Delhi District Court
Ram Kawar Huf (Us 34) vs Ms Bajaj Capital Investor Services ... on 22 December, 2025
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of case 3
3. Brief Facts of the case 3-5
4. Grounds of objection/challenge 5-6
5. Arguments/submissions of Respondent No.1 6-8
6. Arguments/submissions of Respondent No.4 8-9
7. Appreciation of Arguments, Facts & Law 9-17
8. Decision 17
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2025.12.22
16:18:47
+0530
ARBTN No. 12547/2016 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 17 Patiala House Court, New Delhi
ARBTN. 12547/2016
In the Matter of: -
RAM KAWAR HUF
GP-103, Maurya Enclave,
Pitampura, Delhi-110088.
...Petitioner
Versus
1. M/s Bajaj Capital Investor Services Ltd
Now M/s Just Trade Securities Limited
Bajaj House, 97, Ground Floor,
Nehru Place, New Delhi-110001.
2. The National Stock Exchange of India Ltd.
Through the Managing Director and CEO
Exchange plaza, Bandra Kurla Complex,
Bandra East, Mumbai-400051.
3. The National Stock Exchange of India Ltd.
Through the Chief Manager (Arbitration)
4th Floor, Jeevan Vihar Building,
Parliament Street, New Delhi-110001.
4. The Securities & Exchange Board of India,
Through the Chairman,
SEBI Bhawan, Plot no. C 4A, G Block,
Bandra Kurla Complex,
Bandra East, Mumbai-400051.
...Respondents
Date of Institution : 07.11.2015
Arguments heard on : 21.11.2025
Decided on : 22.12.2025
Decision : Petition is allowed.
ARBTN No. 12547/2016 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.2 of 17 Patiala House Court, New Delhi
JUDGMENT
DESCRIPTION OF THE CASE
1. Present petition under Section 34 of the Arbitration and Conciliation Act, 1996, has been filed by petitioner seeking the setting aside of the Arbitral Award dated 31.07.2015 passed by the learned Appellate Arbitral Tribunal of the National Stock Exchange of India Limited, New Delhi.
BRIEF FACTS OF THE CASE
2. The brief facts necessary for adjudication of the present petition are as follows: - Petitioner was a client of respondent no.1, who was a stockbroker. Petitioner had filed arbitration proceedings claiming certain amounts alleged to be due from respondent no.1. The original arbitral tribunal rejected the claims of petitioner. Aggrieved thereby, petitioner preferred an appeal before appellate Arbitral Tribunal. Appellate tribunal, vide impugned appellate award dated 31.07.2015, dismissed petitioner's appeal.
3. Petitioner contends that all derivative transactions, described as NIFTY Future Index derivative trades, were suo-motu entered into by respondent no.1 in petitioner's trading account without any instructions from petitioner. It is asserted that respondent no. 1 had failed to produce any evidence to show that petitioner had ever placed such orders, as required under the National Stock Exchange (Futures and Options Segment) Trading Regulations, 2000.
4. It is the case of petitioner that all such trades were allegedly executed on the platform of the National Stock Exchange of ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 17 Patiala House Court, New Delhi India Ltd., and that respondent no.1 was required to strictly comply with the circulars, notifications, rules, and regulations issued by the Securities and Exchange Board of India (SEBI). Respondent no. 1 allegedly violated these requirements and carried out unauthorized and illegal derivative trades in petitioner's account.
5. Petitioner submits that in terms of the said NSE Trading Regulations, 2000, respondent no.1 was mandated to maintain written records and computer-generated order slips of all derivative trade orders placed by petitioner, and to obtain the requisite approval of the exchange before opening any branch for booking derivative trades. Further, respondent no.1 was required to ensure that only trained and authorized employees executed such trades on behalf of clients, after submitting details of such authorization to the F&O segment of the Exchange.
