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2018 Supreme(Bom) 2429
IN THE HIGH COURT OF JUDICATURE AT BOMBAY AT GOA BENCH
C.V. Bhadang, J.
Ifin Commodities Limited - Appellant
Versus
Ayesha Madgavkar, Having Office At Nizari Bhawan - Respondent
Appeal Under Arbitra No. 7 of 2018, 8 of 2018, 9 of 2018, 10 of 2018, 11 of 2018, 12 of 2018, 13 of 2018, 14 of 2018
Decided On : 27-08-2018
Kunal Katariya, Adv., P. Bandodkar, Adv., A.D. Bhobe, Adv.
Headnote:
General Clauses Act 1897 - Arbitration and Conciliation Act, 1996 - section 34 - section 27, 42 and 4 - Civil Procedure Code,1908 - section 2(1) (e) - Impugned Judgment - Illegal Acts - Committed Fraud - Illegal Trading - Facts obtaining in se appeals are similar - It would be sufficient to set out facts in Appeal Under Arbitration It was contended of Finance factory had approached in month and had represented that he can offer good and safe investment opportunity in commodities market and first respondent and his family members could receive an assured return per annum on investment made - According to first respondent and his family members weekly statements from 3-P World were e-mailed to respondent no-1 and his family members from which showed regular profits with a few losses in between - It appears that authorized signatory of 3P -World approached and had allegedly admitted about illegal trading conducted and had agreed to unconditionally reimburse entire loss and had passed a cheque of from account of World with HDFC Bank as reimbursement of losses of respondent no-1 and his family members - It was however contended that - had no intention to honor commitment – Held, A perusal of operative part of judgment of learned District Judge would show that District Judge has not allowed any claim against respondents no-2 and 3 - Claim is allowed only as against appellant/s ( respondent no-1 before learned District Judge)- Even in so far as finding given by Arbitral Tribunal is concerned (about re being a private arrangement between same is rendered behind back of respondent nos - 2 and 3 in as much as respondents no-2 and 3 were not parties to arbitral proceedings and could not have been parties as y are not signatories to arbitration agreement- impugned judgment and order passed by learned District Judge in each of se appeals are hereby set aside on ground that learned District Judge at had no jurisdiction to entertain petitions under section 34 of Act – appeal is allowed
Based on the provided legal document, here are the key points regarding the case Ifin Commodities Limited - Appellant Versus Ayesha Madgavkar, Having Office At Nizari Bhawan - Respondent:
Case Details and Jurisdiction * The High Court of Judicature at Bombay, Goa Bench, disposed of appeals under Arbitration No. 7 to 14 of 2018, challenging a District Judge's order in Panaji. (!) * The primary legal issue was whether the District Judge at Panaji had jurisdiction to entertain petitions under Section 34 of the Arbitration and Conciliation Act, 1996. (!) * The High Court held that the District Judge at Panaji lacked jurisdiction because the seat of arbitration was Mumbai, as per the MCX Business Rules and the agreement between the parties, which conferred exclusive jurisdiction on courts in Mumbai. (!) (!) * The Court clarified that the choice of seat for arbitration acts as an exclusive jurisdiction clause for supervisory powers, overriding territorial jurisdiction arguments based on where the transaction occurred. (!)
Facts of the Dispute * The First Respondent (Mr. Anil Madgavkar) and his family members invested money with the Appellant (Ifin Commodities Ltd.) through an intermediary, 3P World, allegedly suffering losses due to unauthorized trades and fraud. (!) * It was alleged that an authorized signatory of 3P World admitted to illegal trading and issued a cheque for Rs. 5 crores as reimbursement, which was not honored. (!) * The Arbitral Tribunal rejected the claims in all seven references, holding that the cheque issuance was a private arrangement between the First Respondent and the 3P World signatory, not binding on the Appellant. (!) * The District Judge set aside the Arbitral Award and allowed the claim for a balance amount of Rs. 80,78,797/- with interest. (!) (!)
