Delhi District Court
M/S. Emkay Commotrade Limited vs Mrs. Anshu Gupta on 3 July, 2014
IN THE COURT OF MS. VINEETA GOYAL, ADDITIONAL
DISTRICT JUDGE 01, PATIALA HOUSE COURTS, NEW DELHI
DISTRICT, NEW DELHI
Arbitration No. 463/13
Unique ID 02403C0153522013
M/s. Emkay Commotrade Limited
Paragon Centre, C06, Ground Floor,
P.B. Marg, Opposite Centrury Mills,
Worli, Mumbai 0 400 013
Also at :
4th Floor, 401, New Delhi House,
27, Barakhamba Road,
NewDelhi - 110 001 ..........
Petitioner
Versus
Mrs. Anshu Gupta
323, Anand Kunj, Vikas Puri,
New Delhi - 110 018 ......
Respondent
Petition presented On : 01.11.2013
Arguments Heard On : 03.07.2014
Judgment Pronounced On : 03.07.2014
Appearance :
Sh. Divyakant Lahoti and Sh. Anish Gupta, Ld counsel
for petitioner.
Mrs. Ashu Gupta respondent in person.
Arbitration No. 463/13
M/s. Emkay Commotrade V. Anshu Gupta . page no. 1 of 9
JUDGMENT
1. The present objection petition u/s. 34 of Arbitration and Conciliation Act 1996 is filed by petitioner herein against the Arbitral Award dated 07.08.2013 passed by Ld. Sole Arbitrator awarding an amount of Rs.61,691/ to respondents herein with directions to petitioner herein to pay the aforesaid amount within one month from the date of award failing which 10% per annum interest shall be paid on the amount from the date of initial filing of application till the date of actual payment.
2. Brief facts as narrated in objection petition are as follows:
2.1 The petitioner is a company incorporated under the provisions of the Companies Act, 1956, having its registered office at Paragon Centre, C06, Ground Floor, P.B. Marg, Opposite Century Mills, Worli, Mumbai and a branch office at 4th Floor, 401, New Delhi House 27, Barakhamba Road, New Delhi. The petitioner is engaged in providing investment solution in Commodity to its customers in India and is a member of MCX, MCDEX, ICEX and NSEL. The petitioner is also a registered Market Intermediatory (Commodity Broker).
2.2. The respondent is a customer / client of petitioner and has executed Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 2 of 9 various documents including Client Registration Form, Risk Disclosure Documents, Rights and Obligations of Members, authorised persons and clients, internet and wireless technology based trading facility provided by members to client, electronic contract note declaration etc for the purpose of engaging into transactions involving "All Commodities". The petitioner created a unique client code of respondent viz B 84A028 and after creation of client code and opening of account in the name of respondent, the petitioner forwarded to the respondent a "Welcome Kit" containing Welcome Letter and Copy of KYC Form. The respondent submitted a cheque bearing no. 910537 drawn on UTI / Axis Bank for Rs.1,00,000/ which was credited to her account by the petitioner on 22.05.2012. On the instructions of respondent, the petitioner started trading in commodities as per the instructions through the petitioner's Delhi office. The respondent used to instruct her dealer on his mobile phone.
2.3 The petitioner further submitted that with respect to the transactions so effected by the respondent through the petitioner, the petitioner prepared, issued and dispatched the electronic contract note regularly through the respondent on her email [email protected], which were duly received, retained and accepted by the respondent without any dispute. Besides this, the petitioner also sent Trade Summary and Ledger Balance Confirmation through SMS to the respondent at the end of Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 3 of 9 the day as the same has been delivered to the mobile number of respondent. The petitioner further submitted that as per exchange norms the petitioner has also send monthly and quarterly statement to the respondents in hard copy through its courier outsourcing agents which were duly delivered to the registered address of respondent. Despite receipt of aforesaid documents at no point of time did the respondent point out any discrepancy or raise any dispute regarding any trade transacted on her behalf by petitioner.
