the plaintiff's case is that the plaintiff is a company incorporated under Companies Act, 1956 and plaintiff formerly known as Dawnay Day AV Securities Private Limited and the said name was subsequently changed as Destimoney Private Limited. In the year 2008, the defendant No.1 retired from her service with the Indian Railways and opened trading account with the plaintiff to trade in securities and securities derivatives in the various segments available on the National Stock Exchange and Bombay Stock Exchange as well as Demat Account. At the time of opening such Demat Account with the plaintiff, 1 st defendant read over and understood the terms and conditions 14 CT 1390_Com.A.S.762016_Judgment .doc and executed necessary applications, agreements, subscription schemes for such trading account. The defendants have submitted statements and power of attorney to the plaintiff. Thus the plaintiff has allotted unique ID No.ISP25 to the 1st defendant. The submission of application for opening Demat Account by the 1 st defendant to the plaintiff is voluntary who has chosen to trade in Capital Markets and Derivatives Segments. All the information available in the application is disclosed to the 1 st defendant by the plaintiff at the time of opening Demat Account. After understanding all the conditions stipulated therein, the 1 st defendant has signed to the said forms and documents with the plaintiff. On 29/3/2014, the 1 st defendant has communicated to the plaintiff categorically that she has personally scrutinized the forms and statements executed by her in favour of plaintiff for opening Demat Account and subscription fee of Rs.11,236/ was paid by 1st defendant to the plaintiff on 14/08/2008.
15. The 1st defendant is highly educated person and she is medical doctor and after retirement from government service at Western Railways by serving in senior position as Chief Medical Officer voluntarily approached plaintiff for opening of Demat Trading Account. The conversation with the 1st defendant by the plaintiff discloses that the 1 st defendant had quite knowledge and having all information about the other securities market. Later the 1 st defendant 15 CT 1390_Com.A.S.762016_Judgment .doc has paid a sum of Rs.90,000/ to the plaintiff towards maintenance charges to discharge the obligations in Demat Account. The 1st defendant has commenced trading in September 2008 and continued till June 2009. The said transactions were authorized and conducted by the 1 st defendant through plaintiff and plaintiff has dispatched all transaction statements, contract notes, ledger statements and other documents to the 1st defendant by registered email address confirming the trade taken up by the 1 st defendant with the plaintiff. The said statements and other documents were received by 1st defendant and they never challenged by the 1st defendant at any point of time. The 1st defendant opened her account in the year 2008 and physical shares were sent for dematerialization in the year 2009. Multiple trades were taken place, for which, SMS alerts were sent to the contact address and email ID of defendant No.1 by the plaintiff. The receipt of which was confirmed by the 1 st defendant at the regular intervals.
16. On 25/6/2009, the 1st defendant made her first application to the plaintiff for conversion of some shares which were held in physical form into dematerialized form. Thereafter, the 1st defendant has submitted share certificates of various companies for conversion into dematerialized form. The 1st defendant has continued her stock business and securities from June 2009 till August 2012. All transactions were authorized and conducted by the 1 st defendant through 16 CT 1390_Com.A.S.762016_Judgment .doc the plaintiff. As such the 1st defendant is aware of the said transactions and she never disputed nor made claims with respect to said transactions. For transactions conducted through plaintiff by the 1st defendant, the contract notes, margin statements, DP transaction cum holding statements as well as ledger statements are sent through electronic media to the 1st defendant. But on 14/5/2009, 1 st defendant has sent an application to the plaintiff requesting not to send any trade confirmations or communication pertaining to her trade activities directly and same shall sent and communicated through relationship manager. Later 1st defendant continued her trading account with the plaintiff till August 2012 and stopped conducting transactions for the reasons best known to her. At the relevant point of time, the plaintiff has furnished complete details and particulars of transactions carried out by the plaintiff on behalf of the 1 st defendant to the email ID of 1st defendant. The National Stock Exchange and even Central Depository Services Limited send SMS alerts directly to customers about transactions taken place in the Demat Account. Further plaintiff send Demat statement monthly to the customers which shows all the transactions take place in their Demat Account. The 1 st defendant received information from more than one source about the transactions taken place in her Demat Account. On 20/3/2012, the 1st defendant has paid Rs.3,98,000/ towards the ledger account and said transaction was disclosed in the Demat Account of the 1st defendant.
