CHINOY CHALANI AND COMPANY A FIRM CARRYING ON BUSINESS AS STOCK AND FINANCE BROKERS Vs. Y ANJIAH ALSO KNOWN AS YADAGIRI ANJIAH

JUDGEMENT

(1.) This appeal arises out of a petition made under Section 559 of Hyderabad Civil Procedure Code to file the award dated 24th Amardad 1359 F. and make it the rule of the Court. Plaintiffs-appellants are stock, shares and finance brokers and their firm is a member of the Hyderabad Stock Exchange Ltd. The defendant-respondent who is not a member of the stock exchange had dealings with them in relation to the purchase and sale of shares in various companies. The established course of their dealings was that the defendant would intimate to the plaintiffs either on phone or otherwise that he wished to sell or purchase certain number of shares and the plaintiffs then would send contract notes evidencing the contract thus entered into between them and obtain confirmation slips. These transactions were by express agreements made subject to the rules of the Hyderabad Stock Exchange. At one stage, these transactions barring a few shares of two companies were adjusted up to 24th March 1946. Though the outstandings thus found were not settled the transactions thereafter continued as ever. Eventually the plaintiffs made a demand but the defendant denied his liability. Thereupon the plaintiff purchased the shares due to be delivered by the defendant in the market at the risk of the defendant and claimed the difference amount from him (the defendant). They applied in October 1946 to the Secretary, Stock Exchange for reference of the dispute to arbitration under the rules of the Stock Exchange. The arbitration proceedings were however started and after several vicissitudes an award was made on 24th Amardad 1357 P., in the absence of the parties and without notifying the date of making the award. The defendant who was out of station on account of disturbed conditions could come to know of the award within a reasonable time. He as the aggrieved party could have preferred an appeal but he came to know of the award only after the plaintiffs had started the proceedings for filing the award and a notice was served on him in the year 1358 P. Even the plaintiffs became aware of this award on 22nd Shehrewar 1357 F. as a result of which he could apply to the Court under Section 559, Hyderabad Civil Procedure Code within the statutory period of limitation.

(2.) The defendant resisted the claim of the plaintiffs on more than one ground. Of course, he admitted that there were dealings between the parties in relation to the purchase and sale of shares of various Companies and that the plaintiffs used to deliver to him contract forms duly signed and obtain from him the confirmation Blips. He however denied the transactions of contract notes Nos. 1125 and 1136 for which he did pass any confirmation slips and alleged in relation to all the transactions that there was express agreement between the parties, that the Shares will neither be delivered nor obtained nor their price be paid but only profits and losses in the transaction will be adjusted. Such transactions being "Badla" forbidden by law the defendant contended that they are unenforceable and cannot be made the subject-matter of arbitration. He further alleged that he, placing entire reliance upon the plaintiffs and without ascertaining the actual prevailing market rates confirmed contract forms and that the plaintiffs never gave weekly or monthly accounts and eventually made a demand without furnishing a copy of the accounts. The other contentions raised were that the contracts entered into were subject to the rules of the Hyderabad Stock Exchange and the plaintiffs had therefore no right and the Secretary, Stock Exchange, no power to refer the matter to arbitration, that contracts Notes 1125 and 1136 which were totally denied by the defendant and regarding which the defendant had signed the confirmation slips could in no circumstance validly form the subject-matter of arbitration, the proceedings on that account are without jurisdiction, and that though the defendant went before the Arbitrators to defend the case it was only under protest. His further allegations are that the arbitrators were duly constituted, they were prejudiced against the defendant being the members of the Stock Exchange and were guilty of judicial misconduct, that the defendant was allowed to choose his arbitrator nor was he permitted to be represented by a lawyer, that there were serious irregularities in the procedure and that at any rate, as the arbitrator who gave the award had become functus officio at the expiry of the statutory period of 15 days and no extension was obtained from the President for their continuance, the award passed is without any legal effect.

(3.) The Court below, on these pleadings; settled as many as 15 issues and after due enquiry found that the arbitrators had no jurisdiction, that they were guilty of judicial misconduct, that the defendant submitted to the jurisdiction of the arbitrators only under protest, that his conduct does amount to waiver and that the petition therefore was liable to dismissal. He accordingly dismissed it with costs.