Point of Law: Arbitration and Conciliation –Rule 13(V) which provides that the member shall be responsible in all acts, omission and commission for the authorized person would apply only if such authorized person is appointed pursuant to the approval of the Multi Commodity Exchange in the manner prescribed under Rule 13(iii) after following the eligibility criteria and not otherwise.

JUDGMENT :

R. D. Dhanuka, J.

By these Appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996, the appellants have impugned the judgment delivered by the learned Single Judge dismissing the Arbitration Petitions filed by each of these Appellants under Section 34 of the Arbitration and Conciliation Act, 1996 (for short ‘the Arbitration Act’) . By consent of parties, all these appeals were heard finally at the admission stage. The parties have addressed this Court in the lead matter i.e. Appeal No. 8 of 2021 and have stated that the view that would be taken by this Court in the said lead matter would also apply to the other matters in this batch of appeals. Some of the relevant facts for the purpose of deciding these appeal are as under :-

Facts and submissions in Appeal No. 8 of 2021 :-

2. The appellant was the original claimant in the arbitral proceedings and was the original petitioner before the learned Single Judge. It was the case of the appellant that on 8th March, 2011, the appellant and the respondent no.1 entered into an agreement in respect of investment of Rs.50,00,000/- to be made by the appellant. The appellant issued a cheque for the said amount in the name of the respondent no.1. Under the said agreement, there was a stop loss trigger of 3.5% loss. According to the appellant, all trades were to be done with prior written consent of the appellant by the respondent no.1. On 14th March, 2011, the appellant invested an additional amount of Rs.25,00,000/- by issuing a cheque in the name of the respondent no.1. The transactions were carried out by the appellant through the respondent no.2.

3. It is the case of the appellant that on 14th April, 2011, the respondent no.2 who was alleged to be an agent of the respondent no.1 asked for a massive increase in its commission. The entire family of the appellant who had invested along with the appellant immediately instructed the respondent no.1 to stop all further investments and called for refund of the amounts invested by the appellant. In the first week of May, 2011, there was a crash in the Commodity Market due to which the appellant lost 70% of its investment value.

4. It is the case of the appellant that on 8th May, 2011, the entire family of the appellant sent an email to the respondent no.1 specifying that the trades had not been done with their consent and that the stop loss trigger clause had been breached by it. In response to the said email, on 11th May, 2011, the respondent no.2 who was alleged to be an agent of the respondent no.1 according to the appellant, pleaded on behalf of the respondent no.1 and allegedly admitted liability and requested that no legal action be taken against the respondent no.1/respondent no.2. Respondent no.2 issued a cheque for Rs.5 crores in favour of the family of the appellant as repayment allegedly on behalf of the respondent no.1.

5. It is the case of the appellant that on 13th May, 2011, Mr. Anil Madgavkar, the appellant in Appeal No. 8 of 2021 sent an email only for himself stating that he was agreeable to continue with his investments with respondent no.1 It is the case of the appellant that the said email was sent on the basis of certain representations made by the respondent no.2 on behalf of the respondent no.1 which were then breached. On 13th June, 2011, the respondent no.2 forwarded an affidavit admitting that he was responsible for the losses incurred by the appellant and his family. On 22nd July, 2011, the appellant received a communication from the respondent no.1 that w.e.f. 19th July, 2011 the respondent no.2 was not its authorized person.

6. On 5th August, 2011, the entire family of the appellant sent an email to the respondent no.1 protesting the losses alleged to have been caused to them by the respondent no.1 by carrying out the trades contrary to the terms and conditions of the agreement in the accounts of the appellant and his family members including the stop loss trigger provision and without their