NIDHI VERMA Vs. PRABHUDAS LILLADHER PVT. LTD.

JUDGEMENT

(1.) ADMIT . With the consent of learned Counsel for the Appellant and the Respondent, the appeal is taken up for final hearing. Counsel for the Respondent waives service. This appeal arises from an order of a learned single Judge on a Petition under section 34 of the Arbitration and Conciliation Act, 1996 filed by the Respondent. The arbitral proceedings took place before an arbitral tribunal constituted by the National Stock Exchange. The Respondent is a Member of the National Stock Exchange who had entered into transactions on behalf of the Appellant. The claim of the Respondent was allowed by the arbitral tribunal in an Award dated 14 October 2009 in the sum of Rs. 3,25,597/ - on which interest was allowed at 12% per annum from 26 September 2008. There was a Counter Claim of the Appellant which was dismissed on the ground that it was barred by limitation. The dismissal of the Counter Claim was not challenged by the Appellant. However, the Respondent filed an Arbitration Petition under section 34 since the claim of the Respondent was allowed in the amount of Rs. 3,25,597/ - as against a claim of Rs. 24,43,064/ -. The learned single Judge while allowing the Arbitration Petition filed by the Respondent did so only on the ground that the rejection of the Counter Claim filed by the Appellant on the ground of limitation "needs to be considered in view of the latest circular whereby the period of limitation has been extended to 3 years instead of 6 months." Hence, without expressing any opinion on merits, and keeping all points open, the Arbitration Petition which was filed by the Respondent has been allowed and the arbitral Award has been set aside only on the ground that rejection of the Counter Claim of the Appellant was not in order.

(2.) HAVING heard the learned Counsel appearing on behalf of the contesting parties, we find that the ground of challenge in the Appeal is unanswerable and it was impossible in an Arbitration Petition under section 34 of the Arbitration and Conciliation Act, 1996 for the Court to set aside an arbitral Award on the ground of rejection of a Counter Claim though there was no challenge whatsoever by the original Respondent whose Counter Claim had been rejected. The challenge to the arbitral Award was at the behest of the Respondent who was aggrieved by the fact that as opposed to an arbitral claim of Rs. 24.43 lakhs, the Arbitrator had awarded an amount of Rs. 6.71 lakhs; and after giving due credit for an amount of Rs. 3.45 which had been realised, directed the Appellant to pay an amount of Rs. 3.25 lakhs. It was that challenge to the arbitral Award that fell for consideration. The rejection of the Counter Claim was not an issue at all since the Appellant whose Counter Claim had been dismissed had not challenged the rejection of the Counter Claim and had accepted the arbitral Award.

(3.) THAT leaves the Court to deal with the merits of the arbitral Award which was challenged by the Respondent in proceedings under section 34 of the Arbitration and Conciliation Act, 1996. The Appellant was a constituent of the Respondent. There was no short -fall in the margins relating to the transaction between the parties until 2 June 2008. From 3 June 2008 there was a debit balance until 19 June 2008, as noted in the arbitral Award. Thereafter, the Appellant made payment in her account to take care of the short -fall of margin and requested the Respondent to roll over the open position to the July 2008 series. On 24 June 2008 the position was corrected and there was a credit balance in the account of the Appellant which continued until 13 September 2008. From 15 September 2008 there was a short -fall of margin in respect of the open position of the Appellant. The settlement for September 2008 had to be closed on 25 September 2008. On 25 September 2008, an e -mail was addressed by the Appellant to the Respondent stating that funds were being arranged in October 2008 and seeking a roll over. On 25 September 2008 an email was sent by the Respondent to the Appellant at 2.10 p.m. stating that the Appellant had been allowed to roll over the position only for that month on the representation that the debit shall be paid in October 2008 and for the next month, post -dated cheques for the full amount would be recovered. By a further e -mail which was sent at 2.44 p.m. on 25 September 2008, the Appellant was informed by the Respondent that cheques should reach the Respondent on that very day, failing which action would be taken. The Respondent thereafter proceeded to roll over the outstanding position of the Appellant to the month of October 2008 and again thereafter till November 2008.