A party must raise jurisdictional objections in arbitration proceedings; failure to do so waives the right to challenge the award under Section 34 of the Arbitration Act.

JUDGMENT :

Neela Gokhale, J.

1. The Petitioner has assailed the arbitral award dated 27^th March 2008 passed by a panel of three arbitrators, by way of the present Arbitration Petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 (‘the Act’).

2. The facts of the case, in brief, are as under:-

2.1 A reference was made to the Arbitral Tribunal under the Rules, Bye - laws and Regulations of the Bombay Stock Exchange Limited (‘BSE’).

2.2 The Petitioner herein is a company incorporated under the Companies Act, 1956, stated to be engaged in social and charitable activities in the areas of public and rural healthcare. The Respondent is a corporate member-broker of BSE since 1997, registered with the Security Exchange Board of India (‘SEBI’). The Petitioner had opened a trading account with the Respondent and was allotted Client Code Number-6299.

2.3 It is the case of the Petitioner that one, Mr. Gurpreet Sarin, representing himself to be the manager of Angel Group of Companies, lured the Petitioner into doing business with the Delhi office of the Angel Group of Companies. It was represented to the Petitioner that the Petitioner would be dealing with various group of companies of the Angel Group including M/s. Angel Broking Limited - a Member of the BSE and Angel Capital and Debt Market Limited - a Member of the National Stock Exchange Limited (‘NSEL’).

2.4 The Petitioner opened a trading account with the Respondent No.1 and with Angel Capital and Debt Market Limited. It is the Petitioner’s case that after 13^th January 2006, it made several transactions through the Respondent No.1, however, on 26^th April 2006, a review of its account revealed certain amounts due and payable by the Petitioner to it and hence, forwarded the account statement to the Petitioner requesting it to make the payment. The Petitioner made only a part payment.

2.5 Another review on 30^th September 2006 revealed that the Petitioner was liable to pay the Respondent No.1 an amount of Rs.30,28,565.61. A demand letter dated 10^th October 2006 was issued by the Respondent No.1 to the Petitioner, calling upon it to make the payment within 7 days. However, despite signifying its willingness to discuss the matter, no payment was made by the Petitioner. Hence, the Respondent No.1 claimed an amount of Rs.30,28,565.61 by making a reference to arbitration on 20^th October 2006.

2.6 The Petitioner failed to file a written statement but filed a letter raising disputes. The reference was thus, closed for passing of award. However, on a request of the Petitioner to re-open the case to file its written statement, the Tribunal permitted the request subject to cost of Rs.25,000/- payable to the Respondent No.1.

2.7 Undated written statement was filed to the Statement of Claim of the Respondent No.1. The Petitioner also made a counterclaim of Rs.46,06,547.25 against the Respondent No.1 in the written statement. A rejoinder, also undated, was filed by the Respondent No.1 to the counterclaim. The Arbitral Tribunal passed its award on 27^th March 2008, which is the subject matter of the present Petition.

3. Mr. Jash Dalia, learned counsel, appeared for the Petitioner and Mr. Shyam Kapadia, learned counsel, appeared for the Respondent No.1.

4. Submissions of Mr. Dalia, on behalf of the Petitioner:

(i) The arbitral proceedings at Mumbai under the BSE Rules was without prior notice on consultation with the Petitioner. The Tribunal was initially constituted ex-parte without joint nomination of the Arbitrators.

(ii) Principles of natural jus