6. Petitioner further submits that respondent no.1 failed to notify petitioner regarding dealings in F&O derivative trades as required under SEBI Circular No. MIRSD/SE/Cir-19/2009 dated 03.12.2009. Respondent no.1 did not produce any material to demonstrate that quarterly statements containing such intimation were ever furnished to petitioner.
7. According to petitioner, all F&O derivative trades appearing in its account, were entered solely by respondent no.1 without authorization, in violation of the applicable regulatory framework of SEBI and NSE. It is alleged that respondent no.1 adopted such irregular practices for its own convenience to misuse and channel petitioner's funds, thereby inflating its business volumes and ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 17 Patiala House Court, New Delhi brokerage earnings. Petitioner asserts that respondent could have executed trades in petitioner's account only on the basis of confirmed written instructions, which are entirely absent in the present case.
GROUNDS OF OBJECTION/CHALLENGE
8. Aggrieved by the Arbitral Award dated 31.07.2015, petitioner has filed the present objections under Section 34 of the Arbitration and Conciliation Act, 1996, on the following grounds: -
i. That ld. Arbitrators failed to discharge their legal duty to examine whether respondent no.1 had obtained and maintained any confirmed trade order instructions from petitioner in accordance with the applicable trading regulations.
ii. That ld. Arbitrators allegedly ignored all substantive legal submissions advanced by petitioner and conducted the proceedings in a manner that, according to petitioner, reflected undue favour and alignment with respondent-broker.
iii. That the impugned award is barred by limitation, having been passed beyond the statutorily prescribed period. It is contended that the award lacks legal sanctity as the arbitrators had lost their mandate under Section 14 of the Arbitration and Conciliation Act, 1996.
iv. That the three learned Arbitrators were biased and prejudiced against petitioner and acted contrary to the public policy of India. It is alleged that all three arbitrators, being exchange officers of the Arbitration Department of the Delhi office of the Exchange, favoured respondent-broker, and passed an illegal award by ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 17 Patiala House Court, New Delhi disregarding the rules, regulations, and by-laws laid down by SEBI and NSE.
v. That ld. Arbitrators failed to furnish the mandatory declaration of independence and impartiality as required under Section 12 of the Arbitration and Conciliation Act, 1996. Petitioner asserts that the arbitrators were neither independent nor impartial, thereby vitiating the proceedings.
vi. That ld. Arbitrators failed to treat petitioner equally and did not provide petitioner a full and fair opportunity to present its case. It is alleged that the hearings were concluded abruptly, in an arbitrary and irregular manner, resulting in a denial of natural justice.ARGUMENTS/SUBMISSIONS OF RESPONDENT NO. 1
9. In the written submissions filed on behalf of Respondent No. 1, it is averred that petitioner and Respondent No. 1 had entered into a Member-Client Agreement, under which petitioner agreed to invest and trade in securities, contracts, and other instruments listed on the National Stock Exchange, including the derivatives segment. Petitioner opened a trading account with Respondent No. 1 in the year 2007 and thereafter actively traded in the derivatives segment. It is argued that petitioner had deposited a sum of Rs. 1.30 crores in the said trading account. During the course of trading, petitioner incurred losses, pursuant to which Respondent No. 1 refunded a sum of Rs.41,529.59. It is mentioned that after a lapse of more than two years from the date of the last trade, petitioner invoked the arbitration mechanism under Regulation 5.9(h) of the NSE Regulations. The original ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 17 Patiala House Court, New Delhi arbitral tribunal passed a detailed and reasoned award, relying on the conduct and trading experience of petitioner, as well as the documentary evidence produced by Respondent No. 1. Tribunal concluded that all trading transactions were within the knowledge of petitioner, that he was duly consulted prior to the trades, and that necessary authorization was obtained from him before execution of the transactions. Petitioner thereafter challenged the original award before appellate Arbitral Tribunal, which dismissed the appeal and affirmed the findings of the original tribunal. Appellate tribunal held that the arbitral record unequivocally established that petitioner was participating in trading activities, that he was regularly receiving contract notes, and that he had full knowledge of all trades executed in his account.
