Delhi High Court
Rakesh Kumar Garg vs Dse Financial Service Ltd. on 18 September, 2015
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 18th September, 2015.
+ W.P.(C) No.6591/2015 & CM No.12016/2015 (for stay)
RAKESH KUMAR GARG ..... Petitioner
Through: Mr. Vivek Aggarwal, Adv.
Versus
DSE FINANCIAL SERVICE LTD. ..... Respondent
Through: None.
AND
+ W.P.(C) No.7088/2015 & CM No.12989/2015 (for stay)
MALTI GARG ..... Petitioner
Through: Mr. Vivek Aggarwal, Adv.
Versus
DSE FINANCIAL SERVICES LTD. ..... Respondent
Through: None.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. The petitioner in the two petitions being husband and wife have filed
these petitions impugning the "Appellate Award" dated 26th December, 2014
and 1st October, 2014 respectively of the arbitration under the Bye-laws of
the National Stock Exchange of India Limited (NSE). The petitions were
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 1 of 10
filed on 2nd July, 2015 and 22nd July, 2015 and though were listed first on
13th July, 2015 and 27th July, 2015 but were adjourned from time to time on
the request of the counsel for the petitioners, without issuing notice therefor.
The counsel for the petitioners has been heard.
2. It is the case of the petitioners that (i) they were associated with the
respondent DSE Financial Services Limited (DSEFSL) as clients and also
as SEBI registered sub-brokers in NSE Capital Market Segment and as
authorized persons in NSE F&O Segment and in BSE Cash Agreement
Segment respectively; (ii) that the respondent DSEFSL made a claim against
the petitioners separately and which claims were referred to arbitration in
accordance with the NSE Bye-laws; (iii) that the Arbitral Tribunal to whom
the claim of the respondent DSEFSL against the petitioner in W.P.(C)
No.6591/2015 was referred vide Arbitral Award dated 30th July, 2014,
directed the petitioner to pay Rs.31,18,979/- with interest; (iv) the sole
Arbitrator, to whom the claim of the respondent DSEFSL against the
petitioner in W.P.(C) No.7088/2015 was referred, vide Arbitral Award dated
1st April, 2014, dismissed the claim of the respondent DSEFSL; (v) that the
petitioner in W.P.(C) No.6591/2015 preferred an appeal to the Appellate
Tribunal for setting aside of the award against him and the respondent
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 2 of 10
DSEFSL filed an appeal to the Appellate Tribunal for setting aside of the
Arbitral Award of dismissal of its claim against the petitioner in W.P.(C)
No.7088/2015; and, (vi) that the Appellate Tribunal vide Award dated 26 th
December, 2014 has dismissed the appeal of the petitioner in W.P.(C)
No.6591/2015 but has vide Award dated 1st October, 2014 allowed the
appeal of the respondent DSEFSL and allowed the claim of the respondent
DSEFSL against the petitioner in W.P.(C) No.7088/2015 for a sum of
Rs.22,94,338.70p.
3. Though the petitioners in their respective petitions have set out the
grounds of challenge to the impugned Awards of the Appellate Tribunal but
since I entertain doubts as to the very maintainability of these writ petitions
in the face of availability of alternative remedy under Section 34 of the
Arbitration and Conciliation Act, 1996, need is not felt to elaborate on the
same.
4. I may in this regard notice that I have in :-
A. Roshan Lal Gupta Vs. Shri Parasram Holdings Pvt. Ltd.
MANU/DE/0146/2009 held a suit, subject matter whereof was
subject matter of arbitration under the Bye-laws of the NSE, to
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 3 of 10
be not maintainable under Section 5 of the Arbitration Act and
held a petition under Section 34 of the Arbitration Act, with
respect to an Award of arbitration under the Bye-laws of NSE,
to be maintainable;
B. Motilal Oswal Securities Ltd. Vs. Sandeep Paul
MANU/DE/2045/2009 entertained a petition under Section 34
of the Arbitration Act with respect to an Arbitral Award under
the Bye-laws of NSE;
C. Rajive Stock Brokers Limited Vs. Smt. Saroj Bala
MANU/DE/1817/2009 again entertained objections under
Section 34 of the Arbitration Act with respect to the Arbitral
Award under the Bye-laws of NSE;
D. Biba Sethi Vs. Dyna Securities Limited
MANU/DE/1325/2009, relying upon Harinarayan G. Bajaj Vs.
