Delhi District Court
National Stock Exchange Of India vs Board Of Trustees Of Port Of Marmugao ... on 20 August, 2010
IN THE COURT OF SH. SANJEEV JAIN
ADDITIONAL DISTRICT JUDGE9 (Central): DELHI
Suit no. 251/09
ID No.02401C0370302008
Mr.Chandrachud Majumdar
122/169, Vijay Path
Aggarwal Farm,
Mansarovar,
Jaipur302020
.. Petitoner.
Vs.
1.National Stock Exchange of India
th
4 floor, Jeevan Vihar Building
Parliament Street,
New Delhi110001
(Through its authorized signatory)
2.M/s.Indianbulls Securities Ltd.
PhV, Udyog Vihar,
Gurgaon122 001
(Through its Director/M.Director)
3.Mr.Ravi Kant.
(Sole Arbitrator)
National Stock Exchange of India
th
4 Floor, Jeevan Vihar Building,
Parliament Street,
New Delhi110001
Suit no.251/09 1
Date of filing of institutions : 11.03.08
Final Arguments heard on : 17.08.10
Date of decision : 20.08.10
ORDER
1 By this order, I propose to dispose off the petition filed by petitioner Sh.Chandrachur Majumdar under section 34 of Arbitration and Conciliation Act 1996 (herein after referred as "Arbitration Act" in short) for setting aside award dt.28.11.07 passed by sole arbitrator Sh.Ravi Kant.
2 The brief facts relevant for disposal of objections are as under:
As per the case of the petitioner, respondent no.1 National Stock Exchange of India is the appointing authority of sole arbitrator Sh.Ravi Kant i.e. respondent no.3. The main dispute is between the petitioner and respondent no.2. As per the petitioner, he opened DMat account with respondent no.2 after depositing certain amounts for investment/reinvestment in shares. Respondent no.2 illegally caused losses to the petitioner and therefore, he filed an application before respondent no.1 for Resolution of dispute by way of arbitration. Notice was issued to respondent no.2. Respondent no.1 appointed respondent no.3 as the sole arbitrator.
3 Plaintiff filed a claim for Rs.3,44,702/ before the arbitrator which includes loss of principal amount as Rs.2,28,566/, interest @ 48.5% as Rs.1,10,854/, incidental expenses Rs.2500/, salary for the period of leave which Suit no.251/09 2 he was forced to take Rs.2782/. In claim petition, petitioner alleged that he deposited an amount of Rs.3,80,000/ with respondent no.2 in June 2006. Respondent no.2 started trading both in cash and F&O segments without any permission or knowledge of applicant. He used to inquire about his daily profits. He was assured that he was earning profits regularly. In August 2006 when he was in West Bengal for three weeks, he was told that his capital has been reduced to Rs.2,17,000/. On learning this, he told the respondent no.2 to stop trading at once, but respondent no.2 continued trading his account. Respondent was forced to borrow "lakhs of rupees" at higher rate of interest. After returning from West Bengal on 26.8.06, the respondent Co. credited the remaining balance to his account. On account of losses caused to petitioner by respondent no.2, the claim was filed.
4 Ld.Arbitrator vide award dt.28.11.07 held that the disputed transaction were related to the period of 16.6.06 to 18.08.06. As per the byelaws (3) of Chapter XI of NSE byelaws, the claim for arbitration could have been raised within a period of six months. In the opinion of Ld.Arbitrator, there was a delay of about one year seven days from the last disputed transactions. Ld.Arbitrator held that even as per applicant, there was a delay of three months and nineteen days. The byelaws does not provide for condonation of delay. Therefore, the claim of the petitioner was dismissed on the sole ground of limitation.
5 The arbitration award has been challenged on the ground that copy of member client agreement was not supplied to him by respondent no.2 and Suit no.251/09 3 therefore, he could not have been aware about the limitation period of six months. Ld.counsel for respondent no.2 has controverted the contention. As per record, the member client agreement bears the signature of petitioner. Therefore, petitioner can not take the plea that copy of the agreement was not supplied to him and he was not aware about the limitation period of six months. 6 Petitioner contended that under the byelaws of NSE, Limitation period of six months was for making reference and not for any other purpose. Therefore, arbitrator was not justified to dismiss his petition particularly when the delay was already condoned by referring the matter for arbitration. The contention is controverted by respondent no.2. It is submitted that the duty of the court is to dismiss any suit or proceedings which is filed beyond limitation, even if the plea of has not been taken by the parties.