Key Legal Holdings * Jurisdiction: The objection to the jurisdiction of the District Judge at Panaji was valid. The Court ruled that an application under Section 34 is not an original proceeding where a "reply" can be filed, and objections to jurisdiction can be raised suo motu. Furthermore, the District Judge's reliance on the petitioners challenging an impleadment order before the High Court did not constitute an admission of Panaji's jurisdiction. (!) (!) (!) * Power to Modify Award: The Court held that under Section 34 of the Act, the court cannot correct errors of the Arbitral Tribunal or grant a claim that was rejected by the Tribunal. The court can only quash or set aside the award, leaving the parties to initiate fresh arbitration proceedings if desired. (!) (!) (!) * Service of Process: The issue of proper service on Respondents No. 2 and 3 was deemed unnecessary to decide because the District Judge had not allowed any claim against them, and the findings regarding the private arrangement could not bind them as they were not parties to the arbitration agreement. (!)
Final Order * The appeals were allowed. (!) * The impugned judgment and order of the learned District Judge at Panaji were set aside on the ground of lack of jurisdiction. (!) * The Respondent No. 1 was directed to seek appropriate legal remedies before the correct forum (courts in Mumbai). (!) * The signed copy of the Arbitral Award was ordered to be returned to the Respondent No. 1. (!)
JUDGMENT
C.V. Bhadang, J. - All these appeals involve common and connected questions of law and fact and as such they are being disposed of by this common judgment.
2. The facts obtaining in these appeals are similar. It would be sufficient to set out the facts in Appeal Under Arbitration No.13/2018.
The respondent no.1, Mr. Anil Madgavkar and his family members (who are the respondent no.1 in the rest of the appeals) had invested various amounts in the Multi Commodity Exchange (MCX) through the appellant Ifin Commodities Ltd., which is a member of the MCX. Mrs. Rashmi Sharma (Respondent no.2) is the proprietress of 3P World, while Mr. Raj Sharma is its authorized person. According to the first respondent, Mr. Rajesh Chheda of Finance factory was a franchise of 3P world. According to the first respondent and his family members (who were the claimants before the Arbitrator in seven different claims, out of which these appeals arise) on account of illegal acts of the appellants and persons connected with the appellant, the first respondent and his family members had suffered a loss and erosion of the amounts invested. It was contended that the appellant and the persons connected with it have committed fraud by carrying out trades in the commodities market without the consent of the respondent no.1 and his family members. They had issued false weekly statements, showing profits although huge losses were incurred by the first respondent and his family members through unauthorized trades. It was contended that Mr. Rajesh Chheda of Finance factory had approached Mr. Anil Madgavkar, some where in the month of February 2011 and had represented that he can offer good and safe investment opportunity in the commodities market and the first respondent and his family members could receive an assured return 30% per annum on the investment made. According to the first respondent and his family members the weekly statements from 3-P World were e-mailed to the respondent no.1 and his family members, from February 2011 to 16/4/2011, which showed regular profits with a few losses in between.
3. Be that as it may, according to the first respondent and his family members, it was informed to Rajesh Chheda by a letter dated 14/4/2011 to stop all further trades in the various accounts till the issues between the parties were sorted out. The respondent no.1 and his family members also asked the appellant by an email dated 8/5/2011 to reimburse and compensate for the loss caused on account of the illegal trades done by the appellant and the 3P- World. It appears that Mr. Raj Sharma, the authorized signatory of the 3P -World approached Mr. Anil Madgavkar on 11/5/2011 and had allegedly admitted about the illegal trading conducted and had agreed to unconditionally reimburse the entire loss and had passed a cheque of Rs. 5.00 crores from the account of 3P World with HDFC Bank, as reimbursement of the losses of the respondent no.1 and his family members. It was however contended that Mr. Raj Sharma had no intention to honour the commitment.
The appellant informed the first respondent and his family members by letter dated 22/7/2011 that they had terminated the ''authorized person agreement'' with 3P- World w.e.f 19/7/2011 and as such, they are no longer responsible for their actions. Subsequently, the first respondent and his family members received a statement of account showing substantial erosion of the capital invested which was on account of unauthorized trades conducted by the appellant and the persons connected with it.
4. It appears that the first respondent and his family members received separate cheques towards the refund of the amount. The amounts so refunded were substantially lesser than the amount originally invested. This led the first respondent and his family members to approach the MCX. The disputes and differences between the parties came to be referred to a panel of three arbitrators, in accordance with Clause 3.4(c) of Rule 37 of the Bu
