TREXIM CORPORATION Vs. FORTIS SECURITIES LTD

JUDGEMENT

(1.) The challenge in this petition under Section 34 of the Arbitration and Conciliation Act, 1996 ('Act') is to an Award dated 28 th October 2004 passed by the Arbitral Tribunal constituted under the Bye Laws, Rules and Regulations of the National Stock Exchange of India Ltd. ('NSEIL'). By the impugned Award the Arbitral Tribunal allowed the claims of the Respondent and directed that the Petitioner would pay to the Respondent a sum of Rs. 43,15,797.06 together with simple interest @ 12% per annum from 1 st April 2000 till the date of the payment.

(2.) The Petitioner Trexim Corporation ('Trexim') states that it had certain transactions with the Respondent Fortis Securities Ltd. ('Fortis') in sale and purchase of shares from December 1997 onwards. The dealings between the parties were in accordance with the Contract Notes that were duly acknowledged and confirmed in writing. Trexim and its partner Mr. Arvind Kapur appended signatures to a Member-Constituent Agreement dated 11 th February 1998. While the case of Trexim was that the parties stopped transacting after December 1999, barring a few transactions in January 2000, Fortis maintained that the transactions continued in February and March 2000. Fortis' claim before the Arbitral Tribunal of the NSEIL was that for the transactions between January and March 2000, Trexim owed it a sum of Rs. 80,16,602.83 together with interest at 24% per annum with effect from 22 nd March 2000 till the date of payment. Trexim on the other hand denied that the transactions for which the claim was raised were entered into on its behalf by Fortis.

(3.) Trexim's preliminary objection to the constitution of the Arbitral Tribunal was rejected by it by an order dated 18 th January 2002. In the final Award dated 28 th October 2004 the Arbitral Tribunal negatived Trexim's further preliminary objections to its jurisdiction to entertain Fortis' claims. It held that inasmuch as Bye Law 1 (a) of the NSEIL's byelaws provided that all dealings on the NSE were automatically subject to arbitration under the NSEIL Bye Laws, Rules and Regulations, and the MCA between Trexim and Fortis also mentioned that all dealings between them on the NSE shall be subject to its bye laws, there was in effect an arbitration agreement between the parties. Trexim's contention that the disputes could only pertain to transactions on the NSE was accepted by the Arbitral Tribunal. It was however observed that if Fortis was prepared to give credit to Trexim for any money due to Trexim even though arising outside NSE transactions, there could be no objection as Fortis was voluntarily giving up its claim by way of adjustment.