CHOUDHARY Vs. NARENDRA DEV RELAN

JUDGEMENT

(1.) THE defendants Nos. 1 and 2 in this suit for declaration and recovery of monies have applied under Section 8 of the Arbitration and Conciliation Act,1996.

(2.) THE plaintiffs are members of a family. The plaintiffs in or about the year 1997-98 were selling and purchasing stocks/shares. The defendant No.3 M/s.R.K. Relan and Co., a partnership firm of the defendants No.1and2 was carrying on business as a stock/share broker. The defendant No.3 was a member of the Delhi Stock Exchange Association Ltd. Impleaded as defendant No.4. The plaintiffs were selling/purchasing shares through the defendant No.3. The defendant No.3 is stated to have defaulted in making payments and delivery of shares to the plaintiffs. The plaintiffs complained to the various Regulatory Authorities including SEBI and the defendant No.4. The plaintiffs claimed to have received a letter dated 5th March, 1999 from SEBI stating that the defendant No.3 M/s R.K. Relan and Co., Member, Delhi Stock Exchange had been referred to Default Committee for declaring them as defaulter on account of non redressal of investors? complaint. The plaintiffs claimed to have received another letter dated 22nd October, 1999 from SEBI stating that the defendantNo.3 M/s R.K. Relan and Co. had been declared as a defaulter by the Delhi Stock Exchange and the plaintiffs could approach the Delhi Stock Exchange (DefendantNo.4) for their complaints and the same shall be settled after due verification. The plaintiffs at that time had claims of recovery of principal sum ofRs. 4,26,144.78 and Rs. 63,599/- against the defendant No.3 besides of delivery of certain shares. The plaintiffs further pleaded that they received letters from the defendant No.4 Delhi Stock Exchange asking the plaintiffs to sign on prepared letters, acknowledging receipt of the said Rs. 4,26,144.78 andRs. 63,599/- as well as the shares which the defendant No.3 had failed to deliver. The plaintiffs claim to have signed the said prepared letters with their own endorsement that they were accepting the full and final settlement of principal amount. Otherwise, it was printed on the said letters that the said amounts were received in full and final settlement of claims against M/s R.K.Relan and Co. (dissolved).

(3.) THE defendants No.1and2 on receipt of summons applied under Section 8of the Arbitration Act. It is the case of the defendants No.1and2 that as per the bye laws of the Delhi Stock Exchange, no sale or purchase of shares can be affected without execution of a contract in terms of the said bye-laws; that such contract notes were prepared in relation to the transaction of the defendant No.3 with the plaintiffs also; that the said contract notes were filed by the plaintiffs themselves in the complaint being pursued by the plaintiffs against the said defendants before the Consumer Courts; that the said contract notes contain a clause for arbitration of all claims, differences or disputes in respect of any dealings, transactions and contracts, in terms of the rules, bye laws and regulations of the Delhi Stock Exchange. It is further pleaded by the defendants No.1and2 that the plaintiffs had as such complained to the Delhi Stock Exchange and on receipt of the complaints of the plaintiffs as well as others against the defendant No.3, the Delhi Stock Exchange appointed a Default Committee headed by Justice M.M. Goswami (Retd.) to look into all the claims of the investors against the defendant No.3; that pursuant to the appointment of Justice M.M. Goswami as arbitrator, the defendant No.3 was declared as a defaulter and the defendants No.1and2 were directed to deposit certain monies; that on demise of Justice Goswami, Justice M.K. Chawla was appointed on the Default Committee; that notices were issued to the plaintiffs by the Default Committee and the plaintiffs had pursued their claims before the Default Committee and had accepted the monies and the shares in full and final settlement. It is further pleaded that the claims in the present suit emanate from sale and purchase of shares subject matter of the contract notes containing an arbitration clause and thus this court under Section 8 had no other option but to refer the parties to arbitration.