Bangalore District Court
Praveen L vs Angel Broking Ltd on 13 August, 2024
KABC170020602021
IN THE COURT OF LXXXVII ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU (CCH.88)
Present: Smt. Roopa K.N., B.Sc., LL.B.,
LXXXVII Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 13th day of August, 2024
Com.A.P.No.106/2021
PLAINTIFF : 1. Praveen L
Son of A.Lokesh
Aged about 33 years,
No.302, 3rd Floor, Aadhi Bhairavi Mansion,
Near Sathya Narayana Temple,
Chowdappa Layout, Yemalur, Bengaluru -
560 037.
(Rep by Sri.VUR Advocate)
-Vs-
DEFENDANTS : 1. Angel Broking Ltd
G-1, Ackruti Trade Centre, Mide Road
No.7, Andheri East, Mumbai -400 093.
2. A.V.Muralidharan
Presiding Arbitrator
Father's name not known to the plaintiff
Aged Major,
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Com.A.P.106/2021
C/o.National Stock Exchange of India Ltd.
Office No.217, 2nd Floor, DBS House,
26, Cunningham Road,
Bengaluru - 560 052.
3. B.P.Rao
Arbitrator
Father's name not known to the plaintiff
Aged Major,
C/O National Stock Exchange of India Ltd.
Office No.217, 2nd Floor, DBS House,
26, Cunningham Road,
Bengaluru - 560 052.
4. G.V.Srinivasa Murthy
Arbitrator
Father's name not known to the plaintiff
Aged Major,
C/O National Stock Exchange of India Ltd.
Office No.217, 2nd Floor, DBS House,
26, Cunningham Road,
Bengaluru - 560 052
(R-1 by Sri.S.N.Advocate)
(R-2 to 4 by Sole Arbitrator)
Date of Institution of the suit 13.12.2021
Nature of the suit (suit on Arbitration Petition,
pronote, suit for declaration & Shareholders Agreements
Possession, Suit for injunction
etc.)
Date of commencement of
recording of evidence
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Com.A.P.106/2021
Date on which judgment was 13.08.2024
pronounced
Total Duration Year/s Month/s Day/s
2 08 00
(ROOPA K.N.),
LXXXVII ACC & SJ (CCH-88),
(Commercial Court)
Bengaluru
-: J U D G M E N T :-
This petition is filed by the petitioner under Sec.34 of
The Arbitration And Conciliation Act, 1996 seeking set
aside of the impugned award dtd:15.09.2021 passed by the
appellate arbitral tribunal in appellate arbitration matter
No.NSEBEN/0021259/20-21/ARB/APPL allowing the 1 st
respondent's appeal for claim of Rs.1,29,823/-. The
petitioner has also challenged the impugned award
dtd:15.09.2021 passed by the appellate arbitral tribunal in
appellate arbitration matter No. NSEBEN/0021259/20-21/
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Com.A.P.106/2021
ARB/APPL and dismissed the cross appeal filed by this
petitioner for a claim of Rs.18,99,336/-.
2. The respondent herein appeared through his counsel
and filed objections to main petition. This court heard the
arguments of both petitioner and respondents on merits.
LCR was secured.
3. Heard both sides.
4. Now, the point that arises for my consideration is;
1. Whether, the petitioner has made out
reasonable grounds to set aside the two
appellate arbitral awards dtd:15.09.2021?
2. Whether, the present petition filed by the
petitioner under Sec.34 of the Arbitration and
Conciliation Act 1996 challenging two
different awards is maintainable?
3. What Order?
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Com.A.P.106/2021
5. My findings on the above Points are as under:
Point No.1 :"Does not arise for consideration".
Point No.2 : In the "Negative".