10. Respondent No. 1 submits that an arbitral tribunal is the final authority in interpreting contracts and appreciating evidence, and that courts should not interfere with such findings unless they are perverse. In the present case, both arbitral tribunals have meticulously examined the material on record and rendered concurrent factual findings based on submissions and evidence furnished by both parties.
11. It is contended that the grounds raised by petitioner do not fall within any of the statutorily recognized grounds for setting aside an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. Both tribunals, having evaluated the evidence, have returned a clear and concurrent finding that petitioner had full knowledge of all transactions in his account ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 17 Patiala House Court, New Delhi and had authorized them. It is further pleaded that trades may be entered even without written instructions, as long as the client's authorization is otherwise established. Respondent No. 1 maintains that contract notes, quarterly statements of accounts, fund statements, and other communications were periodically and duly supplied to petitioner and were duly received by him, demonstrating that all trades were within his knowledge.
12. Respondent No. 1 further argues that under NSE Bye-law 13(b) of Chapter XI, appellate arbitral proceedings are required to be concluded within three months from the date of appointment of the arbitrator, with a permissible extension of two months. However, it is contended that minor delays in issuance of an appellate award do not render the award invalid. It is asserted that petitioner voluntarily participated in all arbitral proceedings, and therefore, even assuming any delay occurred, petitioner had waived his rights and is estopped from raising any plea of the arbitrators having lost their mandate under Section 14 of the Act. In support of its submissions, Respondent No. 1 has relied upon various judicial precedents.
ARGUMENTS/SUBMISSIONS OF RESPONDENT NO. 413. In the written submissions filed on behalf of Respondent No. 4, it is contended that Respondent No. 4 is neither a necessary nor a proper party to the present proceedings. It was averred that petitioner has impleaded Respondent No. 4 and, in the prayer clause, seeks directions against Respondent No. 4 to further direct the National Stock Exchange (Respondent No. 3) to provide certain information and details. Respondent No. 4 argues ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 17 Patiala House Court, New Delhi that such a prayer is vague, misconceived, and legally untenable. It is further contended that there is no privity of contract between petitioner and Respondent No. 4 that could give rise to any cause of action against Respondent No. 4. It is also asserted that no arbitration agreement exists between petitioner and Respondent No. 4, and hence Respondent No. 4 was not and could not have been a party to the arbitration proceedings. Respondent No. 4 further submits that, in terms of Section 20A of the Securities and Exchange Board of India Act, 1992, the jurisdiction of civil courts is expressly barred in respect of any order passed by SEBI or its adjudicating officer under the said Act.
14. Per contra, petitioner reiterated the facts and submissions already placed on record, and, in support thereof, relied upon various decisions of the Hon'ble Supreme Court and different High Courts.
15. I have considered the rival submissions, and have perused the record of the case.
APPRECIATION OF ARGUMENTS, FACTS & LAW
16. The scope of enquiry under section 34 is restricted to consideration whether any one of the grounds mentioned in section 34 exists for setting-aside the Award. Section 34 of the Act reads as under: -
"34. Application for setting aside arbitral Award- (1) Recourse to a court against an arbitral Award may be made only by an application for setting aside such Award in accordance with sub-section (2) and sub- section (3). (2) An arbitral Award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 17 Patiala House Court, New Delhi
i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice. Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 17 Patiala House Court, New Delhi policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re- appreciation of evidence."
17. The general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the Award which makes it unsustainable, is not to be set aside even by the Court, even if the Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the Award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the Award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the Award passed by the Arbitrator.
18. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 17 Patiala House Court, New Delhi Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the Award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterised as perverse. It was held that a finding based on no evidence at all or an Award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
19. In the present case, one of the principal objections raised by the petitioner pertains to limitation, that the appellate arbitral award was rendered beyond the statutorily prescribed time period, resulting in loss of mandate of the arbitrators under Section 14 of the Act.