7 In support of his contention Ld.counsel has cited V.M.Salgaocar & Brothers Vs. Board of Trustees of Port of Marmugao (2005 (4) SCC 613. After careful consideration, in my opinion, it is settled legal proposition of law that question of limitation goes to the root of the matter. Plea of limitation may be taken at any stage of proceedings. Even if, the plea of limitation has not been taken as a defence, court or the quasi judicial forum are duty bound to dismiss the suit or the proceeding if the same is found barred by the limitation period. I have carefully considered the material on record. I do not find any substance in the contention of petitioner that six months limitation period provided by byelaws of NSE is only for making of reference and for no other purpose. In the present case, application for referring the matter to the arbitration was filed after expiry of Suit no.251/09 4 period of limitation. Only by referring the matter for the arbitration by respondent no.1, it can not be said that delay has been condoned by the main respondent i.e.respondent no.2. On behalf of petitioner, it was further contended that under the limitation act, the period of limitation to raise such a dispute is three years before the civil court. The byelaws enacted by NSE has no statutory force and therefore, it can not be said that limitation period for referring the dispute was six months. In support of his contentions, Ld.counsel for petitioner has relied on Smt.Biba Sethi Vs. Dyna Securities Ltd. decided by Hon.High Court of Delhi on 17.3.09 and cited as DRJ 112 (2009) 512. In this case it was held by Hon.High Court that byelaws enacted by NSE in respect of the limitation period are purely contractual in nature and the agreement by which the party is restricted absolutely from enforcing rights under a contract is void. Ld.counsel for respondent no.2 pointed out that judgment in the case of Smt.Biba Sethi Vs. Dyna Securties Ltd. given by Ld.Single Judge of Hon.High Court of Delhi has been challenged before a division bench and is still pending for adjudication. It was submitted that vide order dt.19.11.09 in FAO (OS) 253/2009 and CM no.8688/2009 the operation of above mentioned judgment has been stayed by Hon.High Court which is still in operation. Ld.counsel for respondent no.2 submitted that the law laid down by Hon.Single Judge of Hon.High Court of Delhi can not be followed as the operation of the judgment has been stayed by a large bench. Ld.counsel for respondent no.2 relied on, Ashwani Kumar Mittal Vs. Vimla Securities Pvt.Ltd. decided by Hon.High Court of Delhi on 20.7.09 in OMP 341/2006. In this case, the same question was dealt with Hon.High Court. The relevant para 5 of the judgment is reproduced here below:
"Both the above contentions were rejected by the learned Arbitrator Suit no.251/09 5 and to my view rightly so. It is an undisputed fact that the while applying to National Stock Exchange seeking adjudication of its claims, the petitioner had requested for adjudication of his differences with the respondent within the purview of byelaws, rules and regulations of the Stock Exchange. Since respondent was a member of Stock Exchange and the petitioner had invoked the arbitration clause contained in byelaws of the Stock Exchane, the petitioner can not take a stand that the provisions of byelaws of the Stock Exchange would not be applicable. These byelaws have been framed by the Stock Exchange by virtue of powers conferred under Section 9 of Securities Contracts (Regulation) Act, 1956 and these byelaws take form of subordinate legislation and it can not be said that these byelaws are in any way inferior to the statutory provisions of Limitation Act. Moreover, it is settled law that the parties to a contract can bind themselves to a period of action different from statutory provisions. Only those contracts canbe said to be void which are covered under Chapter II of the Contract Act. If the parties had agreed that a dispute is to be referred within six months from the time of starting of cause of action, such a provision can not be said to be void. I, therefore, consider that the learned Arbitrator rightly came to conclusion that the byelaws of NSE would be applicable in this case and the reference was to be made within six months".
8 In view of the fact that operation of the judgment in Biba Sethi's case Suit no.251/09 6 has been stayed by Hon.High Court, by following the law laid down by Hon.High Court in the case of Ashwani Kumar Mittal, In my view, the contention of petitioner can not be accepted. The provision of limitation period given in the byelaws of NSE are applicable in the present case.
9 Petitioner further submitted that impugned award is against the principal of natural justice and public policy. The perusal of impugned award makes it clear that claim was dismissed by Ld.Arbitrator on the sold ground of limitation period. In view of the above findings, I do not find any substance in this contention. Before concluding the order its worth mentioned here that in its reply, respondent no.2 has taken the plea of jurisdiction of this court. As per respondent no.2, this court lacks jurisdiction as the parties agreed to submit their dispute to Mumbai court. The perusal of original arbitration proceedings makes it clear that application for appointment of arbitrator was filed by petitioner before NSE and then arbitrator was appointed. Ld.Arbitrator passed his award at New Delhi. Both the parties participated in the proceedings before Ld.Arbitrator. This issue had never been raised before the Ld.Arbitrator. Parties can enter into an agreement to submit to the territorial jurisdiction of a particular court. If more than one court has jurisdiction. But by agreement cannot take away the jurisdiction of a court which otherwise have the jurisdiction. In the present case, Arbitrator was appointed by NSE at Delhi and arbitration award was also passed in Delhi. Therefore, the objections are maintainable before Delhi courts. 10 In the light of the above findings, I do not find any merit in the objections filed by petitioner. Therefore, petition is dismissed. File be consigned Suit no.251/09 7 to R/R after due compliance.
(SANJEEV JAIN) ADDITIONAL DISTRICT JUDGE9, (Central District), Delhi Announced in the Open Court Today : 20.08.10 Suit no.251/09 8