2000 Supreme(Bom) 348

IN THE HIGH COURT OF BOMBAY
Vijay Daga, J.
Newage Fincorp (India) Ltd...... Petitioners.
Versus
Asia Corp Securities Limited..... Respondents.
Arbitration Petition No. 31 of 2000, decided on 28-4-2000.
Advocates appeared :
S.U. Kamdar with I.A. Siddiqui, for the petitioners.
Viraj Tulzapurkar with Walawalakar i/b Udwadia, Udeshi Berjis, for the respondents.

Headnote:Sections 2(b) and 16-Existence or validity of arbitration agreement-Arbitral Tribunal can examine and determine such issue.- There has to be an agreement, to confer authority on the arbitrator to hear and decide the dispute. Whenever one party to the dispute asserts that there is no arbitration agreement to refer the dispute to an arbitrator then such issue has to be examined and determined. To constitute "an arbitration agreement", it is necessary that from documents it must appear that the parties had agreed to submit present and future differences to arbitration. The arbitration agreement had not been specifically referred to in the Memorandum of Understanding but it shall be deemed to be part of the Memorandum of Understanding because the last clause of the Memorandum of Understanding referred to the rules, which by necessary implication made bye-law 248 (a) applicable whereunder any dispute between the parties arising out of contract can be referred to an arbitrator. The Arbitration and Conciliation Act also specifically provides that arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of arbitration agreement.

       Section 9-Principles of granting interim reliefs-Exercise of discretion in granting or refusing to grant interim reliefs has to be in a judicial manner in circumstances of each case.- The Court before the grant of interim measures of protection under Section 9 of the Arbitration and Conciliation Act must broadly satisfy itself that (a) the person seeking interim measures has made out a prima facie case; (b) the balance of convenience is in his favour; and (c) the person in absence of interim measures would suffer irreparable loss or injury. In granting or refusing to grant interim measures, the Court has wide discretion under Section 9 of the Act. The exercise of this discretion has to be in a judicial manner depending upon the circumstances of each case. No hard and fast rule can be laid down as regards exercise of such discretion. However, the rule that before the issue of interim relief, the Court must satisfy itself that the petitioner has a prima facie case, does not mean that the Court should examine the merits of the case closely and come to a conclusion that the petitioner has a case in which he is likely to succeed. This would amount to prejudging the case on its merits. All that Court has to see is that on face of it the person applying for an interim relief has a case which needs consideration. The balance of convenience also has to be looked into.

       Stock Exchange

       Membership card of Stock Exchange is now property but constitutes a personal permission from Exchange to exercise rights and privileges attached thereto subject to rules of Stock Exchange-It is not a transferable right and no property can be claimed in membership of Stock Exchange-The membership right is a privilege conferred subject to the bye-laws, rules and regulations of the Stock Exchange.

       Subsequent Events and Amendment and Civil Procedure Code

       Order VI, Rule 17-Respondent/plaintiff instituted suit on the basis of certificate granted under Section 88-B of the Bombay Tenancy and Agricultural Lands Act issued in favour of plaintiff No. 2-Petitioner/ defendant No.1 filed written statement on 2.10.1973-Certificate issued to plaintiff No.2 under Section 88-B cancelled by competent Court by order dated 22.10.1973 i.e. after filing written statement by the petitioner - In view of cancellation of certificate the petitioner sought to amend his written statement-Trial Court rejected the application for amendment - Challenge to the order refusing to permit amendment of the written statement-Trial Court erred in rejecting the application for amendment - Amendment allowed.

       Sections 9 and 34-Bye-Iaws and Rules of Stock Exchange-Membership of Stock exchange is governed by Rules while contract relating to securities by provisions of byelaws.- The contracts relating to purchase or sale of securities are controlled and regulated by the bye-laws framed under Section 9 of the Securities Contracts (Regulation) Act. All the contracts relating to the securities are governed by the bye-laws framed under the provisions of the Act. Section 30 provides for power to make rules for the purpose of carrying into effect the objects of the Act. The rules amongst others may provide for the manner in which the bye-laws are to be made or amended and the manner in which they are to be published for inviting criticism before being so made or amended and also may provide for the manner in which the applications are to be made for acquiring membership of the Stock Exchange. In the above backdrop it would be clear that the bye-laws and rules are operating in two different fields. So far as membership is concerned the same is regulated and controlled by the rules framed under Section 30; whereas the contracts relating to the securities are governed by the provisions of the bye-laws framed under Section 9 of the Act. In the aforesaid premise, if the area of operation of the bye-laws and rules are demarcated by the Act then in that event one can safely reach to the prima facie conclusion that the issues relating to the membership are to be governed by the rules; whereas issues relating to the contract in respect of securities are to be governed by the bye-laws.

       Section 9 and Mumbai Stock Exchange Bye-law 248 (a)-Disputes relating to membership and nomination fall within sweep of bye-law 248(a)-Can be subject matter of arbitration proceedings under bye-law 248(a).- The Mumbai Stock Exchange, being recognised stock Exchange, in exercise of powers conferred under Section 9 of the Securities Contracts (Regulation) Act, has framed bye-laws and if said bye-laws are perused, then it would be clear that the bye-laws are exclusively meant for regulating the dealing in securities and contracts. Similarly bye-laws have to provide for the method and procedure for settlement of claims or disputes including settlement by arbitration. The transactions in securities are regulated by the bye-laws and not by rules, whereas the subject of membership and nomination is governed by the rules and not by bye-law. Rule do not provide case.