Rajesh Meghani (2005) 10 SCC 660 held that the arbitration
proceedings as provided for in the Bye-laws and Regulations of
NSE are subject to the provisions of the Arbitration Act supra
to the extent not provided for in the Bye-laws and is a
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 4 of 10
contractual, though having a statutory flavor; (FAO(OS)
No.253/2009 preferred thereagainst was dismissed as
withdrawn on 30th March, 2011); and,
E. Sharad P. Jagtiani Vs. M/s. Edelweiss Securities Limited 208
(2014) DLT 487 again held a suit subject matter whereof was
the subject matter of arbitration under the Bye-laws of the NSE
to be not maintainable.
5. Being thus of the view that these writ petitions would not be
maintainable, the counsel for the petitioners was asked to address on the
same.
6. The counsel for the petitioners drew attention to Surya Dev Rai Vs.
Ram Chander Rai AIR 2003 SC 3044 and to Cadre Estate Pvt. Ltd. Vs.
Salochna Goyal MANU/DE/2597/2010.
7. While in the former, it was held that interlocutory orders passed by
the Courts subordinate to High Court are open to challenge and subject to
certiorari and supervisory jurisdiction of the High Court, in the latter, a
Single Judge of this Court held a writ petition against the order of the
Arbitral Tribunal to be not maintainable and further held that the mere fact
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 5 of 10
that waiting till the award to challenge the said order may cause
inconvenience to the party / parties is not ground to entertain a writ petition
at an interim stage. The counsel for the petitioner relies on an observation in
para 25 of the latter judgment, that no party could be left remediless and on a
reference in para 27 to a judgment of the Calcutta High Court holding a writ
petition to be maintainable.
8. I fail to see as to how the aforesaid judgments come to the rescue of
the petitioners on the aspect of maintainability of these writ petitions. What
is sought to be done by the petitioners by these writ petitions could have
very well been achieved by them by taking proceedings under Section 34 of
the Arbitration Act and which the petitioners do not claim to have taken;
perhaps realizing that the time within which the petitioners could have taken
the proceedings under Section 34 had lapsed, these writ petitions have been
filed.
9. Else, as far as the maintainability of writ petitions in arbitration
matters are concerned, I have recently in judgment dated 15th September,
2015 in W.P.(C) No.8085/2015 titled Rajeev Gupta Vs. Delhi Metro Rail
Corporation Limited on a consideration of a host of case law held the writ
petitions to be not maintainable against an award / order of an Arbitral
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 6 of 10
Tribunal. It is not deemed appropriate to burden this judgment with the case
law cited in the said judgment.
10. Though having held the writ petitions to be not maintainable but I am
intrigued by the concept of an „Appellate Award‟. Having not found a
provision in the NSE Bye-laws of appeal against the Arbitral Award while
dealing with the judgments supra, I perused the Bye-laws of the NSE on the
website of NSE and find that a provision with respect to appeal has been
introduced in accordance with a Circular of Security and Exchange Board of
India (SEBI) of the year 2010.
11. Chapter XI of the said Bye-laws deals with arbitration and it is
deemed appropriate to set-out the relevant portions thereof hereunder:-
"ARBITRATION
Definitions
„Arbitrator‟ shall mean a sole arbitrator or a panel of
arbitrators.
„Act‟ shall mean the Arbitration and Conciliation Act, 1996
and includes any statutory modification, replacement or re-
enactment thereof, for the time being in force.
„Admissible claim value‟ shall mean the claim value
admissible to the Constituent as ascertained by the Investor
Grievance Redressal Committee or Panel and recorded in
the directions or order.
