Patna High Court - Orders
Adroit Financial Services Pvt. Ltd. vs National Stock Exchange Of India ... on 28 May, 2019
Author: Ahsanuddin Amanullah
Bench: Ahsanuddin Amanullah
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No. 11232 of 2019
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Adroit Financial Services Pvt. Ltd. A company Registered under the
Companies Act, 1956 having its registered office at 401/402, 4th Floor, Angel
Mega Mall, Kaushambi, Ghaziabad, U.P - through its authorized
representative and Vice President of the Company, Nikhil Raj Gupta @ Nikhil
Raj, aged about 40 years, Male, R/o A-104, Ashiana Heritage, Sector-4,
Vaishali, I.E. Sahibabad, Ghaziabad, Uttar Pradesh - 201010.
... ... Petitioner/s
Versus
1. National Stock Exchange of India Limited, No. 305, 3 rd Floor, Vasundhara
Metro Mall, Boring Canal Road, Patna - 800001.
2. Mr. Markandeya Singh, C/24, Vijay Nagar Road No. 2, Hanuman Nagar,
Patna - 800026.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr. Jitendra Singh, Sr. Advocate
Mr. Mrigank Mauli,
Mr. Sanket and
Mr. Abhishek Baid, Advocates
For the Respondent/s : Mr. Markandeya Singh, Advocates
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CORAM: HONOURABLE MR. JUSTICE AHSANUDDIN
AMANULLAH
ORAL ORDER
2 28-05-2019Heard Mr. Jitendra Singh, learned senior counsel along with Mr. Mrigank Mauli, learned counsel for the petitioner and respondent no. 2 in person.
2. The petitioner has moved the Court under Articles 226 and 227 of the Constitution of India for the following reliefs:
"(i) To issue a Writ in the nature of Certiorari quashing the Letter No. -Arbitration Matter No; NSEP At/00090/19-20/Arb dated 22.04.2019 (Annexure-P/16) whereby Respondent No. 1 has constituted an Arbitral Tribunal - at the behest of Respondent No. 2 Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 2/7 without considering the response of the petitioner dated 09.04.2019 (Annexure-P/12) and 11.04.2019 (Annexure-P/14) and without any application of mind.
(ii) As consequence of grant of Relief No. 1 it be ordered/directed that the arbitration proceeding pending before Arbitral Tribunal constituted by Letter No. -Arbitration Matter No; NSEP At/00090/19-20/Arb dated 22.04.2019 is nonest in eyes of law.
(iii) To issue a Writ in the nature of Certiorari calling upon Respondents to show cause why not Arbitration matter No. NSEPAT/00090/19-20/ARB, pending before the Arbitral Tribunal constituted by Respondent No. 1 be quashed as the same is bad, arbitrary, malafide and hit by principles of res judicata and double jeopardy.
(iv) Issue a Writ of mandamus, or any other appropriate writ and/or pass any order or direction, directing the Respondent no. 1 or its Arbitral Tribunal to desist from passing any order or proceeding in the Claim Petition (Annexure-P/10) till the present Writ application is pending adjudication; and
(v) Any other writ, order or direction to which the petitioner is found fit and entitled in the facts and circumstances of the case and in the interests of justice."
3. The petitioner is a Trading Member as defined under the Securities Contract (Regulation) Act, 1956. The respondent no. 2 had made certain investment in stocks through the petitioner who also operates through its sub-broker Credent Securities. The respondent no. 2 being aggrieved by certain perceived loss suffered by him on his investment, filed a complaint before the respondent no.1, on 6th January, 2013 in Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 3/7 which the period of his investment, right from the beginning i.e., 2008 till the date of filing of the complaint was mentioned. The same was referred to the sole Arbitrator by the respondent no. 1 under the provisions of its bye-laws, which stood dismissed. The appeal preferred by the respondent no. 2 resulted in passing of an award dated 24.04.2017, by which the respondent no. 2 was awarded Rs. 10,00,000/- payable by the petitioner for its acts of omission and commission. Both the petitioner and the respondent no. 2 being dissatisfied have preferred appeal under Section 34 of the Arbitration and Conciliation Act, 1996, which is pending before the District Judge, Patna. The respondent no. 2 thereafter filed another complaint to the respondent no. 1 on 04.04.2019 raising claim with regard to loss suffered by him due to acts of omission and commission of the petitioner and its sub-broker for the period October, 2010 to March, 2012. On notice the petitioner responded raising an objection that the claim of the petitioner was already the subject matter of the earlier arbitration which has resulted in award against which the parties have preferred appeal and the present complaint relating to part of the same period, was not fit to be referred to arbitration as it stood settled by the earlier award. However, the respondent no. 1 constituted a fresh Arbitration Tribunal Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 4/7 consisting of three persons by the order impugned dated 22.04.2019.
