The judgment emphasizes the limited scope of judicial review under Section 34 of the Arbitration and Conciliation Act, 1996, and the importance of adhering to SEBI directives regarding pre-trade consent/confirmation.

JUDGMENT

S.R. Krishna Kumar, J. - This appeal is directed against the impugned judgment and order dated 03.01.2022 passed in COM. A.P. No. 02/2021 by the LXXXVII Addl. City Civil & Sessions Judge (Exclusive dedicated Commercial Court), Bengaluru, whereby the said petition/application filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, 'the said Act of 1996') was dismissed by the Commercial Court.

2. Heard learned counsel for the appellant and perused the material on record.

3. The appellant claims to be a registered stock and share broker registered with SEBI and having its head office at Mumbai and branch offices across India. A Demat and trading account was opened by the respondent with the appellant in the year 2008 and he carried on trading through both offline and online modes from that time. In 2019, the respondent filed a complaint with the National Stock Exchange against the appellant inter alia alleging that 30 unauthorized transactions pertaining to the respondent were carried on illegally by the appellant without the consent, permission or knowledge of the respondent who had incurred loss in a sum of Rs. 99,25,914/- and that the appellant was liable to pay the said amount to the respondent together cost. The appellant disputed the said allegations made by the respondent and contended that all the transactions pertaining to the respondent were not only authorized but the same were done by the appellant with the knowledge and consent of the respondent and as such, the complaint was devoid of merit and liable to be rejected.

4. Since no settlement was arrived at between the parties, the complaint of the respondent was referred to the Internal Grievance Redressal Panel (IGRP) of the NSE. After hearing both sides, the IGRP framed two issues viz., firstly, whether the complaint was lodged by the respondent with NSE within reasonable time and whether the trading member, i.e., appellant herein had obtained pre-consent for the transactions listed out by the respondent/complainant as required under the SEBI directives which mandate that with effect from 01.04.2018, the appellant should obtain pre-consent for all transactions from the respondent and record the same.

5. By order dated 12.07.2019, the IGRP answered both issues in favour of the respondent and against the appellant; the IGRP came to the conclusion that the complaint in relation to the transactions during the period February - March 2019 which was filed by the respondent was within reasonable time. The IGRP also came to the conclusion that the material on record including the voice recordings etc., indicate that out of 30 items, respondent had given pre-consent to the appellant in respect of 7 items while in respect of the remaining 23 items, the respondent had not given pre-consent in favour of the appellant, who had not provided proof of pre-consent for the said 23 items, thereby violating the mandate of SEBI and having indulged in unauthorized trade, the appellant was liable to pay a sum of Rs. 64,58,138/- in favour of the respondent.

6. Aggrieved by the said order passed by the IGRP, the appellant initiated Arbitration proceedings before the panel of arbitrators constituted by NSE; in the said arbitration proceedings, the respondent herein not only opposed the claim of the appellant herein but also put-forth counter claim; the Arbitral Tribunal having heard the parties and perused the material on record also came to the conclusion that the appellant did not obtain pre-trade consent/confirmation from the respondent as held by the IGRP; the Tribunal also considered and appreciated the entire material on record including the Circular dated 01.04.2018 in order to come to the conclusion that there was no pre-trade consent/confirmation given by the respondent in favour of the appellant and consequently, in relation to 23 orders/items in respect of which the appellant had not obtained pre-trade confirmation/consent from the resp