Geojit Financial Services vs Shashi Srivastava & Ors.
2014 Latest Caselaw 1611 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           FAO No. 222/2013& CM No.7733/13 (stay)

%                                             26th March, 2014
GEOJIT FINANCIAL SERVICES                                 ......Appellant
                   Through:              Mr. Aman Singhal, Adv.

                            VERSUS

SHASHI SRIVASTAVA & ORS.                             ...... Respondents

                 Through:                Mr. Abhijeet Sinha, Adv.

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 under Section 37 of the Arbitration and

Conciliation Act, 1996 impugning the order of the court below dated

26.3.2013, by which the objections filed by the appellant-objector

challenging the Award of the arbitrator dated 21.1.2010 have been

dismissed. By the Award dated 21.1.2010, the arbitrator Justice (Retired)

M.A.Khan (appointed by the National Stock Exchange), awarded an amount

of Rs.2,48,358/- in favour of the respondent no.1 herein, claimant in the

arbitration proceedings. The amount was awarded on account of the

appellant/objector illegally selling various shares in the De-Mat account

which the respondent no.1/claimant maintained with the appellant/objector.

2. The case of the respondent no.1-claimant in the arbitration

proceedings was that appellant without the consent of the respondent no.1

sold the following shares:

(i)     Reliance Industrial-70
(ii)    Reliance Communications 70
(iii)   RNRI 170
(iv)    Hindustan Uni Lever 190
(v)     Chambal Fertilizer 75
(vi)    Reliance Capital 8 and
(vii) Reliance Infrastructure 4

3. Respondent no.1-claimant stated that she never gave any

authorization whatsoever to the appellant to conduct trades in these shares.

Respondent no.1 also stated that all the employees at the Varanasi Branch

who dealt with the account of the respondent no.1 were removed from

service. Respondent no.1-claimant had contended in the arbitration

proceedings that there are no documents filed by the respondent no.1

showing placing any orders by the respondent no.1 for the transactions in

her account, no proof is shown by the appellant of the respondent no.1

visiting the office of the appellant for placing the orders which ran into 100s

in number, no proof was filed of any telephonic conversation showing

placing of orders by the respondent no.1 upon the appellant and finally no

proof is filed of delivery of all contract notes to respondent no.1 by the

appellant after the transactions were entered into by the appellant on behalf

of the respondent no.1.

4. The case of the appellant in the arbitration proceedings

essentially was based upon the authorization dated 6.6.2008 allegedly to

have been signed by the respondent no.1 permitting the appellant to carry

out any trades whatsoever in the De-Mat account of the respondent no.1

maintained with the appellant. Appellant also contended that after the

transactions were done it had sent the contract notes to the respondent no.1

by UPC and by courier. Appellant contended that any trading which was

done by it in the account of the respondent no.1 was after proper

authorization and due intimation was sent to the respondent no.1 of the

trades conducted, and the claim petition was misconceived and malafide

because actually the respondent no.1 had suffered loss in the transactions

carried out.

5. In the Award dated 21.1.2010, the arbitrator has arrived at the

following salient conclusions:-

(i) The authorization dated 6.6.2008 is not an authorization which was

given by the respondent no.1 to the claimant i.e this is a fabricated

document.

(ii) There is no proof that any instructions for trading were given by the

respondent no.1 to the branch office of the appellant at Varanasi, and which

transactions were in the months of May to August, 2008, and taken with the

aspect that on certain dates transactions were as many as 46 (24.6.2008), 181

(25.9.2008), 93 (25.7.2008) etc etc.

(iii) There is no proof that respondent no.1 ever having personally visited

the Varanasi office of the appellant because no visitors register showing

presence of the respondent no.1 in the Varanasi office was filed by the

appellant.

(iv) No proof is filed by the appellant of any telephonic conversation on

those days from May to August, 2008 when transactions were carried out by

the appellant as per the alleged instructions of the respondent no.1.

(v) Contract notes of the transactions are not sent to the respondent no.1

by the appellant inasmuch as the proof of sending viz basically by UPC and

a few courier receipts, lack credibility.

6. Some of the relevant observations of the arbitrator are

contained in paras 7 to 9 of the Award and these paras read as under:-

"7. The representatives of the respondent has strenuously argued that the applicant and her husband had been visiting the Varanasi branch of the respondent and were in constant touch with the officials of the respondent branch. It is stated that all the trades and transactions executed in the account of the applicant have been carried out by the applicant herself. The copies of the contract notes have also been submitted. Examination of few contract notes would show that there were heavy transactions with the interval of few minutes almost through the day. For example the contract note dated 20.7.2005 shows that the first order for trade was allegedly placed by the applicant at 9:50:11 and the last order was placed at 15:29:44 and with the interval of few seconds and minutes as many as 46 transactions were carried out. Further, the contract note relating to the trades executed on 24.6.2008 shows that the first five orders for the trades were placed at 9:56:43 and the last order for trade was at 15:29:32. In between these trades these were as many as 181 Transactions were carried out with intervals of few seconds and few minutes throughout the trading time. The contract notes for 25.9.2008 shows that the first two orders were placed at10:56:43 and the last order was at 12:35:11 and in between there were nine other trades with intervals of few minutes and few seconds executed. The contract note dated 30.9.2008 shows that first order for trades was placed at 10:50:52 and the last order was at 15:48:53. In between trades numbering 15 were executed. The contract note for 25.7.2008 shows that the first order for trade was allegedly placed at 9:55:37 and the order for five last trades was placed at 15:26:P21. In between 93 transactions were carried out with intervals of few seconds and few minutes throughout the trading day. The contract note for 18.7.2008 shows that the first order for trade was allegedly placed at 9:55:37 and the order for five last trades was laced at 15:26:P21. In between 93 transactions were carried out with intervals of few seconds and few minutes throughout the trading day. The contract note for 18.7.2008. Shows that first order for first transaction was placed at 9:56:51 and the last order for trade was placed at 15:11:46. In between as many as 200 trades were executed with the interval of few seconds and few minutes throughout the trading day. Again, the contract note dated 17.7.2008. Shows the first order for transaction took place at 9:56:51 and the last order was at 15:22:10 and in between with the intervals of few seconds and few minutes 64 trades were carried out. The contract note dated 28.8.2008 shows that the order