2.4 The petitioner further submitted that surprisingly and without giving any notice to the petitioner the respondent on 20.12.2012 had filed a complaint before Investor Grievance Division, Multi Commodity Exchange of India Ltd, Mumbai against petitioner alleging that respondent entered in trading contract with the petitioner for trading in commodities i.e. white metals, to be more specific in silver / gold and zinc on 16.05.2012. However, petitioner on their own dealt in copper and crude causing a loss of Rs.66,000/ through respondent. The complaint filed by respondent was absolutely false, frivilous and incorrect as such complaints were never filed when the respondent was earning profit or trading at breakeven. After receipt of complaint, MCX informed the petitioner. The petitioner replied to a letter of MCX on 18.01.2013 and attached the documents sought by the Exchange. It was specifically pointed out, inter Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 4 of 9 alia that "the complainant raised her complaint after three months", i.e. from the receipt of her balance amount payout lying in her account through NEFT to her bank account mapped with petitioner on September 5, 2012 which itself proves that complainant knows all the transactions and her allegations are false, after thought and an effort to misguide and confuse the exchange in her mischievous attempt to harass petitioner, gain personal scores and to extort money which she lost in transactions done by her in her account.
2.5. The petitioner further submitted that the respondent , after considering the reply of the petitioner to MCX, further improved her case vide letter dated 04.02.2013. The petitioner next submitted that it is the respondent who expressed her desire to effect transactions in "All Commodities". The petitioner responded the letter of respondent on 18.02.2013 and gave paragraph wise reply on merits reiterating that contact notes and bills were sent promptly on the respondent email id which has been duly received, retained and accepted by respondent. Apart from, this Trade Summary, Ledger Balance Confirmation as SMS, Monthly and quarterly statements were also sent as per exchange rules and regulations. 2.6. The petitioner further submitted that the MCX against a conciliation meeting which failed to yield any result. The respondent further wrote to Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 5 of 9 MCX regarding her complaint and concocted a new story in order to mask her illegality and improved her case and later on it was informed to petitioner by MCX on 29.04.2013 that respondent has initiated arbitration proceedings against the petitioner.
2.7 The petitioner further submitted that despite all the evidence against the respondent the Ld. Sole Arbitrator on 07.08.2013, proceeded against the petitioner and awarded a sum of Rs. 61691/, to the respondent payable within one month from the date of award. The award of Ld. Arbitrator per se is contrary beyond the pleadings and without appreciation of evidence.
Being aggrieved by the impugned award dated 17.08.2011, the petitioner filed present objection petition u/s 34 of Arbitration and Conciliation Act, 1996.
3. Pursuant to notice issued, respondent appeared in person and in reply inter alia pleaded that there is no infirmity in impugned award passed by Ld Sole Arbitrator and respondent entered in crude trade without her permission / instructions.
4. Ld counsel for petitioner argued that respondent opened a trading account with the petitioner on 16.05.2012 for trading in "All Commodities"
which include crude oil as well by duly filling the Client Registration Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 6 of 9 Form. The respondent herself in her own handwriting accepted to receive ECN instead of physical contract notes. The respondent instructed the petitioner on the mobile phone of Relationship Manager which is admitted by respondent in her reply for trading in "All Commodities" and for every trade executed by petitioner on behalf of respondent the petitioner admittedly sent ECN through email and SMS to the respondent's registered mobile phone and email respectively. Monthly and quarterly statements were also sent. However, the Ld Sole Arbitrator ignored the respondents signatures on the Accounts Statements which clearly show that respondent was aware of trade in crude oil and loss suffered therein. The entire transactions were available online through the internet to the respondent for scrutiny. The respondent was provided with user name and password to assess her account online. The transactions in crude oil were made between 22.05.2012 and 01.06.2012 and no transaction was made after that. The respondent was aware of loss suffered in crude oil since June 2012, this was the reson why no trade was made in crude oil thereafter. The respondent herself acknowledged and admitted the loss of Rs.61,690/ by signing the accounts statements. The respondent continued trading thereafter on 05.09.2012 and withdraw the balance of Rs. 34053.17 from her trading account on that day. The commodity market in which the respondent has entrusted is highly volatile market which is subject to high financial risk and online trading account with trading Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 7 of 9 members are opened by individual investors after understanding the respective risks involved. Ld counsel for petitioner further argued that it is not open to such full aware investors to turn around and to deny selectively authority of transactions which has eventually turned into loss. 4.1 Ld counsel for petitioner further argued that use of word "may" in the compliance guide gives option to the petitioner to keep the record of client placing orders in any form. The petitioner fully complied with the compliance guide issued by MCX and the observation made by Ld Sole Arbitrator that vide circular no. MCX/COM/399/2009 dated 30.09.2009 of the MCX it has made it obligatory to record all telephonic instructions of clients, is devoid of any merits. The aforesaid circular gives an option to the petitioner to record the client placing order inter alia, in the form of sound recording. This is one of the option and not the only option given to the member to record the evidence. On the aforesaid grounds, ld counsel for petitioner argued that impugned award dated 07.08.2013 passed by Ld Sole Arbitrator be set aside as same is illegal and in conflict with public policy.
