Anjali A.Kulkrni And Avinash ... vs Prabodh Artha Wardhini Pvt. Ltd. ...
2014 Latest Caselaw 147 Bom

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            IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                          
                ARBITRATION PETITION NO. 203 OF 2012




                                                  
    1     Mrs. Anjali Avinash Kulkarni,
          Represented through her Power of 
          Attorney Holder Mr. Avinash




                                                 
          Trimbak Kulkarni.

    2     Mr. Avinash Tryambak Kulkarni,
          Both residing at "Anand" Plot No.24,




                                       
          Sector 27-A, PCNDTA,
          Nigdi, Pune-411 044
                            ig                             ....Petitioners.

                     Vs.
                          
    1     Prabodh Artha Wardhini Pvt. Ltd.,
          Depository Participant having address
          as 1070, Shukrawar Peth, Subhash
          Nagar, Lane 5,
          


          Pune-411 002.
       



    2     Mr. Deepak Shamrao Gosavi,
          Shriram Niwas, Plot No. 35,
          Sector 27A, PCNDTA,





          Nigdi, Pune-411 044.                             ....Respondents.


    Mr. Ganesh S. Vaidya for the Petitioners.
    Mr. Sushil Nimbkar for Respondent No.1.





                           CORAM:- ANOOP V. MOHTA, J.

DATE :- 19 DECEMBER 2014.

ORAL JUDGMENT :-

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The Petitioners-original Constituents, have filed the

Petition under Section 34 the Arbitration and Conciliation Act, 1996

(Arbitration Act) and thereby, challenged final award dated 23

September 2011 passed by the Appellate Tribunal under the bye-laws,

rules and regulations of the National Stock Exchange of India Limited

(NSE), whereby the award passed by the sole Arbitrator dated 9 May

2011, in A.M. No. CM/M-0095/2010 was set aside, and thereby

rejected the claims and the case of the Constituents in toto.

2 The learned sole Arbitrator had passed the final award on

9 May 2011 in the following terms:-

"a) The Respondent No. 1 and 2 are jointly and severally is directed to return 135 shares of L & T, 140 shares of Maharashtra Scooters Ltd. And 40 shares of Ultratech

Cement along with all the dividends and corporate benefits accrued from October, 2008 till the date of delivery of those shares.

b) Respondent No. 1 and 2 to bear their own costs and

Respondent No.1 to bear the cost of the claimant in these proceedings."

3 The submissions of both the learned counsel, as well as,

the material placed on record show that those shares, as directed by

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the sole Arbitrator, as referred in the chart submitted by the

Respondent No.1-the Trader, item Nos. 5 to 7 are in the account of

some third person -Darshan Ashok Gujarathi, who was admittedly not

party to the Arbitration proceedings, being not party to the agreement

between the parties-which is clear from Respondent No. 1's affidavit

dated 15 September 2014. The relevant paragraphs of the affidavit

read as under:-

"2

I state that, Shri. Deepak S. Gosavi was the employee

of the Prabodh Arthwardhini Private Limited.

Annexued hereto and marked as EXHIBIT 'A' is a

copy of three Client Registration Forms showing the

name of Shri. Deepak S. Gosavi as a Branch Head.

Colly.

3 I state that, this Hon'ble Court had also orally

directed to disclose the name of the person holding

the Demat Account No. 1203750000002472 with

Prabodh Arthwardhini Private Limited (Depository

Participant) as mentioned in Table format at Page

No. 64 and 65 of the proceedings. The said Account

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is of Shri. Darshan Ashok Gujarathi. Annexed hereto

and marked as EXHIBIT 'B' is a copy of the Client

Master Report of the Depository."

5 ................Respondent is not aware of the other

transactions of the Complainant which the

Complainant has done with the demat account No.

1203750000002472, as the said account does not

belong to this Respondent. It is clear that the

Complainant is trying unnecessary to involve this

Respondent in the Complainants mysterious dealings

an in attempts to camouflage the Complainants own

wrong-doings."

7 I state that, Prabodh Arthwardhini Private Limited

has given a credit to the Petitioner in respect of the

shares mentioned in first four columns of the table

mentioned at Page 64 and 65 of the proceedings.

Annexed hereto and marked as EXHIBIT 'C' is a copy

of the statements showing credit given to the

Petitioner."

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    4            The Petitioners unable to counter the same as stated to be 

the information placed on record in this Petition. Even otherwise, the

chart so placed on record by Respondent No.1 and as the same was

before the sole Arbitrator referring to the account number against

these shares, which was admittedly not Demat Account of Respondent

No.1, and definitely not owned and/or have no control over those

shares of Respondent No.1. The shares in question, which are already

in the account and/or owned by the third person, who was not party

to the Arbitration proceedings, there was no question of passing order

of transferring those shares in favour of the Petitioners. It is difficult

for the parties, even in whose favour the order is passed to execute

such award as the same was against third person, who was not party

to the proceedings. Such un-executable award and the proceedings

arising out of the same, in my view, is unsustainable. The Apex Court

while dealing with the concept of "public policy" under the Arbitration

Act, recently in Oil and Natural Gas Corporation Limited Vs. Western

Geco International Limited 1 has observed thus-

"39 No less important is the principle now recognised as a salutary juristic fundamental in administrative law that

1 (2014) 9 SCC 263

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a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality

of decisions is tested on the touchstone of Wednesbury principle [Associated Provincial Picture Houses Ltd. V.

Wednesbury Corpn., (1948) 1 KB 223 : (1947) 2 ALL ER 680 (CA)] of reasonableness."......

