BONANZA COMMODITIES BROKERS PVT. LTD. Vs. ROSHANARA BHINDER

JUDGEMENT

(1.) This appeal, under Section 37 of the Arbitration and Conciliation Act, 1996, challenges an order passed by a learned Single Judge under Section 34 of that Act dismissing an arbitration petition challenging an arbitral award.

(2.) The Appellant is a trading member of Multi Commodity Exchange of India Ltd. ('MCX'), carrying on business as a commodity broker. The Respondent is a constituent of the Appellant, carrying on business of sale and purchase of commodities, under a Member Client Agreement ("MCA") with the Appellant. The Respondent executed transactions on the Exchange by using internet trading facility provided by the Appellant. The disputes between the parties arose on account of margin shortfall and failure of the Respondent to replenish MTM (Mark to Market) losses on real time basis. When the market opened on 30 March 2013, the price of silver, in which the Respondent had an open position (110 lots of the lot size of 30 kg. each) of the value of about Rs.17.67 crores, crashed by a substantial margin, resulting into a loss, showing the Respondent's account in a huge debit. The Respondent had a net debit of over Rs.33 lacs. It is the Appellant's case that it had intimated the Respondent for replenishing the losses by sending an SMS, but since no payment was forthcoming, in exercise of its rights under the MCA, the Appellant closed the open position of the Respondent in 110 lots of silver, which resulted into a loss of over Rs.69.33 lacs in the account of the Respondent. The Appellant claims to have sent electronic contract note for the debit of this amount. The Respondent contested the closure transaction. Her case was that the action of squaring up her account without any intimation to her was illegal and arbitrary; that she should have been given T+1 day to make the payment. The Arbitral Tribunal found that the open positions are marked to market based on the closing price; if the closing price goes against the client, he has to deposit the amount of notional loss generally before the commencement of trading the next day. The Arbitral Tribunal held that the Appellant could not have squared off the Respondent's open position due to mark to market loss the same day (in any case before demanding additional funds). The Tribunal accordingly, rejected the Appellant's claim.

(3.) The learned Single Judge, in his impugned order, found the finding of the Arbitral Tribunal to be in consonance with the provisions and bye -laws of MCX and the MCA. The learned Judge held that no case for interference with the award under Section 34 was made out.