„Arbitral Award‟ shall mean an award passed by the
Arbitrator.
W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 7 of 10
„Appellate Arbitrator‟ shall mean a panel of arbitrators who
hears the appeal filed against the Arbitral Award.
„Appellate Arbitral Award‟ shall mean an award passed by
the Appellate Arbitrator.
Reference to Arbitration
(1) All claims, differences or disputes between the Trading
Members inter se and between Trading Members and
Constituents arising out of or in relation to dealings,
contracts and transactions made subject to the Bye-Laws,
Rules and Regulations of the Exchange or with reference to
anything incidental thereto or in pursuance thereof or
relating to their validity, construction, interpretation,
fulfilment or the rights, obligations and liabilities of the
parties thereto and including any question of whether such
dealings, transactions and contracts have been entered into
shall be submitted to arbitration in accordance with the
provisions of these Byelaws and Regulations. The Exchange
shall be entitled to facilitate arbitration for such disputes
and parties as mentioned in the provisions of Byelaw 1,
including the arbitration reference filed by Trading Member
against the directions or order of the Investor Grievance
Redressal Panel (IGRP), by adopting such procedures as
may be prescribed by it under this Chapter.
Arbitration proceedings subject to the provisions of the Act
(14) The arbitration proceedings as provided for by the
provisions of these Byelaws and Regulations shall be
subject to the provisions of the Act to the extent not
provided for in these Byelaws or the Regulations.
Construction of references
(15) For the purposes of section 2(6) of the Act, in all claims,
differences or disputes which are required to be submitted
to arbitration as per the provisions of these Byelaws and the
Regulations, wherever Part 1 of the Act leaves the parties
free to determine a certain issue, the parties shall be
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deemed to have authorised the Relevant Authority to
determine that issue.
Jurisdiction
(17) The arbitration and appellate arbitration shall be conducted
at the regional centre nearest to the address provided by
Constituent in the KYC form or as per the change in address
communicated thereafter by the Constituent to the trading
member. The application under Section 34 of the Act, if any,
against the decision of the Appellate Arbitral Award passed
by the Appellate Arbitrator shall be filed in the competent
court nearest to the address provided by Constituent in the
KYC form or as per the change in address communicated
thereafter by the Constituent to the trading member.
Appellate Arbitration
(19) (a)A party aggrieved by an Arbitral Award may appeal to
the Appellate Arbitrator against Arbitral Award within one
month from the date of receipt of Arbitral Award and in
such manner as prescribed by the Relevant Authority from
time to time notwithstanding the provisions contained under
Byelaw 3.
(b) The Appellate Arbitrator shall consist of three arbitrators
who shall be different from the ones who passed the Arbitral
Award appealed against and such Appellate Arbitrators shall
dispose of the appeal by way of issue of an Appellate Arbitral
Award within three months from the date of appointment of the
Appellate Arbitrator.
(c) A party aggrieved by the Appellate Arbitral Award may
file an application in accordance with Section 34 of the Act
before the court of competent jurisdiction nearest to the address
provided by Constituent in the KYC form or as per the change
in address communicated thereafter by the Constituent to the
trading member."
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12. Having entertained a doubt as to the applicability of Section 34 of the
Arbitration Act with respect to an Appellate Award and having researched in
the said aspect I find a Single Judge of this Court in Steel Authority of India
Ltd. Vs. Engineers Project India Ltd. MANU/DE/2793/2014 to have after
considering a host of case law held that there is no provision in the
Arbitration Act that proscribes a two tier arbitration procedure and thus held
a writ petition thereagainst also to be not maintainable. I do not find
anything to the contrary.
13. There is thus no merit in the petitions.
Dismissed.
No costs.
RAJIV SAHAI ENDLAW, J.
SEPTEMBER 18, 2015 „pp‟ (corrected and released on 21st October, 2015) W.P.(C) No.6591/2015& W.P.(C) No.7088/2015 Page 10 of 10