Bench: Anoop V. Mohta
The Appellants (original Respondents) have filed the
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the Appellate Arbitral Tribunal under the Bye-laws, Rules and
on the ground of limitation without deciding the merits of the matter.
of Arbitrators (Arbitral Tribunal) rejecting the claim of the
Respondent. On 29 September 2011, the Respondent received Award
dated 20 September 2011. On 14 October 2011, the Respondent filed
Tribunal seeking review of Award dated 20 September 2011. On 10
the Respondent's Application under Section 33 of the Act of 1996,
on merits. On 8 December 2011, the Respondent received order dated
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10 November 2011. On 20 December 2011, the Respondent filed
Arbitral Tribunal seeking additional award.
was to file an Appeal. On 19 January 2012 the Respondent filed an
Authority of NSE without praying for condonation for delay. On 24
limitation. On 28 February 2012 the Respondent received the said
reply of the Petitioner opposing the Appeal. On 19 March 2012 the
this Appeal. On 2 April 2012 hearing was fixed before the Appellate
Authority. On 10 April 2012 the Respondent filed further submissions
Section 33 of the Act of 1996. On 19 April 2012, reply of the
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by the Respondent. On 20 April 2012 again hearing was fixed before
the Appellate Authority. On 20 April 2012 vide a hand written
for an opportunity to be heard by the Appellate Authority. On 21
consider the matter for condoning delay and on merits. On 4 June
the learned Single Judge and set aside the said order. The issue of
condonation of delay itself delayed the arbitration proceeding in
4 The parties have read and referred the following
(10) Telepathy Inc v. Directi Interest Solutions Pvt Ltd
and ors. In Arbitration Petition No.704 of 2012 dated 5
December 2014 (Anoop V. Mohta, J.)
(11) Oil and Natural Gas Corporation Limited v.
Western Geco International Limited -n (2014) 9 SCC
(12) R. C. Goenka v. Chase Trading Co and anr - 2002
(3) Bom. C.R. 201.
(13) Central Warehousing Corporation v. A.S.A.
Transport - (2008) 3 Mh. L. J. 382
5 The Arbitration Mechanism in Stock Exchanges for
Settlement of disputes between a client and a member is through
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arbitration proceedings in accordance with the provisions of the
Circulars issued under Section 2(4) of the Act of 1996. There are
separate arbitration mechanism available at Stock Exchanges for
Arbitration of Disputes (Claims, Complaints, differences etc.) arising
between a client and a member (Stock Broker, Trading Member and
Clearing Member) across various market segments. The arbitration
mechanism and the Regulations issued by Circular No.
CIR/MRD/DSA/24/2010 dated 11.08.2010 by Securities and
Exchange Board of India are as under :
"5 Arbitration
5.1 The limitation period for filing an arbitration
reference shall be governed by the law of limitation, i.e. The
Limitation Act, 1963.
5.2 An arbitration reference for a claim/counter claim
upto Rs.25 lakh shall be dealt with by a sole arbitrator while
that above Rs.25 lakh shall be dealt with by a panel of three
arbitrators.
5.3 The stock exchange shall ensure that the process of
appointment of arbitrator (s) is completed within 30 days
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from the date of receipt of application from the applicant.
5.4 The arbitration reference shall be concluded by way of
issue of an arbitral award within four months from the date
of appointment of arbitrator (s).
5.5 The Managing Director/Executive Director of the
Stock Exchange may for sufficient cause extend the time for
issue of arbitral award by not more than two months on a
case to case basis after recording the reasons for the same.
6 Appellate Arbitration
6.1 A party aggrieved by an arbitral award may appeal to
the appellate panel of arbitrators of the stock exchange
against such award.
6.2 An appeal before the appellate panel of arbitrators
may be filed within one month from the date of receipt of
arbitral award.
6.3 The appellate panel shall consist of three arbitrators
who shall be different from the ones who passed the arbitral
award appealed against.
6.4 The stock exchange shall ensure that the process of
appointment of appellate panel of arbitrators is completed
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within 30 days from the date of receipt of application for
appellate arbitration.
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.
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.
6.7 A party aggrieved by the appellate arbitral award may
file an application to the Court of competent jurisdiction in
accordance with Section 34 of the Arbitration and
Conciliation Act, 1996.
