HARINARAYAN G BAJAJ Vs. RAJESH MEGHANI

JUDGEMENT

(1.) Leave granted.

(2.) The first named respondent is a share broker and was a member of the National Stock Exchange of India Ltd. (referred as the NSE). The NSE which was initially named as the second respondent has been deleted from the array of parties at the instance of the appellant. We will therefore refer to the first respondent as the respondent. The appellant started trading in shares through the respondent. In March, 2001 three separate transactions were entered into between the appellant and respondent for purchase of three separate lots of shares of Amara Raja Batteries Ltd. The respondents allegation is that the appellant did not make payment for the shares bought by the respondent for and on behalf of the appellant and that by reason of the non-payment for the shares, the NSE declared the respondent as a defaulter on 19th June 2001. On 21st June 2001, the respondent referred his claim against the appellant to Arbitration under the Bye-laws of the NSE. The appellant contested the claim and contended that the Arbitration reference under the Bye-laws was not maintainable on the ground that the same was filed after the respondent had been declared a defaulter. The appellant also filed a counter claim against the respondent before the Arbitral Tribunal.

(3.) On 31st July 2002, the Arbitral Tribunal passed an award in favour of the respondent for an amount of Rs. 3,46,89,636/- after rejecting the preliminary objection raised by the appellant as to the maintainability of the arbitration proceedings. The Arbitral Tribunal held that the transactions in question had been completed prior to the respondent being declared a defaulter and that the respondent was not in any way debarred or prevented from pursuing his claim to recover amounts due from the appellant in respect of such transactions.