Delhi District Court
Rakesh Kumar Yadav vs M/S Bma Wealth Creators Limited on 17 July, 2014
IN THE COURT OF MS. VINEETA GOYAL, ADDITIONAL
DISTRICT JUDGE - 01, PATIALA HOUSE COURTS, NEW DELHI
DISTRICT, NEW DELHI
Arbitration No. 42/2013
Unique ID : 02403C0022512013
Rakesh Kumar Yadav
K69, Defence Enclave,
Vasant Kunj Road, Mahipalpur,
New Delhi - 110037
........ Petitioner/Claimant
Versus
1. M/S BMA Wealth Creators Limited,
29/5A, Dr. Ambedkar Sarani, Topsia Road,
Vishwakarma II,
Kolkata 700046
2. Learned Sole Arbitrator
SEBI,
4th Floor, Jeevan Vihar Building,
Parliament Street, New Delhi 110001
...... Respondents
Petition presented on : 11.03.2013
Arguments concluded on : 17.07.2014
Judgment pronounced on : 17.07.2014
Appearance :
Sh. Abhishek Soni, counsel for petitioner/claimant.
Respondent exparte.
Arbitration No. 42/2013
Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 1 of 8
JUDGMENT
1. The petitioner has filed present objection petition u/s. 34 of Arbitration and Conciliation Act, 1996, challenging the impugned award dated 29.01.2013 passed by ld Sole Arbitrator.
2. Facts of the case are as follows :
2.1 The petitioner was having a trading account with another trading member Share Khan. On persuasion of one of the employees of respondent, he opened on line trading account on 30.06.2011 with respondent. He was allotted with client ID:
33210011. He had transferred his share holding worth of Rs 2 lacs from the previous DEMAT account to DEMAT account opened with respondent. But after some time felt that there was deficiency in the services provided by respondent in the matter of feedback of the trades, not reverting back to any queries and the non fulfilling the assurances of lesser brokerage etc. 2.2 The petitioner alleged that his trading account was accessed illegally and some trading in F&O was carried out by the employees of respondent company in the petitioner's account in which a loss of Rs 21,088/ plus other taxes in total Rs 25,000/ approximately was incurred. The respondent company has done such Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 2 of 8 transactions without any authorization or prior consent of petitioner. The respondent company has violated SEBI guidelines and rules therein through unilateral and fraudulent trading in the petitioner's account which is completely breach of trust between broker and investor. He objected to unauthorized trade done in his account. In fact, he had no knowledge of F&O trading and had never traded in this segment before.
2.3 The petitioner further alleged that he made several complaints and wrote several mails to respondent, Head of customer care and also to Corporate and concerned authorities to settle the claim but no action was taken against the defaulters/respondent. After waiting for a month and a half, the petitioner went to respondent company, Noida Branch at sector 18 and met Sh Pradeep Chaubey and Sh Vipin Bhardwaj, employees of respondent company who were conspirators to the trade in the petitioner's account unauthorizedly. However, believing commitments and assurances given by aforesaid employees that petitioner will recover the losses by doing further trade in his account, the petitioner in good faith and trust allowed to do trading in his account with strict instructions to obtain prior approval before trading. But after few trades which were executed in the account, the petitioner realized that he has been trapped in well planned conspiracy, in fact respondent company has been taking approval for one trade but actually making repeated and multiple transactions of sale and purchase to earn daily earnings and profits by Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 3 of 8 respondent company through brokerage without taking further approval to do so from the petitioner. The petitioner went to Noida Branch of respondent on 21/6/2012 and without even consulting and taking his prior approval, whether to trade in that particular high value in F&O, the respondent carried out high value script in the petitioner's account resulting causing huge losses to petitioner on same day total amounting to Rs 33,000/. The petitioner filed arbitration application claiming a sum of Rs 2 lacs from the respondent. The arbitration claim was dismissed vide Award dated 29/1/2013. Aggrieved by this, the petitioner challenged the impugned award dt. 29/1/2013 passed by Ld. Sole Arbitrator through present objection petition moved u/s 34 of Arbitration and Conciliation Act, 1996.
3. Pursuant to notice issued, the respondent M/s BMA Wealth Creator Limited initially appeared through Advocate, however, subsequently neither reply was filed nor respondent marked their presence to traverse allegations of the petitioner made in the petition for the reasons best known to him.
4. Ld counsel for petitioner argued that the Ld Arbitrator has not taken any cognizance of relevant facts, documentary evidence, circumstantial proof etc before passing the award. Further that Ld. Arbitrator did not take cognizance of mensrea, malafide intention and conspiracy of the respondent who induced petitioner to earn profit through brokerage from its retained property. Ld. counsel, for the petitioner Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 4 of 8 argued that the ld. Sole Arbitrator failed to take cognizance of his own order dt 29/11/2012 as petitioner had received only one CD on 16/1/2013, without transcription of the recording conversation and award was passed without considering the objection raised by the petitioner.