"40 ......"if on facts proved before them the arbitrators

fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that

enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast

away or modified depending upon whether the offending part is or is not severable from the rest."

5 As aggrieved by the impugned order Respondent No.1

challenged the said award. Respondent No.1 is a trading member.

Respondent No. 2 is the employee of Respondent No.1 however,

according to the Petitioners, he is the Branch Head of Nigdi, Pune

office of Respondent No.1. Apart from long association of the

constituents with Respondent No.2, the fact of agreement between the

constituent and trading member was not in dispute and so also the

fact of Respondent No. 2's employment with Respondent No.1.

Because of the trading agreement, the Petitioners had handed over the

blank Depository Instrument Slip of HDFC DP, with instructions to

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Respondent No.2 as stated for transfer the shares in the Demat

Account opened by the Petitioners with Respondent No.1. Those

shares were transferred in the third person's name (Darshan

Gujarathi). The Petitioners received no consideration whatsoever,

therefore, disowned the transactions itself of those shares. Petitioner

No.1 appeared before the Sole Arbitrator in person through her

husband-Petitioner No.2.

The parties appeared before the sole Arbitrator and filed

reply and documents. Admittedly, no further evidence lead nor

evidence filed through the affidavit on record. Therefore, all these

allegations/ counter allegations remained to be proved and/or

unproved. The sole Arbitrator, however, based upon the documents as

recorded above, had passed the un-executable Award. The Appellate

Tribunal also while setting aside the award, not dealt with specifically

the claims of the Petitioners, in the background of transactions in

question, based upon the blank signed Instruction Notes, so referred

above. The Petitioners admittedly, lost those shares, as well as, the

ownership without any consideration, as nothing placed on record to

account the same. It is difficult to accept the case that the share-

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holders/owners would handover such Instruction Notes and in return,

would not accept any benefit and/or any monitory consideration. The

issue with regard to the Instructions Notes handed over to Respondent

No.2 independently and/or individually and/or based upon their

earlier relationship and/or intended to hand over for the transaction

through Respondent No.1, as admittedly there was agreement entered

into between the Petitioners and Respondent No.1 ought to have been

considered by the Tribunal in detail, by giving opportunity to all the

concerned before rejecting the claims of the Petitioners in such

fashion. The Sole Arbitrator had passed the award, though the shares

were in the name of third person, but not specifically dealt with the

aspects of monitory claim and/or consideration in place of transfer of

those shares. The monitory claim ought to have been considered,

instead of ordering the transfer of shares by the sole Arbitrator. The

Appellate Authority also failed to consider the case of Petitioners, so

far as the alleged unauthorized transactions and the loss the

Petitioners suffered because the Petitioners disowned all these

transactions. There is nothing to show that such transactions took

place as intended by the Petitioners and they received any

considerations. The Appellate Tribunal also, while setting aside the

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award, not expressed anything so far as the Petitioners' case, except

blaming them for handing over such Instruction Notes to Respondent

No.2-Deepak Gosavi. There is nothing denial and/or no contra

material on record to show that Respondent No.2-Deepak Gosavi had

no relation and/or no contract and/or no employment with

Respondent No.1. There is nothing on record to show that

Respondent No.2-Deepak Gosavi was not authorized to entered into

and/or to deal with the transactions, based upon the agreement of

Petitioner with Respondent No.1. Normal practice of entering into the

transactions through the agents and/or employees of such Traders,

also cannot be overlooked. However, the Appellate authority rejected

the claims by reversing the award of sole Arbitrator.

7 Therefore, taking overall view of the matter and in the

interest of justice and also for the fact that the Petitioners, at the

relevant time before the Sole Arbitrator did not appear through any

advocate and that resulted into injustice and hardship to the

Petitioners, as they have suffered the loss of shares, as well as,

received no compensation whatsoever. The aspect of individual roles

of all the parties and specifically of Respondent's employee, just

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cannot be brushed aside without giving full opportunity to the

Petitioners. There is no case of fraud and/or misrepresentation. To

verify the truth of transactions, an appropriate reasoning and/or

opportunity required to be given to the Petitioners to prove their case.

Those shares are in the account of third person-Mr. Darshan Gujarathi.

Therefore, in my view, a case is made out to quash and set aside final

award dated 23 September 2011 passed by the Appellate Tribunal

and award dated 9 May 2011 passed by the Sole Arbitrator. The

matter is remanded back for re-consideration by keeping all points

open.

8 In Section 34 of the Arbitration Act and in the background

and as there is no bar, I am inclined to remand the matter for re-

consideration, by restoring the original complaint on record filed by

the Petitioners. The Arbitral Tribunal to consider the same, in

accordance with law by giving an equal opportunity to all the

concerned including for the averments so made by Respondent No.1

through affidavit dated 15 September 2014, referring to the actual

transfer of shares in the name of third person and its effect on the

Petitioners' claims.

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    9          Therefore, the following remand order:-




                                                                                
                                                       
                                     O R D E R

a) Award dated 23 September 2011 passed by the

Appellate Tribunal and Award dated 9 May 2011

passed by the Sole Arbitrator, are quashed and set

aside on all counts and the original complaint filed

by the Petitioners, is restored to file.

b) The learned Sole Arbitrator and the Appellate

Tribunal to decide the claims in accordance with

law, by giving equal opportunity to all the

concerned, as early as possible, preferably within

six months from today.

c) Both the parties to co-operate, accordingly.

d) The Petition is accordingly allowed.

e) There shall be no order as to costs.

(ANOOP V. MOHTA, J.)