6 The point of limitation with regard to the power of
Appellate Arbitral Tribunal and/or Arbitral Tribunal has been
elaborated in a Division Bench judgment in Munish Madanlal Bumb
(HUF) v. M/s. Joindre Capital Services Ltd in Appeal No.147 of 2013
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in Arbitration Petition No.554 of 2012 dated 24.07.2013 by Dr. D. Y.
Chandrachud and S.C. Gupte, JJ. There are other judgments also in
this regard.
7 The learned Judge, in the impugned order, has referred
Circulars dated 1.8.2010 and 31.08.2010, placed on record by the
Appellant/Petitioner in para 6, while recording the other submissions.
After considering the rival case and the facts, the learned Judge has
given finding in para 10 and allowed the Arbitration Petition by
setting aside impugned Award/order dated 4 June 2012. Considering
the facts and circumstances, therefore, the learned Judge has referred
the judgment in Geojit Financial Services Ltd v. Kritika Nagpal (Appeal
No.35 of 2013), and observed in para 12 as under :
"12 Before concluding, it may be stated that the
judgment of the Division Bench of this Court in
Geojit Financial Services Ltd vs. Kritika Nagpal
(Appeal No.35 of 2013) which interalia holds that
it is not permissible for the Court exercising
jurisdiction under section 34 of the Arbitration &
Conciliation Act, 1996 to remand the matter after
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setting aside the Award, would not apply in the
facts of the present case inasmuch as the Appeal is
dismissed on the ground of limitation and the
Petitioner has not been heard and in view of the
categorical statement of the learned Counsel for
the Petitioner that the Petitioner is wiling to go
back to the Appellate Arbitral Tribunal."
It is relevant to note that apart from orders passed by the
learned Single Judge of this Court with regard to the aspect of
limitation and/or power of Arbitral Tribunal and/or Appellate
Tribunal to condone the delay in view of the said Circular so referred
above, including Circular dated 11.08.2010 and which was
subsequently followed in Circular dated 9.02.2011 which stipulates
that the provisions of Limitation Act would be applicable for such
scheme. A Division Bench (Dr. D. Y. Chandrachud and S.C. Gupte, JJ.)
who passed the judgment in Geojit Financial Services (supra) observed
in para 7 of Munish Madanlal Bumb (HUF) v. M/s. Joindre Capital
Services Ltd (supra) as under, and thereby maintained the order passed
by the learned Judge of condoning the delay by the Arbitral Tribunal
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referring to the said issue of power of Tribunal's/Appellate Tribunal of
National Stock Exchange in question.
"7 The arbitral tribunal which is constituted by
the National Stock Exchange was bound to give effect
to the terms of the circulars. The claim in the present
case was admittedly within a period of three years of
the date of the last transaction. When the reference
was filed on 20 December 2010, the first circular
dated 11 August 2010 had come into force and was
applicable. The second circular dated 9 February
2011 stipulates that the limitation of three years
would be applicable inter alia to cover cases where,
(i) three years had not yet elapsed and parties have
not filed for arbitration, (ii) an arbitration
application was filed but was rejected solely on the
ground that there was a delay in filing within the
earlier limitation of six months and three years had
not yet elapsed. This circular of 9 February 2011
was in continuation of the earlier circular dated 11
August 2010. The circular came into effect
immediately. The use of the expression inter alia
would indicate that the two categories of cases listed
in clauses I and II are not exhaustive. In the present
case, on the date of the reference, the claim was
within a period of three years from the date of the
last transaction and therefore, was within limitation.
The learned Single Judge was justified in coming to
the conclusion that the claim was within limitation."
9 In Marwadi Shares & Finance Ltd. Vs. Miral Kanaksinh
Thakore1 this Court (Coram:- R.D. Dhanuka, J.) after considering the
power of Appellate Bench under the Bombay Stock Exchange bye-laws
1 2014 SCC OnLine Bom 22= (2014) 1 Bom CR 481
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and regulations and after considering the rival contentions and the
bye-laws so prescribed, allowed Section 34 Petition and directed the
Appellate Bench to hear the Application for condonation of delay by
exercising the powers of condonation of delay on its own merits
expeditiously. Present case is covered by the Judgment, as majority of
facts are similar.
