The main legal point established in the judgment is that the rejection of a counter-claim based on an earlier limitation period was contrary to the express provisions of the Limitation Act and public policy, and the SEBI Circulars extended the provisions of the Limitation Act to pending cases.

The Petitioner, original Respondent, has challenged impugned award dated 13 July 2009 passed by the Arbitral Tribunal, constituted under the Rules, Bye-laws and Regulations of the Bombay Stock Exchange (for short, BSE), basically the rejection of the counter-claim solely on the ground of limitation, under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act).

2. The dates and events are relevant for the purpose of deciding the present Petition. On 24 November 2007, Hansraj Gouthi suffered a major stroke and was in a critical condition, totally incapacitated till his death on 30 July 2008. On 23 October 2007, Respondent No.1 filed Arbitration Application before the BSE for claim of Rs.40,98,609.08 against the Petitioner. On 25 November 2007, the Petitioner denied the claim of Respondent No.1 stating that the same were fraudulent transfers and an amount of Rs. 33,50,814.02 was due and payable to the Petitioner. On 25 February 2008, the Petitioner filed reply/ counter-claim stating that the Respondent's claim was illegal, malicious and fraudulent and prayed for payment of Rs.33,50,814.02.

3. On 13 July 2009, the Arbitration Award was passed, whereby, claim of Respondent No.1 was rejected stating that they were unable to substantiate authorization of transactions entered pursuant to 24 November 2006. The Arbitrators also rejected the counter-claim of the Petitioner on the ground of limitation under the BSE Bye-law of 252 (2).

4. Being aggrieved by the impugned Award, the Petitioner filed the present Petition on 8 October 2009. The matter was listed for final hearing on 30 October 2012. The Respondent Bank has not challenged the impugned award against the rejection of their main claim. We have to concern only with the rejection of counter-claim of the Petitioner.

5. On 11 August 2010 and 9 February 2011, the circulars of SEBI stating that the Limitation Act, 1963 (for short, the Limitation Act) has been made applicable for filing of the Arbitration References with further clarification that the Arbitration Applications which were rejected solely on the ground of limitation should be reheard on merits, if the limitation period of three years is not yet over.

6. The relevant clauses of circular dated 11 August 2010 are as under:-

“5.1 The limitation period for filing an arbitration reference shall be governed by the law of limitation, i.e. The Limitation Act, 1963.”

“13. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and shall come into effect from September 1, 2010.”

This circular supersedes the earlier various circulars of the Securities and Exchange Board of India (for short, SEBI), (from 9 July 1999 to 2 December 2009) and also modifies the provisions relevant to Arbitration contained in various circulars from the year 1997 to 2010.

7. By subsequent circular dated 9 February 2011, the Arbitration mechanism of Stock Exchanges referring to the applicability of the provisions of the Limitation Act has been further elaborated in the following words:-

“This is in continuation of circular ref. No. CIR/MRD/DSA/24/2010 dated August 11,2010, which inter alia prescribed that the limitation period for filing an arbitration reference shall be governed by the provisions of the Limitation Act, 1963. In this regard upon consideration of various representations received by SEBI and pursuant to the discussions held with the representatives of stock exchanges, it has been decided that the limitation period, as modified to three years in terms of Limitation Act, 1963, shall be applicable to cover inter alia the following cases:-

i. where three years have not yet elapsed and the parties have not filed for arbitration with th