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2002 Supreme(Bom) 551
IN THE HIGH COURT OF BOMBAY
S.A. Bobde, J.
P.R. Shah Shares Stock Brokers Pvt. Limited .... Petitioners.
Versus
BHH Securities Private Limited others.... Respondents.
Arbitration Petition No. 99 of 2000, decided on 20-6-2002.
Advocates appeared :
P.K. Samdani with S.K. Jain i/b., Anil Agarwal, for petitioners.
D.D. Madon with D.R. Mehta i/b. Dhruve Liladhar Co., for respondent No. 1.
Nilesh Shah, Dy. Manager (Arbitrators) of respondent No. 3, present in person.
Headnote:Admission Rules for Post-graduate Courses - - Section 34 - Bombay Stock Exchange Bye-laws and Regulations, Bye-laws 248(a), 249 and 282 - Bye- laws - Interpretation of - Arbitrators - Jurisdiction of - Not between members - Petitioner/broker made liable to pay stipulated amount towards purchase of shares on behalf of respondent 2 at instance of petitioner who happens to be common Director to respondent 2 - Objected - Peti- tioner being member of S.E. panel arbitrators has no jurisdiction to hear matters against him - Held - In view of Bye-law 248 panel arbitrator can decide matter between member and non-member of exchange - Claim against a non-member if involves a member too can also be resolved under Bye-law 248. - If, in a dispute between a member and non-member an incidental or connected claim against another member cannot be referred for arbitration under Bye-law 248 and the claimant is compelled to resort to two proceedings before different fora then the possibility of multiplicity of finding at variance in each other by different two fora cannot be ruled out. In my view it would be most undesirable to adopt a construction which would bring about the possibility of two fora reaching different conclusion where the cause of action is based on same set of facts. As noted above, the two fora are differently constituted and such a possibility cannot be ruled out. In the circumstances, I am of the view that a claim against the member can be entertained under Bye-laws 248 where the said claim is incidental to or connected to a claim against a non-member. I am of the view that the claim made by the BHH in the present case is such a claim.
(1) Hemant V. Shah,
(2) Sharad Dalal and
(3) Justice D.B. Deshpande.
Two arbitrators i.e. Hemant V. Shah and Sharad Dalal have held the respondents viz. BHH Securities Pvt. Ltd. as entitled to recover a sum of Rs. 36,98,384.73 from M/s. Continental Securities Pvt. Ltd., the respondent No. 2 herein and M/s. P.R. Shah Share Stock Broker Pvt. Ltd., i.e. the petitioners. By a separate order the third arbitrator Justice D.B. Deshpande allowed the claim of BHH Securities Pvt. Ltd. against M/s. Continental Securities Pvt. Ltd. i.e. the respondent No. 2 herein. The learned arbitrator has rejected the claim against M/s. P.R. Shah Share Stock Broker Pvt. Ltd. i.e. the petitioners herein. The third arbitrator has rejected the claim against the petitioners only on the ground that the arbitrators has no jurisdiction to hear and decide the claim against the petitioner since the petitioner is a member of the Stock Exchange. It may be noted that the third arbitrator has not accepted the petitioner's defence on merits.
2. The respondent No. 1 BHH Securities Pvt. Ltd., hereinafter referred to as "BHH", made a claim against the petitioner M/s. P.R. Shah Share Stock Broker Pvt. Ltd., hereinafter referred to as "P.R. Shah Limited" and the respondent No. 2 M/s. Continental Securities Pvt. Ltd., hereinafter referred to as "Continental Limited". According to BHH, they were approached by Miss K.C. Sheth, a Director of the P.R. Shah Limited and also a Director of Continental Limited. She requested BHH to get a carry forward sauda in respect of 15,000 shares of BPL and 15,000 shares of Sterlite Industries Limited transferred to BHH on behalf of Continental Limited through a Negotiated deal. There is no dispute about the fact that the two Directors of P.R. Shah Limited i.e. Miss K.C. Sheth and her husband Mr. Chetan Sheth were the Directors of Continental Limited. As I understand the transaction, after hearing the learned Counsel on both sides, P.R. Shah Limited had contracted to purchase on behalf of Continental Limited the aforesaid shares. That purchase could not be completed because P.R. Shah Limited could not or did not obtain delivery of the shares and therefore the transaction was carried forward. According to BHH, P.R. Shah Limited through its Director who is common to Continental approached BHH for a transfer of the transaction i.e. the transfer of its right to receive the shares to BHH with an intention that BHH should take delivery of the shares and transfer the same in the name of Continental Limited.
3. It is clear that there is no written contract between BHH and P.R. Shah Limited, BHH issued a contract note in the name of Continental Limited and the contract note stated that they had bought for the latter 15,000 shares of Sterlite Industries Limited. The invoice is also raised in the name of Continental Limited. On both, the contract note as well as the invoice the address of Continental Limited is given as C/o. P.R. Shah Shares Stock Brokers Pvt. Ltd. BHH claimed that it had a contract with P.R. Shah Limited and that P.R. Shah Limited had paid an amount of Rs. 13 lakhs to it for purchase of the shares by BHH for constituents of P.R. Shah Limited i.e. Continental Limited. BHH also claimed that it had received from P.R. Shah Limited a sum of Rs. 4 lakhs in cash.
4. The claim was resisted by P.R. Shah Limited on the ground that there was no contract whatsoever between it and the Claimant BHH. That though it has paid an amount of Rs. 13 lakhs to BHH upon raising the invoice it has done so by way of a loan which BHH had requested for.
5. By the Award the two arbitr
