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SUPREME COURT OF INDIA
V.D. TULZAPURKAR AND RANGANATH MISRA, JJ.
Banwari Lal Kotiya, Appellant
Versus
P.C. Aggarwal, Respondent.
Civil Appeal No. 2729 (N) of 1972, D/- 8-5-1985.
Securities Contracts Act, 1956 - Arbitration Act, 1940 - Section 2(a), 2(e), 20, 20(4) - Indian Arbitration Act, 1899 - Stock Exchange - Transactions - Arbitrators - Appellant is a share-broker and a member of Delhi Stock Exchange - an Exchange recognised by Central Government - Respondent, a non-member, had dealings in shares and securities with appellant as principal to principal in respect whereof printed Contract Notes in prescribed form were issued by appellant arid were signed by respondent - These transactions were subject to Rules, Regulations and Bye-laws of Exchange which covered transactions between a member and a non-member - A sum of Rs. 5923/- became due and payable by respondent to appellant but since respondent raised a dispute and did not pay claim said dispute was referred to arbitration of two arbitrators Mr. Prem Chand and Mr. P. S. Khambete after following procedure prescribed under Rules, Regulations and Bye-laws of Exchange, former being nominee of appellant and latter being appointee of Exchange on respondents failure to nominate his arbitrator when called upon to do so - Whether respondent could be said to be a party to actual Reference to arbitration and whether on that account Reference to two arbitrators could be said to be unilateral - Whether on that account Reference to two arbitrators could be said to be unilateral - Whether in facts and circumstances of ease there was a unilateral reference to arbitration of two arbitrators Mr. Prem Chand and Mr. P. S. Khambete or having regard to terms and conditions of Contract Notes which included an arbitration clause in very wide terms - Whether Full, Bench has properly appreciated true scope and effect of relevant observations made by this Court - Whether fresh assent of both parties for actual reference is necessary or not must depend upon whether arbitration agreement is a bare agreement of type indicated earlier or it is an arbitration agreement as defined in S. 2(a) of Act – Held, True effect of these observations is that even in case of an arbitration agreement which squarely falls within definition of that expression as given in S. 2(a) and which is not a bare arbitration agreement there would be included in it a consensual actual reference by parties of all their disputes including questions of law that may arise later but arbitrators award on such questions of law would not be within his exclusive jurisdiction since specific question or questions of law cannot be said to have been referred to him as required by law of arbitration but though reference would be valid award and his decisions on questions of law if erroneous on face of it would, be liable to be set aside by Court - This is far from laying down wide proposition that there can be no reference to arbitration except through Court under S. 20 unless both parties join afresh in actual reference - If it is latter then clearly actual reference to arbitration would be consensual and not unilateral and no fresh assent of parties would be necessary nor will resort to S. 20 be necessary - Instead party desirous of going to arbitration can resort to remedies available to him under Chapter II of Arbitration Act, 1940 ; and in a case like instant one he can, as appellant did, proceed under relevant Bye-laws - Having regard to judgment and decree of teamed single Judge following view of Full Bench is set aside and decree in terms of Award which was passed by learned trial Judge is restored - Respondent will pay costs of appeal, to appellant - Appeal allowed.
Judgment
TULZAPURKAR, J. :- This appeal by special leave is directed against the judgment and decree passed by the learned single Judge of the Delhi High Court on 18th July, 1972 in F.A.O. No. 139D of 1962 whereby a decree in terms of the Award passed by the Trial Court was set aside. Principally the view of the Full Bench in ILR (1972) 1 Delhi 279 rendered on the specific question referred to it and which was followed by the learned single Judge while allowing the first appeal has been challenged by the appellant before us in this appeal.
2. Facts, admitted and/or found by the lower courts are these : The appellant is a share-broker and a member of the Delhi Stock Exchange - an Exchange recognised by the Central Government under the Securities Contracts (Regulations) Act, 1956. The respondent, a non-member, had dealings in shares and securities with the appellant as principal to principal between 14th July and 27th September, 1960 in respect whereof printed Contract Notes (Exs. P. 1 to P. 31) in the prescribed form were issued by the appellant arid were signed by the respondent. These transactions were subject to the Rules, Regulations and Bye-laws of the Exchange which covered transactions between a member and a non-member. Each one of the Contracts contained an arbitration clause couched in very wide terms requiring the parties thereto to refer all their disputes or claims to arbitration as provided in the Rules, Regulations and of the Exchange and Bye-law 247(a) incorporated a "Reference to Arbitration" in respect of such disputes or claims (whether admitted or not) between a member and a non-member arising out of or, in relation to such transactions to two arbitrators to be appointed under the Rules Regulations and Bye-laws of the Exchange.
3. It appears the under these transactions a sum of Rs. 5923/- became due and payable by the respondent to the appellant but since the respondent raised a dispute and did not pay the claim the said dispute was referred to the arbitration of two arbitrators Mr. Prem Chand and Mr. P. S. Khambete (both members of the Exchange) after following the procedure prescribed under the Rules, Regulations and Bye-laws of the Exchange, the former being the nominee of the appellant and the latter being the appointee of the Exchange on the respondents failure to nominate his arbitrator when called upon to do so. The arbitrators held their proceedings in which the respondent participated though he inter alia raised a contention that he was not a party to the reference and would not be bound by the Award that might be made, on the basis of such unilateral reference. After considering the entire evidence oral and convention produced before them and after hearing the parties the arbitrators made their Award on 18th April, 1961 whereby they allowed the claim of the appellant with costs against the respondent. The Award was filed in Court and after notices of filing the Award were served, the respondent filed objections to the Award on several grounds such as denial of the existence of the agreement of reference, that he was not a member of the Exchange, that the Contract Notes had not been signed by him, that the arbitrators had misconducted them selves and the proceedings, that the Award had been improperly procured etc, The learned Sub-Judge Ist Class, Delhi who heard the matter negatived all the objections raised for setting aside the Award, in particular he recorded the findings that the Contract Notes bore the signatures of the respondent and as such. under the arbitration clause contained in each One of them read with the relevant Bye-laws there was a valid Agreement for Reference to arbitration. Consequently, he made the Award a rile of the Court and pissed a decree in favour of the appellant on 7-9- 1962.
4. The respondent preferred an appeal being F.A.O. No. 139D of 1962 to the High Court of Delhi. The learned single Judge who heard the, appeal confirmed the trial Courts findings on all the issues. ar
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