20. The arbitral proceedings in question were governed by the NSE Bye-Laws and the SEBI Circular dated 11.08.2010. Appellate arbitral tribunal was initially constituted on 24.09.2014. In terms of Clause 6.5 of the SEBI Circular dated 11.08.2010 read with Bye-Law 19(b) of the NSE Bye-Laws, appellate tribunal was required to dispose of the appeal by issuance of an appellate arbitral award within a period of three months from the date of its appointment.
21. The record reveals that hearings before appellate tribunal commenced thereafter and the matter was reserved for orders on 26.11.2014. However, no award was pronounced within the ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 17 Patiala House Court, New Delhi stipulated period. Subsequently, the National Stock Exchange of India Ltd. issued a communication dated 21.01.2015 seeking the consent of the petitioner for reconstitution of appellate arbitral tribunal. The petitioner had given such consent on 28.01.2015, and the reconstituted tribunal ultimately rendered appellate award on 31.07.2015.
22. Clause 6.5 of the SEBI circular dated 11.08.2010 reads as under:
-
"6.5 The appeal shall be disposed of within three months from the date of appointment of appellate panel of such appeal by way of issue of an appellate arbitral award."
23. Bye law 19(b) of the NSE bye-laws reads as under: -
"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 appellate Arbitrator."
24. Clause 6.6 of the SEBI circular dated 11.08.2010 reads as under:
-
"6.6 The Managing Director/Executive Director of the stock exchange may for sufficient cause extend the time for issue of appellate arbitral award by not more than two months on a case to case basis after recording the reasons for the same."
25. Clause 6.5 of the SEBI Circular dated 11.08.2010 mandates disposal of the appeal within three months, while Clause 6.6 permits an extension not exceeding two months, subject to recording of reasons by the competent authority. The said framework makes it evident that the timelines prescribed are not merely directory but intended to ensure expeditious and effective ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 17 Patiala House Court, New Delhi resolution of disputes in the securities market. Bye-Law 19(b) of the NSE Bye-Laws also reinforces this requirement by obligating appellate arbitral tribunal to issue its award within three months from the date of appointment.
26. The Hon'ble Delhi High Court in Harji Engineering Works Pvt.
Ltd. v. Bharat Heavy Electricals Ltd. (2008 SCC OnLine Del 2719) held that: -
"20. It is natural and normal for any arbitrator to forget contentions and pleas raised by the parties during the course of arguments, if there is a huge gap between the last date of hearing and the date on which the award is made. An Arbitrator should make and publish an award within a reasonable time. What is reasonable time is flexible and depends upon facts and circumstances of each case. Is case there is delay, it should be explained. Abnormal delay without satisfactory explanation is undue delay and causes prejudice. Each case has an element of public policy in it. Arbitration proceedings to be effective, just & fair, must be concluded expeditiously. Counsel for the respondent had submitted that this Court should examine and go into merits and demerits of the claims and counter claims with reference to the written submissions, claim petition, reply, document etc. for deciding whether the award is justified. In other words, counsel for the respondent wanted the Court to step into the shoes of the Arbitrator or as an appellate court decide the present objections under Section 34 of the Act with reference to the said documents. This should not be permitted and allowed as it will defeat the very purpose of arbitration and would result into full fledged hearing or trial before the Court, while adjudicating objections under Section 34 of the Act. Objections are required to be decided on entirely different principles and an award is not a judgment. Under the Act, an Arbitrator is supposed to be sole judge of facts and law. Courts have limited power to set aside an award as provided in Section 34 of the ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 17 Patiala House Court, New Delhi Act. The Act, therefore, imposes additional responsibility and obligation upon an Arbitrator to make and publish an award within a reasonable time and without undue delay. Arbitrators are not required to give detailed judgments, but only indicate grounds or reasons for rejecting or accepting claims. A party must have satisfaction that ld. Arbitrator was conscious and had taken into consideration their contentions and pleas before rejecting or partly rejecting their claims. This is a right of a party before an Arbitrator and the same should not be denied. An award which is passed after a period of three years from the date of last effective hearing, without satisfactory explanation for the delay, will be contrary to justice and would defeat justice. It defeats the very purpose and the fundamental basis for alternative dispute redressal. Delay which is patently bad and unexplained, constitutes undue delay and therefore unjust."
