R C GOENKA Vs. SOM NATH JAIN

JUDGEMENT

(1.) THE only question that arises for consideration is whether the criminal proceedings arising out of the same facts on the basis of which the claim is already pending adjudication in the Civil Court, is liable to be stayed until the decision by the Civil Court.

(2.) THE petitioner is a member of the Stock Exchange, Bombay carrying on business in Bombay and is governed by Rules, Bye -laws and Regulation 1957 framed under the Securities (Regulation) Act, 1956. Somewhere in June, 1991 the respondent approached the petitioner and expressed his desire to invest his funds in the Stock Exchange Bombay for the purpose of and sale of shares. As such, the respondent wanted to purchase shares in his name and also in the names of his family members. In the first week of August 1991 the petitioner received two drafts for Rs. 7 lacs payable at Bombay from the respondent for this purpose. The respondent instructed the petitioner to purchase or sell the shares in the Stock Exchange, Bombay in his name or in the names of his family members. As per instructions, shares were purchased and sold over a period of five months from July, 1991 to November, 1991. On execution of the order as per instructions, contract notes were regularly despatched to him and even statement of account and bills raised by the petitioner were also sent to the respondent. According to the petitioner, this investment in the purchase and sale of shares was purely for speculative purpose and to earn quick money. The petitioner alleges that on some occasions the respondent gained but when they realised that they were losing and were required to make payments to the petitioner, they raised disputes. As a result of disputes and huge claim being raised by the respondent against the petitioner, the petitioner filed an application on 15.12.1992 before the Stock Exchange Board, Bombay requesting that the disputes and differences be referred to the arbitrator. This application is stated to have been filed in furtherance to clause 248(a) of the Bombay Stock Exchange Rules which reads as under: - "All claims, whether admitted or not, differences and disputes between a member and a non -member or non -members (the terms "non -member" and "non -members" shall include a remisies, authorised clerk or employee or any other person with whom the member shares brokerage arising out of or in relation to dealings, transactions and contracts made subject to the Rules, Bye -laws and Regulations of the Exchange or with references to anything incidental thereto or in pursuance thereof or relating to construction, fulfilment or validity or relation to the rights, obligations and liabilities of remisiers, authorised clerk, employee or any other person with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the Rules, Bye -laws and Regulations of the Exchange. Contract constitute Arbitration Agreements: (b) An acceptance whether express or implied of a contract subject to arbitration as provided in sub -clause (a) and with this provision for arbitration incorporated therein shall constitute and shall be deemed to constitute an agreement between the member and the non -member or non -members concerned that all claims (whether admitted or not), differences and disputes of the nature referred to in sub -clause (a) in respect of all dealings, transactions and contracts of a date prior or subsequent to the date of the contract shall be submitted to and decided by arbitration as provided in the Rules, Bye -laws and Regulations of the Exchange and that in respect thereof any question whether such dealings, transactions and contracts have been entered into or not shall also be submitted to and decided by arbitration as provided in the Rules, Bye -laws and Regulations of the Exchange." Bye -laws 274 reads as under: - "Operation of contracts. All dealings, transactions and contracts which are subject to the Rules, Bye -laws and Regulations of the Exchange and Regulations of the Exchange apply shall be deemed in all respects to be subject to the Rules, Bye -laws and Regulations of the Exchange and shall be deemed to be and shall take effect as wholly made and entered into and to be preformed in the city of Bombay and the parties to such dealings, transactions, contracts or agreements shall be deemed to have submitted to the jurisdiction of courts in Bombay for the purpose of giving effect to the Rules, Bye -laws and Regulations of the Exchange."

(3.) THE respondent in this petition filed a petition under Section 33 of the Arbitration Act, 1940 before the Court of Shri R.S. Bishnoi, Sub Judge, Chandigarh who passed an ex parte order dated 25.2.1993 granting injunction against Kamal Nagra, respondent No. 3 in that petition from appointing the arbitrator in furtherance to the above rules and regulations.