In "Geojit" (Supra) award on merit was set aside and
matter was remanded for re-consideration on all issues. The counter-
claim was not decided by giving reasons. Therefore, both the claim
and the counter claim as interlinked were directed to be decided. The
Division Bench, however, did not accept the remand order. The
Appeal was allowed against the Section 34 Judgment and remand
order. In the present case, the Appellate Bench did not decide the
merit of the matter - Rejected the Appeal on ground of delay. The
facts are different so also the reason for sending back the matter for
reconsideration. We are therefore, in agreement with the learned
Single Judge that the decision of the Division Bench in "Geojit" is not
applicable in the facts of the present case.
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11 In the present case, therefore we are maintaining the
impugned Judgment as the Appellate Authority and NSE Rules, are
bound by Arbitration and Conciliation Act, 1996 specially Section 43
and the Limitation Act, including it's principles to consider the case of
condonation of delay, if sufficient case is shown. The order of
Appellate Authority did not deal with specific provision of about Acts
and it's principles. The direction to reconsider the issue of limitation
and to take decision, therefore, distinguishes this case from
"Geojit"(Supra).
12 Normally the Appellate Court, unless specific case is made
out do not accept documents for the first time. In the present case, in
reply to the Appeal filed by the Respondent, two correspondences of
original Petitioner with National Stock Exchange, Arbitration
Department, WRO, Mumbai are placed on record. The inquiry was
about the power of Appellate Court to condone the delay. The said
communication is not specifically denied, but address only to the
Petitioner/Respondent and, therefore, as objected by the Appellant,
still the contents and reply of Department supports the case of
Respondent that the provisions of Arbitration Act shall prevail and the
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Appellate Tribunal may at his own discretion allow the condonation of
delay or may reject the same. This is precisely the reason where we
are also inclined to maintain the order independently for the reason so
recorded by the learned Judge as well as for above reasons. This
communication definitely was after the impugned judgment passed by
the learned Judge.
The aspect of remand, therefore, in the present facts and
circumstances, as facts and circumstances of Geojit Financial Services
(supra) are different. The same Division Bench has concluded the
issue about applicability of Limitation Act, to such claim. This,
therefore, is also required to be noted by the Appellate Tribunal,
including the basic principle of condonation of delay in facts and
circumstances of the case. As the learned Judge directed the
Appellate Authority to decide the case on delay application in filing
Appeal, and as no merit is decided, therefore, no case is made out to
interfere with the impugned Judgment. The judgments so cited are of
no assistance in view of distinguished and distinct facts of present
case. There is no perversity and no illegality. The judgment is well
within the frame of law by keeping interest of justice and fair and
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equal opportunity to both the parties. It is unacceptable to say that in
these circumstances,provisions of Limitation Act shall not be
applicable to Appellate forum.
14 As a sequel to the above discussion, we may observe that
it is indisputed that the original claim as filed by the Respondent was
not barred by limitation. A two-tier arbitration mechanism has been
created for resolving the disputes between the constituents and the
trading members of the NSE. It is a settled principle of law that the
right of appeal is not a mere matter of procedure but, is a substantive
right and such right was vested/accrued in the Respondents as also
the Appellants on the day the lis commenced albeit it would be
actually exercised when such occasion would arise namely an adverse
order of the Arbitral Tribunal so as to invoke the appellate remedy.
We cannot overlook the position that the provisions of the Limitation
Act 1963 were admittedly applicable to the original proceedings
which was clear from the circular dated 11 August 2010 issued by
SEBI in exercise of the powers under the Security and Exchange Board
of India Act, 1992 read with section 10 of the Securities Contracts
(Regulation) Act 1956. If this be the case an appeal which is a step in
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in the series of proceedings connected by an intrinsic unity cannot be
regarded as a different proceedings outside the purview of the
Limitation Act. We are therefore, of the clear opinion that the
Appellate Authority in these circumstances, would have power to
condone delay of ten days as arising in the present case. Any other
conclusion wold render the right of appeal otiose defeating
substantive rights occurred to an aggrieved party.
We are therefore, in complete agreement with the
impugned orders passed by the learned Single Judge.
15 Therefore, considering the submission so raised by the
learned counsel appearing for the Appellant/original Respondent, in
view of the above settled position of law, we see that no case is made
out to interfere with the Judgment.
16 The Appeal is dismissed. There shall be no order as to
costs.
17 In view of dismissal of the Appeal itself, nothing survives
in the Notice of Motion and the same is also disposed of.
(G. S. KULKARNI, J.) (ANOOP V. MOHTA, J.)