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17. But the 1st defendant during November 2013 falsely claimed that there is some discrepancies in the number of shares held by 1st defendant in the Demat Account and sought for statement of Demat Account and directed the plaintiff to stop trading in her shares. The plaintiff has provided information required by the 1st defendant with respect to her Demat Account on 27/11/2013. After receipt of said details, the 1st defendant has filed false complaint before Securities and Exchange Board of India on 28/3/2014 and claimed a sum of Rs.1,06,00255/ towards alleged value of shares sold, Rs.25,00,000/ towards dividend lost, Rs.25,00,000/ towards mental trauma and Rs.10,00,000/ towards legal fees and SEBI has forwarded the said complaint to Bombay Stock Exchange and further the 1st defendant has filed similar complaint before National Stock Exchange. Thereafter the Bombay Stock Exchange has closed the complaint since National Stock Exchange has hearing the complaint of 1st defendant.
18. The 1st defendant has filed such complaint before National Stock Exchange on 22/5/2014 which was forwarded to the plaintiff for response. But plaintiff has submitted his reply in response to the complaint of 1st defendant stating that the 1st defendant has used the shares as margin purpose for trading activities and some of the shares have been liquidated towards her settlement obligations arising out of 18 CT 1390_Com.A.S.762016_Judgment .doc her trading activities. Plaintiff also stated that there was no such wrongful activities taken place by plaintiff in the Demat Account of 1st defendant.
19. After submission of such reply to the complaint of 1st defendant to the National Stock Exchange, the Investor Grievance Resolution Panel heard the matter on 18/7/2014 and passed an order in favour of 1 st defendant and directed the plaintiff to pay Rs.63,60,153/ towards claim of the 1 st defendant. Thus the 1st defendant as per byelaws of National Stock Exchange initiated arbitral proceedings No.CM/B0004/2015 challenging the finding of Investor Grievance Resolution Panel. The arbitral tribunal appreciating the complete facts passed an award on 16/7/2015 directing the plaintiff to pay sum of Rs.79,50,191/ to the 1st defendant. Aggrieved by the said award, the plaintiff has preferred an appeal which was heard by the panel of arbitrators and passed an award on 22/12/2015 confirming the orders passed by earlier arbitral tribunal and some of the claims of the 1 st defendant was rejected by the panel of arbitrators in the said award. Aggrieved by the said award, the plaintiff has preferred an appeal before the Appellate Tribunal contending that the 1 st defendant voluntarily opened Demat Account and trading on her own and 1st defendant being highly educated medical professional dealing with the said account on her own and deposited margin money of Rs.90,000/ to meet the 19 CT 1390_Com.A.S.762016_Judgment .doc obligations of trade and there is no such trade taken place without the instructions of the 1st defendant by the plaintiff. After appreciating the evidence of both the sides, the Appellate Tribunal has passed an award on 16/2/2016 and upheld the award passed by the Panel of Arbitrators on 22/12/2015 and rejected some claims of the 1 st defendant and not set aside the award passed on 22/12/2015. Thus aggrieved by the award of Appellate Tribunal the present suit is filed by the plaintiff.
20. On going through the award passed by Arbitral Tribunal and Arbitral Appellate Tribunal and further on going through the pleadings of both the sides, it is not in dispute that the plaintiff is company incorporated under companies Act and they are dealing in business of securities and shares. It is also not in dispute that substantial number of shares and securities were dealt by plaintiff under the instructions of 1st defendant from 2008 to 2013. But the 1 st defendant contended that without her instruction and knowledge, the plaintiff has carried on some business of shares in her Demat Account which caused loss to her. Thus she has complained to National Stock Exchange for violation of circulars of SEBI in dealing with the shares of 1st defendant by plaintiff in her Demat Account. Admittedly on the said complaint explanation of both the sides was called by SEBI and after going through the documents of both the sides an award was passed by National Stock Exchange Investor Grievance 20 CT 1390_Com.A.S.762016_Judgment .doc Resolution Panel on 18/7/2014 and awarded sum of Rs.63,60,153/ payable by plaintiff to the 1 st defendant and aggrieved by the said award an arbitration was preferred and the arbitrators were appointed by National Stock Exchange who have heard the matter in proceeding No.CM/B 0004/2015 and the Arbitral Tribunal constituted by National Stock Exchange passed an award on 16/7/2015 directing the plaintiff to pay sum of Rs.79,50,191/ to the 1 st defendant and aggrieved by the said award admittedly the present plaintiff has preferred an appeal before Arbitral Appellate Tribunal which has passed an award on 16/2/2016 confirming an order passed by Arbitral Tribunal and directed the plaintiff herein to pay sum of Rs.79,50,191/ to the 1 st defendant. But in the said award the counter claim of plaintiff towards loss of bonus and dividend Rs.25,00,000/, mental trauma of Rs.25,00,000/ and cost of arbitration proceeding Rs.10,00,000/ was rejected. These facts are not in dispute between parties in the present suit.
