Commander S.P.Suri(Retd.) vs M/S Alankit Assignments Limited
2009 Latest Caselaw 99 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  FAO(OS) 434 OF 2008


             Judgment reserved on: 09.01.2009
%            Judgment delivered on: 15.01.2009


             Commander S.P.Suri(Retd.)           .....Appellant
                            Through: Appellant in person

                   versus

             M/s Alankit Assignments Limited         ....Respondent
                               Through: Mr. D. C. Chauhan, Advocate
                                          for respondent No.1.

CORAM:

HON'BLE MR. JUSTICE MUKUL MUDGAL
HON'BLE MR. JUSTICE VIPIN SANGHI

1. Whether the Reporters of local papers may
be allowed to see the judgment?                      No

2. To be referred to Reporter or not?                No

3. Whether the judgment should be reported
in the Digest?                                       No


VIPIN SANGHI, J.

1. The present appeal is directed against the judgment delivered

by a learned single Judge of this Court in OMP No.395/2005 dated

27.8.2008, whereby he has dismissed the objections preferred by the

appellant to the award of a three member arbitral tribunal constituted

under the bye-laws, rules and regulations of the National Stock

Exchange of India Limited in A.M.No.D012/05.

2. By the aforesaid award the Tribunal dismissed the claim of

the appellant and allowed the counterclaim of the respondent for

Rs.17,72,631.59, after deducting an amount of Rs. 15 lakhs lying with

the respondent as margin money. The Tribunal rejected the

respondent's claim for interest, and also imposed costs on the

appellant to the tune of Rs.10,000/-, in favour of the respondent.

Before the learned single Judge, the counsel for the respondent

clarified that there was a calculation error. The figure of

Rs.32,72,631/- held to be due to the respondent (before adjustment of

margin money of Rs. 15,00,000/-), according to the respondent should

have been noted as Rs.32,28,968/-. The learned single Judge

accordingly modified the award to the aforesaid extent, while

dismissing the objections raised by the appellant.

3. The submission of the appellant, who appears in person, is

that he had only invested an amount of Rs. 15 lakhs with the

respondent on an understanding that he would earn assured interest

on the deposit. It is the appellant's case that the respondent, on its

own, opened a trading account and a demat account in the name of

the appellant, and undertook sale and purchase of shares in the said

account without the instructions of the appellant. It is his case that

interest was, in fact, credited to his account on one occasion by the

respondent.

4. We have heard the appellant and gone through the award of

the Tribunal as also the judgment of the Ld. Single Judge. We find that

the arbitral Tribunal and the learned single Judge have dealt with the

aforesaid case of the appellant in detail and have disbelieved the

same. It was held by the Tribunal, and also taken note of by the

learned single Judge, that the version put forth by the

appellant/claimant was not supported by documents. Agreements

between the parties established the relationship between the

respondent and the appellant as that of a broker and a

trader/purchaser/seller of shares. The version of the appellant that he

had merely invested the money with the respondent on an assurance

of a minimum guaranteed return on investment, was held to be

contrary to the SEBI/NSE Rules which prohibit the making of any such

assurance to a customer by a broker.

5. The appellant maintained an e-Speed account, and was

possessed of the password for the said account which enabled him to

not only view the status of his demat account with the respondent, but

also to give instructions to the respondent to purchase/sell shares. The

appellant had, in fact, issued two cheques amounting to Rs.62 lakhs

(approximately) towards discharge of his liability which had been

dishonoured on presentation. There was no basis for the appellant's

claim that these cheques were given on account of "Accounting

Generally", and on an assurance by the respondent that they would

not be presented for encashment.

6. The case of the appellant that the amount of Rs.1.07 lakhs

and Rs.10,000/- was credited to his account by the respondent on

account of interest on the amount of Rs.15 lakhs deposited with the

respondent was disputed by the respondent. The case of the

respondent was that the said amount was advanced as a loan to

enable the appellant to tide over his difficult financial position.

