The main legal point established in the judgment is the interpretation of the limitation period for filing arbitration claims and counter claims, emphasizing the continuous running of time and the application of the Limitation Act to arbitrations.

(R.D. Dhanuka, J.)

1. The appellant challenges an order of a learned Single Judge dated 9 June 2011 dismissing a Petition under section 34 of the Arbitration & Conciliation Act, 1996. The Petition challenged an arbitral award which rejected the counter claim of the appellant.

2. The respondent is a share broker registered with the National Stock Exchange. The appellant was a client of the respondent. On 30 March 2002 the appellant and the respondent executed a Member Client agreement and a client code was allotted to the appellant. The appellant commenced dealings in the NSE/BSE cash segment. The case of the appellant is that since 20 September 2007, it commenced dealings in the Futures and Options segment (F&O) of N.S.E. with the respondent. It is the case of the respondent that till 18 September 2007, settlement of accounts was done by payment of cheques against specific deals or bills. However, since the respondent started transactions in the F&O segment from 20 September 2007, payments were made on a lump sum basis and a ledger was maintained on a running account basis. It is the case of the respondent that since three different ledgers were maintained, it was not possible for the appellant to give cheques and receive cheques from all three accounts and hence, as per the appellant's instructions, the balance was transferred from one ledger account to another as required.

3. According to the respondent, as on 18 January 2008, the appellant had a debit balance of Rs.26,18,786.50 in the F&O ledger, a debit balance of Rs.59,79,687/-in the margin account against a credit balance of Rs.1,80,581/-in the cash segment. On 21 January 2008 the appellant sold shares worth Rs.15,43,633.71 and gave a cheque of Rs.15,00,000/- dated 23 January 2008 to the respondent. On 21 January 2008 the market further went down and the loss of the appellant in the F&O segment increased. Though on 21 January 2008 the appellant had a debit balance of Rs.73,36,169.09 in the F&O segment and a debit balance of Rs.1,03,75,881.57 in the margin account, the appellant gave a cheque of only Rs.15,00,000/-. It is the case of the respondent that on 22 January 2008, the market went down further as a result of which the loss in the account of the appellant increased. Since the appellant failed to make any further payment, the respondent squared off the outstanding contracts of the appellant as per the rules, byelaws and regulations of the Exchange and informed the appellant. The respondent also delivered a copy of the contracts to the appellant. On 31 January 2008 the respondent addressed a letter to the appellant pointing out the debit balance of Rs.1,12,01,286.74 in the account of the appellant. The respondent called upon the appellant to send a cheque for the said amount by 1 February 2008, making it clear that if the appellant failed to pay the amount demanded, it would be forced to liquidate the shares of the appellant lying with it as collateral.

4. The appellant, by an email dated 1 February 2008 denied that there was any amount payable to the respondent. The appellant alleged that the entire amount in respect of the shares purchased by the appellant from the respondent was already paid and there was no outstanding. It is further alleged that inspite of the request made by the appellant, the respondent had not transferred shares in the demat account of the appellant. The appellant requested the respondent to transfer the shares held by the appellant and its group company in the demat account on the same day and instructed it not to sell any shares without the written consent and authority of the appellant.

5. On 4 February 2008, the appellant sold shares worth Rs.14.67 lacs, and instructed the Respondent to transfer the proceeds to the F&O ledger account. On 24 March 2008, the appellant sold some other shares worth Rs.8.26 Lacs. approximately and instructed the respondent to transfer the proceeds to the F&O Ledger account of the appellant. The appe