21. After passing of such award by Arbitral Appellate Tribunal, the plaintiff herein aggrieved by said award filed the present suit claiming that the award passed by the Arbitral Appellate Tribunal is opposed to public policy and contrary to the arbitral clause mentioned in the agreement between plaintiff and 1st defendant. Thus it is prayed to set aside the said arbitral award.
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22. On the other hand the learned counsel for 1 st defendant has argued that the Arbitral Appellate Tribunal considering the relevant facts and circumstances and taking into consideration the documents and evidence placed before them and considering the award passed by the Arbitral Tribunal confirmed the same which is not opposed to the public policy of India nor exceeded the limits of arbitrators. Hence the same cannot be set aside.
23. On going through the arbitral award passed by the arbitrators appointed by National Stock Exchange they have considered the arguments of both the sides and after perusal of available evidence they have held that the plaintiff herein not complied with SEBI circulars for having followed the requirements of stock brokers transactions as prescribed by SEBI and it is also contended that the plaintiff being the stock broker registered under National Stock Exchange ought to have followed the circular issued by SEBI and ought to have transacted in terms of the said circulars and would have provided the statement of account and statement of holding over quarter end to the 1st defendant who was holding the Demat Account with the plaintiff. It is also apparent on the face of the said order that the plaintiff herein being the stock broker who was managing the Demat Account of the 1 st defendant without following the instructions of the 1 st defendant has dealt with the shares held by her and caused loss to her and also not followed the circulars issued by SEBI 22 CT 1390_Com.A.S.762016_Judgment .doc in dealing with such shares and securities of 1st defendant in her Demat Account. Considering all these aspects, the Arbitral Tribunal and Arbitral Appellate Tribunal have passed an award directing the plaintiff herein to pay sum of Rs.79,50,191/ which is 75% of the value of shares which were sold by plaintiff in the Demat Account of 1 st defendant and the orders passed by both the Arbitral Tribunal and Arbitral Appellate Tribunal cannot be considered as opposed to public policy as provided U/s.34 of Arbitration & Conciliation Act. On hearing both the sides, it cannot be held that the Arbitral Tribunal or Arbitral Appellate Tribunal have exceeded the limits prescribed under the Act. Considering all the relevant facts such an award was passed by both the Arbitral Tribunal and Arbitral Appellate Tribunal.
24. In the grounds of the present suit the plaintiff contended that award passed by both Arbitral Tribunal and Arbitral Appellate Tribunal are perverse and suffers from cogent errors on the face of record. But as provided U/S.34 of Arbitration & Conciliation Act this court cannot go into the merits of the case or reappreciate the evidence and documents placed by both the sides before the Arbitral Tribunal or Arbitral Appellate Tribunal in passing such award. The arbitral Tribunal or Arbitral Appellate Tribunal have exceeded their limits or award passed by them is opposed to the provisions of Sec.34 of Arbitration & Conciliation Act alone has to be considered by this court. The 23 CT 1390_Com.A.S.762016_Judgment .doc other grounds which are mentioned in the present suit by the plaintiff cannot be considered, since the award passed by the Arbitral Tribunal and Arbitral Appellate Tribunal are not opposed to the public policy or exceeded their limits as provided U/S.34 of Arbitration & Conciliation Act.