Moreover, there was voluminous documentary evidence to the

contrary to show that the amount of Rs. 15,00,000/- was deposited by

the appellant for the purpose of undertaking purchase and sale of

shares, and not by way of an interest bearing investment. The learned

single Judge in the impugned judgment has culled out the relevant

evidence to reject the aforesaid submission of the appellant by, inter

alia, taking note of the following facts :-

a) The amount of Rs.14.4 lakhs was paid in a staggered

manner through different cheques over a period of about

two months between 17.1.2004 and 16.3.2004. The

purchase of shares in the account of the objector began

even earlier to the deposits being made.

b) The appellant entered into an agreement dated 2.1.2004

for trading in securities and was assigned a specific client

ID for this purpose. He maintained a separate demat

account for which he entered into a separate agreement

with the respondent. As aforesaid he also entered into an

agreement for availing of the e-Speed facility to enable

issuance of instructions to the respondent and to keep a

constant watch on his portfolio of investments.

c) The appellant, admittedly, had been carrying on sale and

purchase of shares even before entering into the aforesaid

agreements with the respondent. His wife and brother-in-

law were also dealing in shares. He was not a novice in

this field.

d) Pertinently the appellant had issued two cheques of Rs.30

lakhs and 32,32,645.31 to square of his liability as on

31.3.2004. This, to our mind, clearly shows that the

appellant was indulging in speculative purchase and selling

of shares in the stock market through the respondent

broker. This also clearly belies the appellant's claim that

he had merely invested on the sum of Rs.15 lakhs on the

assurance of a fixed return and that it was the respondents

who were indulging in buying and selling of shares in the

name of the appellant without his knowledge or

involvement. This also shows that the appellant was aware

of, and acknowledged his liability to the tune of Rs.

62,32,645.31 owed to the respondent. If there was any

truth in the aforesaid case of the appellant, there was no

occasion for him to have issued the aforesaid two cheques

of about Rs.62 lakhs which, by no means, is a small

amount.

e) The appellant himself, admittedly, being involved in the

purchase and sale of shares would be well aware of the

risks in the share market and the fact that the share

market invariably sees upswings and downswings. In

these circumstances, the learned single Judge held that it

was difficult to accept the appellant's contention that he

was assured a hefty return of 24% per annum on his

investment. In any case no document or any cogent

material has been brought on record to substantiate the

aforesaid claim.

f) The respondent raised a demand of Rs.1,08,56,840.24

which was the debit balance in the account of the

appellant vide letter dated 30.6.2004. The appellant did

not make payment of the same. The shares held by the

appellant were transferred to his pool account on his

instructions and sold for a value of Rs.74,84,208.65 leaving

an outstanding balance of Rs,32,72,651.59. Pertinently in

his reply dated 8.7.2004 to the aforesaid demand, the

respondent did not claim that he had made an investment

on an assured or fixed return. Even in his further reply

dated 22.7.2004, he made no such claim. Once again

while replying to the legal notice dated 14.7.2004, on

30.7.2004, no such claim was made by the appellant. This

claim was made for the first time on 30.8.2004 when he

stated that the respondent should pay a fixed return of 2%

per month plus sharing of profit, if any, irrespective of

losses.

7. In our view, the learned single Judge rightly held that the

arrangement claimed by the appellant was too good to be true. The

learned single Judge also observed that the appellant never questioned

the deposit of the cheques of approximately Rs.62 lakhs, as aforesaid,

which also belies the stand of the appellant.

8. In view of the aforesaid position, we find that there is

absolutely no error either in the award or in the view taken by the

learned single Judge with which we are primarily concerned. The

learned single Judge, has examined the case of the appellant thread-

bare and has found the same to be false. We see no reason to differ

from the view taken by the learned single Judge. The award appears

to be fair and reasonable.

9. The jurisdiction of the Court while examining the award under

the 1996 Act is supervisory. Intervention is envisaged only on limited

grounds like fraud or bias of the arbitrator, violation of principles of

natural justice, or where the award is in violation of public policy (See

Mc Dermot Int. Inc. Vs. Burn Standard Co. Ltd. (2006) 11 SCC 181).

The impugned award cannot be said to be opposed to public policy, as

it is not shown how the award is patently arbitrary or patently illegal

i.e. in violation of statutory provisions, much less that any such

arbitratriness or illegality goes to the root of the matter. The aforesaid

findings of fact, recorded by the Arbitral Tribunal are based on the

materials / documents produced before it. The Arbitral Tribunal is the

final judge of the facts and it is not for this court to sit in appeal over

the findings of fact recorded by the Tribunal by resorting to re-

appreciation of evidence. It cannot be said that the said findings

have been arrived at without any material or basis whatsoever. It is

not for this court to assess the sufficiency or insufficiency of the

evidence before the Tribunal, and so long as the view of the Tribunal is

a plausible view, this court would not interfere, even if a different view

could be taken on the material evidence before the Tribunal.

Accordingly, the appeal is dismissed and the judgment of the learned

single Judge is affirmed. The appeal stands disposed of in the

aforesaid terms.

(VIPIN SANGHI) JUDGE

(MUKUL MUDGAL) JUDGE January 15, 2009 as