5. Respondent failed to appear for many dates of hearing despite putting appearance initially therefore the undersigned proceeded to hear arguments advanced by ld counsel for petitioner.
6. This is an objection petition preferred against the impugned award dated 29/1/2013 passed by Ld. Sole Arbitrator. The Ld. Arbitrator in para 6 of the award has observed that the representative of the respondent, during hearing of the case stated that applicant had carried out trade on 28.03.2012, 30.03.2012, 13th, 16th, 23rd April, 2012, on 12th, 13th, 14th, 19th, 30th and 21st June, 2012. It has been stated that confirmation was in relation to all trade done on these dates and SMS of the trades already was sent to the applicant on his email ID and registered mobile number respectively. The representative of respondent had produced a CD containing record of conversations which belied the case of applicant that he was unaware of F&O trade rather they showed that he was actively participating in that trade. This aforesaid observation indicates that Ld. Arbitrator over relied upon the fact that confirmation, SMS and emails have been sent to petitioner without appreciating Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 5 of 8 that even in the case of unauthorized trade, if carried out, by trading member, he can still sent SMS and email without taking objections of petitioner (client) on record.
In the present petition, the petitioner has been challenging that the respondent consciously did not respond to his complaint and kept on indulging in unauthorized trades. Such allegations of the petitioner can be refuted only by leading evidence which could show the authorization given by the petitioner. Merely because, after the trade information has been pushed to the petitioner would not clothe an unauthorized trade to an authorised trade, particularly, when he is making specific complaints on the conduct of trading member without loss of time.
6. Further it transpires from observation made by Ld. Arbitrator in para no.6 that he was persuaded by CD recording of the conversation also. However, in these objection proceedings the petitioner has referred to an order sheet entry dated 29/11/2012 of the Ld. Arbitrator which reads as under: "The applicant has filed rejoinder. Copy is given to the respondent. The AR of the respondent company has produced a CD stating that it contains the recording of conversation which had taken place between the applicant and the employees of the respondent between October 2011 and June 2012. He has undertaken to submit copies of three CD alongwith the Transcription of the recorded conversation within 15 days.
Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 6 of 8 The applicant, if so desires, may submit comment on the recorded conversation in the CD and transcription within 10 days of the receipt of the CD etc. Arguments were heard in detail. Award reserved."
7. The petitioner herein placed on record an application dt. 18/1/2013 inter alia raising of objection that trading member has not provided all the CD(s) as agreed on 29/11/2012, (three CD(s) are to be provided alongwith transcripts). In that application before Ld. Arbitrator, the petitioner categorically mentioned that no transcript was also provided. The petitioner further stated that in respect of disputed conversation of 28/3/2012, in the CD provided there is no uttering of a single word about the transaction by him. The prayer was made to Ld. Arbitrator for directing to comply with the directions given in the above mentioned order sheet. However, Ld. Arbitrator did not decide on this and passed final award on 29/1/2013. It transpires that the trading member has not adduced enough evidence to support the case that the transaction in question were carried out at the behest of petitioner. It seems that controversy between agitating parties is on account of losses during the trade conducted between 28/3/2012 to 21/6/2012 which the trading member alleges to have been conducted at the instructions of the petitioner whereas the petitioner objected and denies the same. The CD of voice recording of instruction was a good piece of evidence and its transcripts could have been utilized to disprove the allegations made by petitioner. The trading member did not provide such transcript at any stage of proceedings before ld. Arbitrator and even Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 7 of 8 in the present proceeding no such transcript has been placed on record as none appeared on behalf of respondent. The petitioner has continuously raised his objection at all possible form including making complaints to respondent, sending emails of objection to make complaints to investors, grievance cell etc. The trading member/ respondent did not respond to these objections. It is incumbent upon trading member to make respondent to resolve the objections at earliest possible stage. Further in order to avoid any such controversy, the trading member could have denied to carry out any oral instruction to avoid any liability. Moreover, the respondent initially after putting appearance, subsequently neither appeared nor raised any plea to controvert the claim of petitioner for the reasons best known to him. In view of above discussion, the award passed by the Ld. Sole Arbitrator is set aside and appeal is allowed. No order as to cost.
8. File be consigned to Record Room.
Announced in the open Court (VINEETA GOYAL)
on 17th day of July, 2014 Additional District Judge1
New Delhi District : PHC
New Delhi : 17.07.2014
Arbitration No. 42/2013
Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 8 of 8
Arbitration No. 42/2013
Rakesh Kumar Yadav V. M/S BMA Wealth Creators Limited
17.07.2014.
Present : Sh. Abhishek Soni, counsel for petitioner/claimant.
Respondent exparte.
Vide separate judgment of even date the award passed by the Ld. Sole Arbitrator is set aside and appeal is allowed. No order as to cost.
File be consigned to Record Room.
(VINEETA GOYAL) Additional District Judge1 New Delhi District : PHC New Delhi : 17.07.2014 Arbitration No. 42/2013 Rakesh Kumar Yadav V. M/s BMA Wealth Creators Limited page no. 9 of 8