25. In this regard learned counsel for plaintiff has relied upon decisions reported in (2014) 9 SCC 212 which is the case of Anand Brothers Private Limited v/s. Union of India and others and also relied upon unreported decision in Civil Appeal No.2153 of 2010 which is the case of M/s. Dyna Technologies Private Limited v/s. M/s. Crompton Greaves Limited and also relied upon unreported decision in Civil Appeal No.4779 of 2019 which is the case of Ssangyong Engineering & Construction Company Limited v/s. National Highways Authority of India. I have gone through the principles laid down in the said decisions which are not applicable to the present facts and circumstances of this case. In the present suit the plaintiff has challenged the award passed by the Arbitral Appellate Tribunal and also arbitrators on the ground opposed to the public policy. On careful perusal of the award passed by the arbitrators and Arbitral Appellate Tribunal while distinguishing between inadequacy and adequacy, have given proper finding and reasons in awarding such amount payable by plaintiff to the 1st defendant and award passed by the arbitrators and 24 CT 1390_Com.A.S.762016_Judgment .doc Arbitral Appellate Tribunal is well reasoned and it is not opposed to the fundamental policy of India. Hence the decisions relied upon by learned counsel for plaintiff are not applicable to the present facts and circumstances of this case. While arguing the learned counsel for 1 st defendant has relied upon decisions reported in AIR 2019 SC 1168 which is the case of MMTC Limited v/s. Vedanta Limited, AIR 2015 SCC 620 which is the case of Associated Builders v/s. Delhi Development Authority. I have gone through the principles laid down in the said decisions, wherein it is specifically mentioned that while considering the present suit on merits only the provisions prescribed U/S.34 of Arbitration & Conciliation Act has to be considered and this court has no authority to reappreciate the evidence and documents placed before the arbitrators and Arbitral Appellate Tribunal by both the sides. On careful perusal of the award passed by arbitrators and Arbitral Appellate Tribunal, the plaintiff not able to prove the grounds mentioned by them in the present suit under provisions of Section 34 of Arbitration & Conciliation Act. Thus it can be considered that award passed by the arbitrators and Arbitral Appellate Tribunal is not opposed to the public policy or exceeding the limits of the arbitrators as prescribed under the Act.
26. In view of the above said discussions, I am of the opinion that the plaintiff has not made out any cogent case 25 CT 1390_Com.A.S.762016_Judgment .doc that the impugned arbitral award passed by the arbitrators and Arbitral Appellate Tribunal is opposed to the public policy and arbitrators have exceeded their limits in passing such award. The plaintiff has not made out cogent grounds to set aside the arbitral award and from the said grounds it cannot be attributed that the learned arbitrators are perverse, unfair or unreasonable in passing such award and plaintiff has utterly failed to prove and establish that the award passed by the arbitrators falls within the provisions prescribed U/S.34 of Arbitration & Conciliation Act 1996. On the other hand the material placed by the 1st defendant and also arguments submitted by learned counsel for 1 st defendant clearly discloses that the 1st defendant is entitled for the award amount as mentioned in the award passed by arbitrators and Arbitral Appellate Tribunal. Accordingly, I hold point No.1 in the negative.
27. POINT No.2 : In view of my discussion on point No.1 above, I proceed to pass following:
ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 read with Rule 4 of the High Court of Karnataka Arbitration (proceedings before the courts) Rules, 2001 is hereby dismissed.
In view of the circumstances of this case, the parties are directed to bear their own costs.26
CT 1390_Com.A.S.762016_Judgment .doc Draw decree accordingly.
[Dictated to the Judgment Writer; transcript thereof corrected, initialed and then pronounced by me, in the Open Court on this the 23rd day of September 2020] [N. Sunil Kumar Singh] LXXXIII Additional City Civil Judge.
BENGALURU.
27 CT 1390_Com.A.S.762016_Judgment .doc Order pronounced in open court Vide separate judgment ORDER The suit filed by the plaintiff U/S.34 of Arbitration & Conciliation Act 1996 read with Rule 4 of the High Court of Karnataka Arbitration (proceedings before the courts) Rules, 2001 is hereby dismissed.
In view of the circumstances of this case, the parties are directed to bear their own costs.
Draw decree accordingly.
LXXXIII Addl. C.C. & S.J, Bengaluru