Delhi High Court
Ashwani Kumar Mittal vs Vimla Securities Pvt. Ltd. on 20 July, 2009
Author: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: July 09, 2009
Date of Order: July 20, 2009
+OMP 341/2006
% 20.07.2009
Ashwani Kumar Mittal ...Petitioner
Through: Mr. Chetan Sharma, Sr. Adv. with Mr. Sushil K. Pandey,
Advocates
Versus
Vimla Securities Pvt. Ltd. ...Respondent
Through: Mr. Jay Salva with Ms. Arundhati Das & Mr. Rajpal Singh,
Advocates
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the judgment?
2. To be referred to the reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
1. By this petition under Section 34 of the Arbitration & Conciliation Act,
1996 ("the Act" for short) the petitioner has assailed an award dated 16th
March 2006 passed by learned Arbitrator rejecting the claim of petitioner on
the ground that the references were barred by limitation.
2. It is submitted by petitioner that the learned Arbitrator wrongly relied
upon the bye-laws of New Delhi Stock Exchange Limited (NDSL) which
provided that the parties had to submit for arbitration within a period of six
months from the date on which claim/dues or disputes arose. It is also
submitted that the learned Arbitrator wrongly came to conclusion that the
disputes /differences arose on 22nd December 2001 and the learned Arbitrator
wrongly held that the reference was barred by limitation.
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3. Brief facts relevant for purpose of deciding this petition are that the
petitioner worked as sub-broker of respondent for National Stock Exchange
during 1998-2001 and petitioner alleged that he was having a mutual running
demat account with the respondent and used to carry trade as sub-broker of
respondent. The petitioner had to recover certain securities from respondent
for which he had made payment in 2001. Respondent closed down its office in
Delhi and shifted to Mumbai. The petitioner continued sending letters to
respondent. Ultimately, the petitioner addressed a letter to Stock Exchange
Board of India (SEBI) about conduct of respondent on 8th December 2004 and
SEBI referred the matter to Investors Grievance Cell of National Stock
Exchange, New Delhi. After exchange of certain correspondences NSEIL
advised petitioner to move arbitration. The petitioner then moved an
arbitration application and the matter was referred to the learned Arbitrator
under National Stock Exchange's Rules. When the notice of this arbitration
was sent to respondent, respondent took objections that the reference was
barred by limitation under Chapter II of Rules of NSEIL. Respondent also
raised issue of territorial jurisdiction of the arbitrator at New Delhi. The
learned Arbitrator framed two issues, one about the territorial jurisdiction and
the other about limitation. The issue of territorial jurisdiction was answered in
favour of the petitioner, however, the issue of limitation was answered
against petitioner and the learned Arbitrator observed that Bye-Laws (2) and
(3) of National Stock Exchange, under which reference was made provide for
raising a dispute within six months from the date of such arising claim or
dispute. The Bye-laws, however, also provides that the time taken for
conciliation proceedings, if any, initiated and continued as per the provisions
of the Act and the time taken by relevant authorities to administratively
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resolve the claims/ disputes is excluded for the purpose of determining the
period of six months. The petitioner contended that in view of the bye-laws,
the entire period for which he has been corresponding with respondent and
he had made complaint to SEBI and the SEBI had been administratively
dealing with the disputes, should have been excluded by the learned
Arbitrator.
4. The other submissions made by petitioner is that under the Limitation
Act a limitation for three years was provided and this shall have precedence
over the byelaws and rules of NSEIL. The period limitation cannot be curtailed
by byelaws and the Limitation Act being an Act of Parliament will have
supremacy over the rules framed by National Stock Exchange.
5. Both the above contentions were rejected by the learned Arbitrator and
to my view rightly so. It is an undisputed fact that the while applying to
National Stock Exchange seeking adjudication of its claims, the petitioner had
requested for adjudication of his differences with the respondent within the
purview of byelaws, rules and regulations of the Stock Exchange. Since
respondent was a member of Stock Exchange and the petitioner had invoked
the arbitration clause contained in byelaws of the Stock Exchange, the
petitioner cannot take a stand that the provisions of byelaws of the Stock
Exchange would not be applicable. These byelaws have been framed by the
Stock Exchange by virtue of powers conferred under Section 9 of Securities
Contracts (Regulation) Act, 1956 and these byelaws take form of subordinate
legislation and it cannot be said that these byelaws are in any way inferior to
the statutory provisions of Limitation Act. Moreover, it is settled law that the
parties to a contract can bind themselves to a period of action different from
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statutory provisions. Only those contracts can be said to be void which are
covered under Chapter II of the Contract Act. If the parties had agreed that a
dispute is to be referred within six months from the time of starting of cause
of action, such a provision cannot be said to be void. I, therefore, consider
that the learned Arbitrator rightly came to conclusion that the byelaws of NSE
would be applicable in this case and the reference was to be made within six
months.
6. The other plea taken by petitioner is that the start of cause of action
should considered only when he was advised by SEBI to take the matter to
arbitration. The cause of action in this case arose in December 2001 when the
petitioner wrote to respondent asking respondent for supply of shares
mentioned in the list of claim. No response to this letter was received from
respondent. Respondent in fact had shifted its office from Delhi to Mumbai.
When the petitioner did not receive a response about supply of shares, the
petitioner did not take steps from 2001 to 2004. I consider that the law did
not permit the petitioner to keep sleeping over his rights. Even if the
petitioner was not aware that the respondent had shifted from Delhi, the
petitioner could have initiated proceedings against respondent to enforce his
rights. Non-availability of respondent or respondent's shifting from the
address known to the petitioner is no ground for extension of limitation or
shifting of the date of cause of action. In fact, petitioner himself recorded in
his claim petition that cause of action first arose on 22nd December, 2001
when respondent failed to supply the shares, mentioned in the list of claims.
Thus, the cause of action had arisen, even as per the petitioner's version, in
December 2001. The petitioner now cannot take the plea that the cause of
action remain suspended because the petitioner had been corresponding with
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the respondent or SEBI. Since the cause of action arose in 2001, even if the
period of limitation was taken as three years, the reference made to the
arbitrator for adjudication of disputes was barred by limitation.
7. I find no ground to interfere with the award passed by learned
arbitrator. The petition is hereby dismissed being without merits. No orders as
to costs.
July 20, 2009 SHIV NARAYAN DHINGRA J.
rd
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