27. Applying the aforesaid principles to the facts of the present case, I find that, in terms of Bye-Law 19(b) of the NSE Bye-Laws read with Clause 6.5 of the SEBI Circular dated 11.08.2010, the period of three months prescribed for appellate arbitral tribunal to make and publish the award was mandatory in nature.
28. Hon'ble Supreme Court in the case of Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd [(2003) 5 SCC 705] held that: -
"31. It is true that under the Act, there is no provision similar to Sections 23 and 28 of the Arbitration Act, 1940, which specifically provided that the arbitrator shall pass award within reasonable time as fixed by the Court. It is also true that on occasions, arbitration proceedings are delayed for one or other reason, but it is for the parties to take appropriate action of selecting proper arbitrator(s) who could dispose of the matter within reasonable time fixed by them. It is for them to indicate the time limit for disposal of the arbitral proceedings. It is for them to decide whether they should continue with the arbitrator(s) who cannot ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 17 Patiala House Court, New Delhi dispose of the matter within reasonable time. However, non-providing of time limit for deciding the dispute by the arbitrators could have no bearing on interpretation of Section 34. Further, for achieving the object of speedier disposal of dispute, justice in accordance with law cannot be sacrificed. In our view, giving limited jurisdiction to the Court for having finality to the award and resolving the dispute by speedier method would be much more frustrated by permitting patently illegal award to operate. Patently illegal award is required to be set at naught, otherwise it would promote injustice"
29. Appellate arbitral award has indisputably been passed beyond the time prescribed under Bye-Law 19(b) of the NSE Bye-Laws read with Clause 6.5 of the SEBI Circular dated 11.08.2010. Clause 6.6 of the said SEBI Circular further clarifies that any extension of time for issuance of appellate award cannot exceed a period of two months. The first appellate tribunal was appointed on 24.09.2014, hearings commenced thereafter, and the matter was reserved for orders on 26.11.2014. Subsequently, the National Stock Exchange of India Ltd., vide letter dated 21.01.2015, sought consent for reconstitution of appellate arbitral tribunal, which was granted by the petitioner on 28.01.2015. Even if limitation is computed from the date of reconstitution, the mandatory period of three months expired on 27.04.2015. However, appellate award was pronounced only on 31.07.2015, without any valid extension of time, thereby violating the mandatory regulatory framework governing arbitrations under the National Stock Exchange.
30. In view of such excessive and unexplained delay, in clear violation of the NSE Bye-Laws and SEBI Circulars, I am ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 17 Patiala House Court, New Delhi considered opinion that the impugned appellate award is vitiated by patent illegality and is in conflict with the public policy of India within the meaning of Section 34 of the Arbitration and Conciliation Act, 1996
31. Accordingly, the impugned appellate arbitral award dated 31.07.2015 cannot be sustained in law and is liable to be set aside.
DECISION
32. For the foregoing reasons, the petition under Section 34 of the Arbitration and Conciliation Act, 1996 is allowed, and the arbitral appellate award dated 31.07.2015 is hereby set aside.
Digitally signed by PULASTYA PULASTYA PRAMACHALA
PRAMACHALA Date:
2025.12.22
16:18:54 +0530
Pronounced in the (PULASTYA PRAMACHALA)
Open Court on this District Judge (Commercial Court)-01,
nd
22 Day of December, 2025 Patiala House Court, New Delhi ARBTN No. 12547/2016 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 17 Patiala House Court, New Delhi