4. Learned counsel for the petitioner submitted that the reference to the Arbitrator by the respondent no. 1 had been done in a purely mechanical manner without any application of mind or the objection raised by the petitioner. It was submitted that though the power of the respondent no. 1 to refer the matter to an arbitration is not disputed, but the same has to be a valid reference which can be supported, both on facts as well as in law. It was submitted that once the respondent no. 1 itself on the earlier occasion had referred the dispute raised by the respondent no. 2 with regard to the entire period of his dealing with the petitioner, and which has culminated in the passing of an award by the Appellate Arbitral Tribunal, challenge to which is pending before the District Judge, Patna, there could not have been a second reference by the respondent no. 1 with regard to part of the same period. It was submitted that only upon interference by the Court before which the challenge to the award is pending, can result in any further proceeding relating to the dispute between the parties, but the respondent no. 1 entertaining the matter by constituting a second Arbitration Tribunal, is totally beyond jurisdiction and in fact illegal. Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 5/7 Learned counsel submitted that the role of the authorities which referred the matter to the Arbitration is not just mechanical and it is a relevant factor to see as to whether the issue /dispute has already been settled in the past. In the present case, learned counsel submitted that when specifically the attention of the respondent no. 1 was drawn to such fact of the issue being covered under the first award, there was no occasion for a second Arbitration Tribunal to be constituted, the respondent no. 1 by giving a perfunctory reply that all issues should now be raised before the Tribunal constituted has taken a totally erroneous stand, which requires interference by the Court. For such proposition, learned counsel referred to the decision of Hon'ble Supreme Court in United India Insurance Co. Ltd. v. Antique Art Exports Pvt. Ltd. dated 28.03.2019 reported as 2019 SCC OnLine SC 504, the relevant being at paragraphs no. 19 to 22.
5. The respondent no. 2, on the other hand submitted that the present cause of action is quite different to the cause of action which led him to file the first complaint before the respondent no. 1 resulting in award of Rs. 10,00,000/- in his favour. It was submitted that initially the point taken by him before the Arbitrator was that the petitioner had, without Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 6/7 authorization, transacted business on his behalf causing loss, whereas in the present case only in July, 2018 the Securities and Exchange Board of India (SEBI) had uploaded on its website that for the period in question the license to trade of sub-broker of the petitioner was suspended. It was, thus, submitted that such cause of action is quite different and distinct from the cause of action on which the first dispute was raised before the respondent no. 1 which was sent to the Arbitrator. For such proposition, leaned counsel referred to the decisions of the Hon'ble Supreme Court in SBP & CO. v. Patel Engineering Ltd., reported as (2005) 8 SCC 618; Rukmanibai Gupta v. Collector, reported as (1980) 4 SCC 556; Union of India v. H. K. Dhruv, reported as (2005) 10 SCC 218 and State of Jharkhand v. R. K. Construction (Pvt.) Ltd., reported as AIR 2006 Jharkhand 98.
6. Learned counsel for the petitioner, by way of reply submitted that the respondent no. 2 is trying to unnecessarily make a distinction between the cause of action and the grounds on which such cause of action has to be agitated. It was submitted that the cause of action for both the complaints is identical, that is, the loss suffered by him for the period he did business with the petitioner. It was submitted that the basis/ Patna High Court CWJC No.11232 of 2019(2) dt.28-05-2019 7/7 grounds for assailing such cause of action may vary. It was submitted that once the cause of action i.e., loss suffered by the respondent no. 2 is the same, the grounds in support thereof would not make out a fresh cause of action much less give right to a person to prefer a second identical proceeding with regard to such grievance. It was submitted that as it is, against the award, appeal has been preferred by both the parties which is pending before the District Judge, Patna.
7. Issue notice to the respondent no. 1, both under registered cover with A/D as well as ordinary process for which requisites etc. must be filed within one week from today.
8. The matter be listed upon service of notice or appearance of the respondent no. 1, whichever is earlier, among the top five cases.
9. In the meantime, there shall be stay of proceeding before the Arbitrators appointed by order of the respondent no. 1 dated 22.04.2019, copy of which is Annexure-P/16 to the writ petition.
(Ahsanuddin Amanullah, J.) P. Kumar U