Delhi High Court
Indiabulls Securities Limited vs Ramesh Chand Gupta & Anr. on 13 February, 2014
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO No.47/2013
% February 13, 2014
INDIABULLS SECURITIES LIMITED ..... Appellant
Through : Mr. Mohit Gupta, Advocate.
versus
RAMESH CHAND GUPTA & ANR. ..... Respondents
Through : Mr. Rakesh Kansal, Adv. for R-1.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This First Appeal is filed by the appellant against the impugned
judgment of the court below dated 16.10.2012 whereby objections under
Section 34 of the Arbitration & Conciliation Act, 1996 filed by the
appellant/M/s. Indiabulls Securities Limited, were dismissed. By the Award,
the respondent no.1 herein, and who was the claimant in the arbitration
proceedings, was awarded damages by the Arbitrator/respondent
no.2/Justice Mr. V.S.Aggarwal (Retd.), Sole Arbitrator on the ground that
the appellant herein (respondent in the arbitration proceedings) wrongly
liquidated the holdings of the claimant/respondent no.1 although there was
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no balance due in the commencement of the trading on 21.01.2008 because
in the morning of 21.01.2008, a cheque of the respondent no.1/claimant
stood deposited in the bank account of the broker/appellant/objector, which
was in the same bank of respondent no.1/claimant and if there was any delay
for crediting of the account of the appellant by the Bank, then the
claimant/respondent no.1 cannot be held liable.
2. This aspect has been dealt by the court below in paras 5 to 7 of the
impugned judgment and which read as under:-
"5.Both the objections have been carefully dealt with by
the learned Arbitrator. With respect to the delay, he has
opined that the remedy to seek arbitration is not barred.
An arbitration could be initiated for settlement of a
dispute within six months, while before a Civil Court it
could be within three years as the statutory rights of a
claimant cannot be curtailed by any agreement. On
merits, the learned Arbitrator took notice of the fact that
the respondent claimant had protested on 22.01.2008
itself when he learnt about the petitioner's illegal action.
The learned Arbitrator also took note of clause 2.2 of the
Member Client Agreement, but not withstanding the
petitioner's right to square off the position, has noted
that the respondent cheque No.804984 was presented
and debited from his account on 21.01.2008 itself in
favour of the petitioner. For the sake of operational
convenience, the respondent maintained his account
with the same bank as that of the petitioner and,
therefore, it was only a fund transfer from o0ne account
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to another which should have been done immediately.
The delay if any could only be attributed to the bank.
There was nothing on record to show that respondent
had taken up the matter with the bank as to why the fund
transfer was not credited to their account immediately.
Learned Arbitrator has also taken note of the fact that as
per Clause 3.10 of the NSE in respect of F&O
regulations, non-payment of the daily settlement by the
constituent within the next trading day would entitle the
trading member to close out the transactions by buying
or selling the derivative contract. But as the respondent
had taken steps to reduce his liability within the next
trading day, the petitioner's inexplicable urgency in
selling off the respondent's securities was unwarranted
resulting in a loss to the claimant. The learned
Arbitrator therefore concluded that the respondent was
entitled to damages. He has also opined that in the
absence of any fixed or mathematical formula for
arriving at a figure in view of the fluctuating prices, the
damages awarded were confined to 50% of the amount
claimed, i.e. Rs.1,33,190.50.
6. There is no merit in the petitioner's arguments
that the M to M losses should have been made good
before the start of the next trading day. It has to be
settled within the next trading day, which the respondent
did.
7. Learned Arbitrator has gone into the details of the
transaction and has passed the award after due
application of mind. The respondent had taken all steps
for a fund transfer and his account had been duly
debited. The respondent had maintained an account
with the same bank as that of the petitioner to facilitate
the fund transfer. If the bank failed to credit the said
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amount to their account, they were at liberty to take it up
with their bank."(underlining added)
3. Before me, counsel for the appellant more surprisingly argued a
totally new case that the appellant herein, was claiming the balance due at
the end of trading of 21.01.2008 and not in the morning of 21.01.2008. For
this purpose, attention of this Court was invited to para 5 of the written
statement of the appellant before the Arbitrator.
4. The contention of the appellant is not only wholly frivolous but totally
against the pleadings, the entire basis on which the arbitration proceedings
took place and the matter which was argued in the objections filed under
Section 34. Para 5 of the written statement of the appellant talks only of the
balance not at the end of the trading of 21.01.2008 but at the commencement
of trading in the morning of 21.01.2008. As already stated above, the
appellant/respondent no.1 had cleared his balance because his cheque was
deposited in the account of the appellant in the morning of 21.01.2008 and
there was no delay on the part of claimant/respondent no.1 to make payment
with respect to the margin shortfall.
5. Considering the facts of the case, where the respondent no.1
has been unnecessarily put to litigations, costs and waste of time, and that
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the respondent no.1 had cleared his dues on the morning of 21.1.2008 itself,
this appeal is dismissed with costs of Rs.30,000/-. Costs shall be paid within
a period of four weeks. The amount decreed under the Award which is
deposited with the National Stock Exchange in terms of the Award be
released to the respondent no.1 forthwith on the copy of the present
judgment being given to the NSE.
FEBRUARY 13, 2014 VALMIKI J. MEHTA, J.
'sn'