for first trade was received at 13:23:30 and the last order was placed at 15:51:44. In between these two orders as many as 34 trades were carried out with the intervals of few seconds and few minutes and the contract note dated 17.2.2008 shows that the order for first trade was received at 9:56:51 and the order for last trade was at 14:23:49 and in between ten trades were executed with intervals of few minutes and few seconds.

8. From the above contract notes the necessary inference is that if the trades mentioned about contract notes were executed by the applicant she must be an on lines trades mentioned about contract notes were executed by the applicant she must be an on line trade which she is admittedly not or she was sitting in the branch office of the respondent at Varanasi throughout the trading hours and was giving instructions to the officials of the respondent branch. If this contention is believed the respondent would have produced the visitor's register of the branch to show the entry and departure of the applicant or even of her husband in the branch office of the respondent. This has not been produced. Any other document showing that that the applicant or even her husband had come to the office of the respondent for carrying out these heavy and large number of transactions, noted above, has been filed by the respondent. If the respondent was in touch or in contract with the officials of the branch office of the respondent for carrying out transactions, mentioned in the contract note, it would mean that she had been constantly on telephone line and talking to the officials of the respondent taking information and placing order for the trades second by second and minute by minute. It is impossible to execute such large number of transaction on telephone. Even otherwise telephonic conversation or any record of telephone incoming and outgoing calls of the respondent made or received from the applicant has not been filed by the respondent. It is also pertinent to note that the trading account was initially opened by the applicant at Lucknow branch of the respondent. No trade note of any trade similar to the trades, which have been executed at Varanasi branch, have been produced by the respondent the necessary inference is that these large number of transactions have been carried out by the officials of the respondent with instructions and consent of the applicant.

9. The respondent was obliged to send contract notes of the transactions carried out in the trading account of the applicant and the Photostat copies of the certificates of posting of future contract notes allegedly sent on 1.7.2008, 2.7.2008, 5.7.2008, 3.7.2008, 3.7.2008, 18.7.2008, 21.7.2008, 26.7.2008, 27th or 29.7.2008, 30.7.2008 and 31.7.2008 have been filed. The applicant has denied to have received any such contract notes. The onus was upon the applicant to prove that the

contract notes were delivered to the applicant. The contract notes were not sent by registered post so the proof of delivery thereof is obtained. In this case there is no allegation that the digital contract notes were sent. I here for, I do not find the evidence produced by the respondent about delivery of the contract notes to be reliable. This reinforces the contention of the applicant that she had no information about the transactions and the trades were executed in her account without her authority and consent."

(underlining added)

7. The court below has dismissed the objections by observing that

arbitrator has arrived at findings of facts on the basis of record/evidence, and

courts under Section 34 do not sit as an appellate court to reppraise the

findings of facts and conclusions of the arbitrator, once the conclusions are

reasonable conclusions which any reasonable person can arrive at.

8. To satisfy my judicial conscience I have gone through the

arbitration record. It could not be disputed on behalf of the appellant that

there is no proof of any written instructions of orders being placed by the

respondent no.1 upon the appellant and also there is no proof filed before the

arbitrator of any telephonic instructions given to the appellant by the

respondent no.1. Also, there is no dispute that respondent no.1 never visited

the Varanasi Branch office of the appellant. The only documentary evidence

filed by the appellant pertained to sending of contract notes, and which the

arbitrator in my opinion has rightly held to lack credibility because this

documentary proof consists only of UPC document, and not of sending by

registered AD post. Also, about 3 odd courier receipts have been filed

however, a reference to the same also show that they lack credibility because

there are no signatures of the respondent no.1 on these receipts to show that

she ever received any document as per the courier receipts.

9. No doubt, there was a disputed question of fact as to whether or

not respondent no.1 had given any authorisation dated 6.6.2008, but this

document the arbitrator within his jurisdiction has held not to be a genuine

document I would not want to entertain any quarrel about this aspect

because arbitrator is the final authority with respect to appreciation of

evidence, and if two views are possible, no court hearing objections under

Section 34, much less an appellate court hearing an appeal against the

judgment dismissing objections, would want to reappraise the finding of

fact. In any case, it appears to be very doubtful as to why any customer will

give a totally 'blank cheque' so as to say by a limitless authorization at

6.6.2008 for any and every trading at any and every rate and any and every

date from the shares in the De-Mat account of the respondent no.1. It is

inconceivable why such an unlimited power could ever have been given by

the respondent no.1 who is not in any manner related to the appellant or any

of its directors etc, and the respondent no.1 is only a normal customer of the

appellant. Therefore, for this additional reason I agree with the conclusions

of the arbitrator that so called authorization dated 6.6.2008 allegedly signed

by the appellant is a fabricated document.

10. In view of the above, I do not find any merit in the appeal, and

the same is therefore dismissed, leaving the parties to bear their own costs.

MARCH 26, 2014                                VALMIKI J. MEHTA, J.
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