Delhi High Court
Sh. Sukhbir Singh Yadav vs M/S Motilal Oswal Securities Ltd. ... on 4 August, 2011
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO No. 141/2010 & CM No.6414-15/2010
% 4th August, 2011
SH. SUKHBIR SINGH YADAV ...... Appellant
Through: Mr. Gopal Verma, Adv. and
Mr. Jagmohan Sharma, Adv.
VERSUS
M/S MOTILAL OSWAL SECURITIES LTD. & ANR. ...... Respondents
Through: Mr. Manoj V. George and Mr. K.
Gireesh Kumar, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported in the Digest?
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of this first appeal under Section 37 of the
Arbitration and Conciliation Act, 1996 (in short „the Act‟), is to the
impugned judgment dated 7.11.2009 which dismissed the objections of
the appellant under Section 34 of the Act.
2. The facts of the case are that the respondent no.1/broker entered
into a member client agreement with the appellant/client on 16.2.2006. It
was the case of the respondent no.1/claimant in the arbitration
FAO No.141/2010 Page 1 of 5
proceedings that after having conducted various trades/transactions, as
per the instructions of the appellant, and the appellant having paid
monies on two occasions, on account of payments due for the trades
done, as on 18.12.2006 there was a debit balance of Rs.1,86,256.74 which
was payable by the appellant to the respondent no.1. Since this balance
was not paid in spite of repeated communications and reminders
arbitration proceedings were invoked and a claim petition was filed for the
said amount. The respondent contested the proceedings and took up a
defence that the trades were conducted by the respondent no.1 on behalf
of the appellant without any notice to or knowledge of the appellant. It
was stated that the respondent no.1 carried out unauthorized trades and
therefore the respondent no.1 was not entitled to the amount claimed. It
was also stated that no contract notes were sent to the appellant. The
Arbitrator by his Award dated 16.11.2007 allowed the claim petition and
awarded the amount of Rs. 1,86,256.74 to the respondent along with
interest.
3. The trial court has dismissed the objections by taking note of the
fact that if the trades were without any notice to the appellant or without
his knowledge, then there was no reason for the appellant to have made
on account payments on two occasions to the respondent no.1 of
Rs.30,000/- and Rs.50,000/-. It is also noted by the trial court that the
Arbitrator has noticed the fact that the trades were carried out for a very
long period from 21.2.2006 till 18.12.2006 and therefore it does not lie in
FAO No.141/2010 Page 2 of 5
the mouth of the appellant to allege complete ignorance. The most
important aspect which is noted by the Arbitrator for allowing of the claim
petition was the stand of the appellant herein that some trades were done
by the respondent no.1 without his knowledge but some trades were done
with consent thus showing that he cannot take up a stand that all the
trades were without the knowledge or consent of the appellant. At no
point of time, any notice was sent by the appellant to the respondent no.1
as to which trades was done without approval. Even in the arbitration
proceedings except making a bald assertion that certain trades were done
with approval and certain trades were done without approval, no details
were given of the trades done without approval.
4. The Arbitrator, in the Award, has given the following relevant
conclusions to allow the claim petition.
"As already pointed above the respondent states that
some of the transactions were with his approval. Those
transactions which were with his approval even have not
been pointed out. In the absence of the same the
arguments which were eloquently put forward on behalf
of the respondent loses the significance and thrust. It
there were any such transactions details should have
been forthcoming indicating as to how the approved
transactions were conducted and disown others.
Not only that the claimant‟s plea that it has regularly
been sending contract notes though the respondent
denies that he received the same but still the plea of the
respondent falls flat because of the reason that during
these 10 months it is strange that the respondent never
claimed to have the accounts or in this regard to even
find out what exactly had transpired. If he was not
receiving the account as a normal prudent person he
would have insisted for supply of the transactions or even
FAO No.141/2010 Page 3 of 5
the statement in this regard. Nothing of the kind is
shown to have been done." (underlining added)
5. The court below has dismissed the objections by making the
following observations.
"18. In the light of the above judicial
pronouncement, this court has carefully examined the
impugned award dated 16.11.2007 and the perusal of
the same shows that the ld. arbitrator has considered
the entire objections of the petitioner and has
discussed each and every aspect of the dispute
between the parties. The Ld. arbitrator has given
findings on every objection of the petitioner and has
taken into account all the relevant documents and the
material placed on record, by the parties.
19. Perusal of the record further shows
that the petitioner has deposited a sum of Rs.50,000/-
with the respondent no.1 on 12.5.2006 and the
statement of account clearly mentions that the said
payment was received by the respondent no.1 as "on
account payment". The statement of account further
shows that the payment of Rs.30,000/- was also made
by the petitioner on 9.3.2006 as "on account
payment". The period with effect from 9.3.2006 till
the payment dated 17.5.2006, a large number of
transactions have taken place but the petitioner has
failed to lodge any complaint with any authority,
regarding the fact that the transactions were being
done by the respondent no.1 without his knowledge or
consent or without his directions. During the course of
arguments, ld. counsel for the petitioner has admitted
that the notice for appointment of the arbitrator was
received by the petitioner and he has also admitted
that there is an arbitration clause in the agreement
between the parties.
20. The perusal of the record further shows that
the respondent no.1 has placed on record the contract
notes duly certified on behalf of the respondent No.1
and the same were duly considered by the arbitrator
while passing the award dated 16.11.2007."
(underlining added)
FAO No.141/2010 Page 4 of 5
6. The scope of hearing of objections to an Award is limited. The court
hearing objections does not sit as an appellate court and reappraise the
findings of facts. Merely because two views are possible, the court
hearing objections cannot interfere with the Award unless the Award is
wholly perverse, illegal or violative of the principles of natural justice. If
the scope of hearing of objections is limited, then surely, the scope of
hearing of an appeal against the judgment dismissing objections has to be
further limited. Unless there is gross perversity or gross illegality, this
court would not interfere in an appeal against a judgment dismissing
objections.
7. In view of the established fact on record that certain trades were
done with the approval of the appellant and at no point of time, the
appellant objected to the so called other trades allegedly done without his
approval and not having furnished details even in the arbitration
proceedings of the alleged trades done without his approval, I do not find
any merit in the appeal. The objections were rightly dismissed by the trial
court. The appeal and the applications are accordingly dismissed leaving
the parties to bear their own costs. Trial court record be sent back.
AUGUST 04, 2011 VALMIKI J. MEHTA, J.
ib