Point No.3: As per the final order for the
following reasons
-: R E A S O N S :-
6. Point Nos.1 & 2:- The respondent herein
approached National Stock Exchange of India towards the
dispute arose with the petitioner as a result of which NSEIL
appointed sole arbitrator and thereby referred the matter to
the arbitral tribunal. Before the tribunal the respondent
herein was the applicant who claimed itself to be a trading
member having its office at Mumbai and this respondent
who is an individual got registered himself as a constituent
of the respondent in the month of February 2015 and had
agreed to all the prescribed terms and conditions duly
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Com.A.P.106/2021
executed client registration forms and other mandatory
documents and his client code was P69793 for the purpose
of trading and maintenance of statement of accounts in his
name. Further, the petitioner at the time of execution of
KYC opted to receive electronic contract notes over internet
and trading confirmations over SMS and e-mails. The
respondent was sending trade summaries, fund position
and other transactions by way of SMS to the mobile number
of this petitioner. It was further the case of the respondent
herein who was the claimant before the tribunal that, this
petitioner did not informed his account position and
transaction details and this petitioner availed of margin
trading facility of this respondent to carryout trades in his
account. On 05.03.2020, the EOD this petitioner had debit
balance of Rs.6,59,487/- owing to the respondent and
holding shares worth of Rs.9,60,369/- in his account
towards shares of Yes Bank Ltd. The Yes Bank shares was
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Com.A.P.106/2021
witnessing serious marketing swings on and from
05.03.2020 and it was reported in the print and electronic
media that the Reserve Bank of India imposed a
moratorium on withdrawals from Yes Bank subject to a cap
and also superseded Banks Board of Directors. In view of
these developments, the price of Yes Bank shares was
impacted on 06.03.2020 and succeeding days. Further, it
was the case of the respondent that, respondents risk
anticipated a rapid slump in the share price of Yes Bank on
06.03.2020. The market emerged during the course of the
day on 06.03.2020, the Yes Bank share price which opened
at above Rs.33/- fallen to Rs.5.65/-, which amounts to loss
of 83% within a span of single trading day. The respondent
warned the petitioner about the volatility apprehended in
the market value of his bank portfolio, resulting in margin
shortage in his MTF account. However, this petitioner
made part payment of Rs.1,07,000/- on 05.03.2020 against
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Com.A.P.106/2021
outstanding debt of Rs.6,62,104/-. To mitigate the situation
and to avoid sale of his Yes Bank holding because of margin
shortage, respondent demanded payment from the
petitioner before 9.00 a.m. on 06.03.2020 and petitioner
was cautioned that, Yes Bank shares worth Rs.5,55,104/-
would be sold if payment was not made before 9.00 a.m. of
the same day. This petitioner made payment of
Rs.1,84,000/- at around 5.00 p.m. after closure of market
hours and thereby failed to make adequate payment despite
the media reports and the specific demand from the
applicant. After appropriating the sale proceeds the
respondent's ledger carried an outstanding balance of
Rs.1,24,723/- as on 18.01.2020 along with interest till
15.06.2020 at the contractual rate of 18%. According to the
respondent, the claim before the tribunal was for
Rs.1,29,823/- with interest at the rate of 18% p.a. from
16.06.2020 till the date of realization.
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Com.A.P.106/2021
7. The petitioner herein who was the respondent before
the tribunal alleged that, claim raised by the claimant
therein is not maintainable as claimant itself owes this
petitioner a sum of Rs.18,99,336/-. According to him, the
respondent / claimant liquidated the shares of this
petitioner unilaterally without giving due notice though he
remitted substantial sum of Rs.1,84,000/- on 06.03.2020
at 11.33 a.m. towards his debit balance. Prior notice was
not issued by the respondent herein before liquidation of
the petitioners share holdings. In view of this, the
petitioner herein raised counter claim for Rs.18,99,336/-
with interest at the rate of 18% p.a. before the arbitration
tribunal. The sole arbitrator after holding full fledged
enquiry passed an award on 06.01.2021 and thereby
rejecting the claim of the claimant / respondent and further
directed the claimant / respondent to pay Rs.9,45,000/- to
this petitioner with interest at the rate of 10% p.a.
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Com.A.P.106/2021
Aggrieved by this award, the respondent herein who was the
claimant before the tribunal preferred an appeal before the
panel of Appellate Arbitral Tribunal in appeal No.
NSEBEN/0021259/20-21/ARB/APPL. Similarly, the
petitioner who was the respondent before the tribunal also
preferred a cross appeal before the panel of Appellate
Arbitral Tribunal which was given with same appeal No.
NSEBEN/0021259/20-21/ARB/APPL. Both these appeals
were disposed off vide 2 different orders dtd:15.09.2021.
The appeal filed by the respondent herein who was the
claimant before the tribunal was allowed and the impugned
award passed by the sole arbitrator dtd:06.01.2021 was set
aside and the claim of the respondent herein against the
present petitioner for payment of debit balance of
Rs.1,29,823/- was admitted. On the same day the cross
appeal filed by the present petitioner came to be dismissed.
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Com.A.P.106/2021
It is these two awards passed by Appellate Arbitral Tribunal
is now under challenged.
8. It is the specific grounds of the petitioner that, the two
awards passed by the Appellate Arbitral Tribunal are not
substantial in the eye of law and are liable to be set aside
for the grounds under Sec.34(2)(b)(ii) and 34(2-A) of
Arbitration and Conciliation Act. In para 15.04 of the
petition the petitioner raised many contentions about the
appointment of respondent No.4 as a sole arbitrator and it
is his case that, he raised dispute regarding appointment of
respondent No.4 as an arbitrator since respondent No.4 did
not disclosed the facts that, he acted as an arbitrator in two
other similar cases involving unauthorized liquidation of
Yes Bank shares by respondent No.1. Further, it is
contended that, Appellate Arbitral Tribunal has erroneously
has held that, appeal preferred by the respondent No.1 was
within the period of limitation. According to petitioner as
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Com.A.P.106/2021
per clause 19(a) of NSE Byelaws, an appeal can be preferred
against the award of the arbitrator within a period of 1
month from the date of receipt of award. But, the arbitrator
erroneously held that, appeal was in time. It was further
contended that, tribunal failed to consider the fact that,
respondent No.1 liquidated the shares of Yes Bank without
giving any prior notice to this petitioner and with all
malafide intention respondent No.1 herein sent an SMS to
the petitioner at 8.45 a.m. asking him to make payment by
9.00 a.m. According to petitioner there was no time to
arrange adequate funds but, this fact was not considered by
the Appellate Arbitral Tribunal and hence, he sought for the
reliefs claimed in the petition.
