Arbitrators must decide disputes based on contractual terms, not arbitrary notions of fairness; unsubstantiated regulatory violations cannot justify halving awarded amounts when parties knowingly engaged in trades.

JUDGMENT :

Somasekhar Sundaresan, J.

Context and Factual Background:

1. This is a bunch of Petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenging a set of arbitral awards (for purposes of this judgement, “Impugned Award”) passed at the second and appellate stage under the statutory arbitration conducted pursuant to the National Stock Exchange of India’s (“NSE”) Bye-Laws. The Petitions are filed by multiple members of the same family that had engaged the same stock broker.

2. By consent of the parties, Arbitration Petition No.1413 of 2019 was marked as the lead Petition with all dates and page numbers that are referred to, being adopted from the lead Petition. Learned Counsel for the parties agree that resolution of the issues raised in the lead Petition would answer issues involved in the remaining three Petitions as well. Consequently, with the consent of the parties, all four Petitions were taken up for final disposal. All references to the Impugned Award too are references to the Impugned Award in the lead Petition.

3. Essentially, disputes and differences between the parties centre around dealings on the stock market between the Khatod Family and the Petitioner, Dhwaja Shares and Securities Private Limited (“Dhwaja”). Four different trading accounts are involved in the transactions between the Khatod Family and Dhwaja, the trades on the NSE being executed between 2013 and 2018. In the lead Petition, the current Respondents are legal heirs of one Mrs. Dropadidevi Khatod. The Respondents in the other Petitions are members of the same Khatod Family.

4. One Ms. Sunita Khatod is a Respondent in Arbitration Petition No.1424 of 2019 (“Sunita”). Sunita is the daughter in law of Mrs. Dropadidevi Khatod. The role of Sunita would be a little important since it is her e-mail id which is recorded as the e-mail id to which communications were to be sent by Dhwaja in respect of trades under all four trading accounts. While it is the case of the Petitioner that the e-mail id sunitakhatod1@gmail.com is Sunita’s e-mail id, the members of the Khatod family contest that it is her e-mail id. Strangely, Sunita herself has not filed any reply to the Petition filed in her case whereas all the other members of the Khatod family have filed replies in the respective Petitions challenging the awards in their favour.

5. The Arbitral Awards have been passed on three different dates, the details of which are not necessary to articulate. Suffice it to say that all the Impugned Awards are Appellate Awards challenging the decision by an earlier Arbitral Tribunal of the NSE which upheld an earlier decision by the Investor Grievance Resolution Panel (“IGRP”).

6. The Khatod Family appears to have been introduced to Dhwaja by one Mr. Jatin Bhatt, a neighbour of the Khatod Family (“Jatin Bhatt”). Jatin Bhatt, in terms of the official record, is an “Authorized Person” of Dhwaja. However, the Know Your Customer (“KYC”) documents executed in respect of the four trading accounts does identify Jatin Bhatt as “AP”. There is some dispute about whether Jatin Bhatt was a de facto AP in 2013 when the KYC documentation was executed and only became a de jure AP later. That would be alluded to a little later in this judgment.

7. It is a matter of record that prior to the relationship with Dhwaja, the Khatod Family was trading with another broker called M/s India Nivesh. The introducing party that introduced M/s India Nivesh to the Khatod Family, and the person whose e-m