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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SOMASEKHAR SUNDARESAN, J.
Kantilal Chhaganlal Securities Pvt. Ltd. - Petitioner
Versus
Viveka Kumari & Anr. - Respondents
Arbitration Petition No. 1057 of 2014 With Interim Application (L) No. 9261 of 2025 With Notice Of Motion No. 2163 of 2016 In Arbitration Petition No. 1057 of 2014
Decided On : 02-04-2026
| Table of Content |
|---|
| 1. factual background of unauthorized trades and awards (Para 1 , 2 , 3) |
| 2. challenges for ignoring eow complaint and tax returns (Para 4 , 5 , 6 , 7) |
| 3. limited section 34 review for perversity only (Para 8 , 9 , 10 , 11 , 12 , 13) |
| 4. eow complaint vital evidence of authorization (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 26 , 27 , 28) |
| 5. party sophistication relevant to fraud claims (Para 24 , 25) |
| 6. tax returns prove contemporaneous trade acceptance (Para 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37) |
| 7. ignoring vital evidence causes patent illegality (Para 38 , 39 , 40 , 41 , 42) |
| 8. perversity from no evidence warrants interference (Para 43 , 44) |
| 9. awards quashed for fresh arbitration (Para 45 , 46 , 47 , 48) |
JUDGEMENT:
SOMASEKHAR SUNDARESAN, J.
Context and Factual Background:
1. This is a Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”), challenging an arbitral award dated April 8, 2014, which is an appellate award (“Appellate Award”) that refused to interfere with an earlier arbitral award dated October 23, 2013 (“First Award”), thereby holding the Petitioner, Kantilal Chhaganlal Securities Private Limited (“Kantilal”) jointly and severally liable along with Respondent No.2, Akshay Standard Insurance Services Private Limited (“Akshay”) to refund a sum of Rs. 2 crores that had been paid over by Respondent No.1, Viveka Kumari (“Viveka”) on October 9, 2009 to Kantilal. Viveka opened an account with Kantilal, a stock broker on the National Stock Exchange (“NSE”) for trading in the securities market through Akshay, a sub-broker of Kantilal.
2. The First Award had directed interest to be paid at 12% per annum from October 10, 2009 i.e. the very day when Viveka was given credit for the amount deposited with Kantilal. The Appellate Award upheld the First Award, and merely changed the date from which interest was to be computed to March 19, 2012.
3. The factual matrix relevant for purposes of adjudication of this Petition is set out below:-
A) Viveka opened her trading account with Kantilal through Akshay in coordination with one Mr. Jignesh Barasara, (“Jignesh”), who is the husband of one Ms. Mansi Barasara, a close confidante, friend and fellow entrepreneur, with whom Viveka ran some garment ventures. These parties have fallen out, with Viveka accusing Jignesh of cheating and fraud;
B) Jignesh is said to have been well known to Akshay, and Viveka opened the trading account with Kantilal, with Jignesh handling the entire process. The member-client agreement and connected account-opening documentation with Kantilal are said to have been physically executed by Viveka in blank form, signing on the dotted line, since Viveka had full faith and trust in Jignesh, who was meant to fill the rest of the forms after her signatures were taken in blank;
C) Jignesh did not fill up the rest of the particulars but Akshay and Kantilal opened the trading account with blanks as they were. Viveka also wrote a cheque for Rs. 2 crores in Kantilal’s favour, which was credited on October 10, 2009;
D) Viveka has complained that Jignesh led her to believe that the investment activity was doing well and the portfolio had become worth Rs. 3.76 crores. A range of trades in the derivatives segment of the NSE have been effected in Viveka’s account after it was opened in October 2009. The last trade was executed on July 13, 2010. However, as it would transpire, the trading account actually had a debit balance of Rs. ~5 lakhs by July 13, 2010;
E) The disputes over the trades would take place nearly two years later in March 2012. Based on a request dated July 14, 2010 from Viveka, Kantilal provided to her designated Chartered Accountant, a full extract of her account from the ledger and an accounts statement on July 16, 2010;
F) In March 2012, a meeting was held between Viveka, Akshay, Kantilal and Jignesh, at which, Viveka accused Jignesh of having falsely informed her that profits had been made from the trading
Arbitral awards set aside under Section 34 for perversely ignoring vital evidence like party's police complaint admitting trade authorisation and tax returns, constituting patent illegality.
A party cannot claim lack of authorization for trades where active participation and knowledge of transactions are evident.
An arbitral award obtained through fraud and misrepresentation violates public policy, rendering it unenforceable under the Arbitration and Conciliation Act.
An arbitral tribunal lacks inherent jurisdiction to adjudicate a claim against a third party arising out of a private transaction not governed by an arbitration clause.
Judicial review of arbitral awards under the Arbitration and Conciliation Act is limited, focusing on adherence to public policy and fundamental legal principles.
Absence of prior written instructions does not absolve a client of liability for trades if evidence shows active participation and knowledge.
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