9. The learned counsel for petitioner filed written
arguments along with list of authorities and also list of
documents. The written arguments submitted by the
counsel for petitioner herein is nothing but, replicate of
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Com.A.P.106/2021
averments of the petition. On the other hand, the counsel
for respondent though re-iterated the contents of objections
in his oral arguments mainly contended that, the present
petition filed by the petitioner under Sec.34 challenging the
two different awards passed by the Appellate Arbitral
Tribunal is not maintainable. Hence, on this ground
respondent sought for dismissal of the petition. For all
these reason point No.2 was raised by this court.
10. Before going to the fact as to whether the two awards
passed by Appellate Arbitral Tribunal dtd:15.09.2021
deserves to be set aside. This court has to adjudicate the
issue as to Whether, the present petition filed by the
petitioner under Sec.34 of the Act challenging the two
different awards is maintainable. Since this technical issue
is involved, in my opinion before discussing anything on
merits this court has to adjudicate Point No.2. The sole
arbitrator has passed an award on 06.01.2021 wherein the
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Com.A.P.106/2021
claim of the present respondent / claimant was rejected.
The very same award was challenged by the respondent
herein before the Appellate Arbitral Tribunal. Similarly,
the very same award was question by way of appeal by the
present petitioner. I have perused the two awards
dtd:15.09.2021. Admittedly, these two appeals are cross
appeals. The respondent herein who question the
impugned award dtd:06.01.2021 became successful as a
result of which the Appellate Arbitral Tribunal set aside the
award passed by the sole arbitrator and the claim of the
respondent herein against this petitioner was admitted for
Rs.1,29,823/- and the cross appeal filed by this petitioner
wherein this petitioner sought for enhancement in the
compensation awarded by the arbitrator, sought initiating
enquiry against respondent came to be dismissed in whole.
If the results of two orders passed by the Appellate Arbitral
Tribunal are perused no doubt the panel of arbitrators were
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Com.A.P.106/2021
constituted by National Stock Exchange of India Pvt. Ltd.,
and award was passed in both the appeals on 15.09.2021
but, if the proceedings of the two appeals, the discussions
made by the arbitrators in the two appeals and the opinion
expressed are perused, all are totally different. Admittedly,
no common order was passed by the 3 arbitrators but, two
different orders were passed on the very same day.
Similarly, if the results of the appeals are perused while
allowing the appeal filed by the respondent herein
challenging the award, the Appellate Arbitral Tribunal while
setting aside the award admitted the claim of the
respondent herein against the petitioner for Rs.1,29,823/-
and the cross appeal filed by this petitioner was dismissed.
This shows the results of the appeal and cross appeal are
totally different. When such being the case, as rightly
argued by the learned counsel for respondent in this case,
the petitioner herein ought to have filed two different
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Com.A.P.106/2021
petitions under Sec.34 of Arbitration and Conciliation Act
1996 and should have challenged the two awards of appeal
and cross appeal independently. Non filing of two different
petitions under Sec.34 is a valid ground for dismissal of the
present petition as the results of the appeal and cross
appeal are totally different. No doubt it is true that, this
court can set aside the award passed by the arbitrator or
Appellate Arbitral Tribunal if the same falls within the
purview of Sec.34 of the Act. But, no common order has
been passed in the appeal and cross appeal so that this
court can set aside the award passed in either of the
appeals. In view of these observations, I hold the present
petition is not maintainable. For the above reasons, I am of
the opinion that, when the petition itself is not maintainable
on the technical ground, question of going to the merits of
the case so as to set aside the award passed by the
arbitrator does not arise. Accordingly, Point No.1 "does
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Com.A.P.106/2021
not arise for consideration". Point No.2 answered in
the "Negative".
11. Point No.3:- For the aforesaid reasons, I proceed to
pass the following:
ORDER
The petition filed by the petitioner under Sec.34 of Arbitration and Conciliation Act, 1996 is hereby dismissed.
Office to issue Soft copy of this Judgment to both sides by e-mail if furnished.
(Dictated to the Stenographer, typed by her, corrected and then pronounced by me in open Court on this the 13th day of August, 2024.) (ROOPA K.N.) LXXXVII ACC & SJ (CCH-88) (Commercial Court) Bengaluru