5. Repelling aforesaid submission, the respondent argued that there is no infirmity in Award passed by Ld Sole Arbitrator. The respondent deposited Rs.1,00,000 with petitioner for trading in white metals only on Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 8 of 9 16.05.2012 however respondent without her instructions entered in trade of crude oil. Her husband told petitioner not to deal in trade but despite that petitioner continued trading in crude.
6. I have heard arguments advanced by ld counsel for petitioner and respondent and gone through material available on record. The Ld Sole Arbitrator is persuaded for denial of pleas taken by petitioner primarily on the ground that vide circular number MCX/Comp/399/2009 dt. 30.09.2009 of the MCX, it is obligatory to record all the telephonic instructions of the client. Ld arbitrator further observed that it is apparent that respondent is either not following the rules of trade or is hiding the truth which may prove contrary to their contention in their reply dt. 16/5/2013. Ld. Arbitrator further observed that "from the orders executed it is evident that initially the items traded were silver, copper and not crude. From the discussions, evidence and documents on record, it is evident that the respondent was trading in white metals as instructed by the applicant and also traded in crude for some time in May and June 2012 and thereafter again traded in white metals only. It proves the trade in crude was not at the instructions of the applicant. It is also confirmed by the refusal of the respondent to produce telephonic conversation records. The trade in crude resulted in loss of Rs.61,691/.
Arbitration No. 463/13
M/s. Emkay Commotrade V. Anshu Gupta . page no. 9 of 9
7. It transpires from the above observations that Ld Arbitrator has appreciated entire material placed before him and passed well reasoned order. I do not find any infirmity in the award of Ld sole arbitrator because the respondent has opened her account with the petitioner specifically for trading in base metal. This fact is further strengthened on perusal that mostly there is a trade of white metal only but with few exceptions of trading in crude oil. The moot point before Ld Sole Arbitrator was whether or not trading in crude oil is on the specific instructions of respondent on otherwise. The petitioner has miserably failed in producing recordings of telephonic conversation (sound recording) which are obligatory as per Circular dated 30.09.2009 of MCX as relied by Ld. Sole Arbitrator which clearly reveals that the member shall execute the trade of clients only after keeping evidence of the client placing such order, it could be, inter alia, in the form of sound recording. The mere defence that periodical statements, SMS, ECN and contract notes were being sent to the respondent will not serve the cause of petitioner because such an act is unilateral and petitioner can send SMS for unauthorised trade. The petitioner cannot take a shield of having sent SMS for a contract which is abintio unauthorised. The only possible defence available for petitioner was to produce evidence showing specific authorisation of the client / respondent to trade in crude oil. By not producing any such cogent evidence, the petitioners would fail in this case because subsequent Arbitration No. 463/13 M/s. Emkay Commotrade V. Anshu Gupta . page no. 10 of 9 sending of contract notes and account statements does not clothe previously conducted unauthorised trade with the legality and with the consent of respondent when the accounts have been specifically opened to trade in white metal only. Further it is also seen that the respondent has raised her objections at all possible corner which include making complaint to Investors Grievance Division, Multi Commodity Exchange of India against petitioner alleging that petitioner, on their own, dealt in copper and crude causing loss to the respondent. The petitioner has failed to exhibit any apparent perversity or palpable illegality in the impugned award. The impugned award is well reasoned award passed after correct appreciation of facts and circumstances of the case. In view of aforesaid discussion the petition is dismissed. No order as to cost.
File be consigned to record room.
Pronounced in open Court (Vineeta Goyal)
on 03.07.2014 Additional District Judge01,
NDD/PHC/New Delhi/03.07.2014
Arbitration No. 463/13
M/s. Emkay Commotrade V. Anshu Gupta . page no. 11 of 9