IMPORTANT POINT
The main legal point established in the judgment is that the Court should not lightly interfere with the findings of Arbitral Tribunals, especially when composed of technical experts, and that the award and impugned order should be in conformity with relevant bye-laws and regulations.

JUDGMENT :

ANIRUDDHA P. MAYEE

1. The present First Appeal arises out of the impugned judgment and order dated 28.11.2022 dismissing the Commercial Civil Misc. Application No.154 of 2022 under the Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act” for the sake of brevity).

2. The brief facts in the present case are that the appellant herein is a company, which is a trading member/stockbroker registered with the Securities Exchange Board of India (SEBI) and a trading member of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). The respondent is an investor in the stock market and does his transactions in the stock market through the appellant availing its services. The appellant executes trades on various segments including Futures & Options (F & O) Segment of NSE on behalf of its clients. That the appellant places orders and executes trades on behalf of the respondent, who has been carrying on trades across all segments in large quantities and value.

2.1 It is the case of the appellant that the respondent used to place orders with the appellant for F & O Segment. That these derivative contracts are highly volatile in nature and the exposure/loss incurred by the respondent can fluctuate considerably depending on the volatility in the stock market. The clients are made aware that while trading in derivative contracts if any loss is suffered while executing the trade, the client shall be solely responsible for the same. As the stock market is volatile, the MTM loss of a client can rise exponentially within a short span of time. In such a situation, the trading member is required to demand from its client additional margin according to the changes in the stock market prices and call upon the client to deposit the same forthwith with it. The trading member can demand higher margin from its client if it deems fit. Further, as per the terms and conditions of various documents executed between the appellant and the respondent, the appellant was entitled to demand such margin as deemed fit. In the event, the client fails to bring the additional margin, the trading member is entitled to liquidate all the positions for non-payment of margin and adjust the proceeds of such liquidation/close out, if any, against the liabilities/obligations of the constituent.

2.2 It is the case of the appellant that the respondent is carrying on trades across all segments since 2016 and is aware of the stock market norms and procedure. The parties are dealing with each other without any complaint in respect of the trading in the stock market. The dispute in question arose on 13.03.2020 when the stock markets were highly volatile due to the impact of global covid-19 outbreak. The respondent had exposure in various F & O contracts including large number of Nifty Call Options. It is an admitted position that on 13.03.2020, there was a drastic fall of about 10% in the stock market due to high volatility. The stock market opened at 9.15am and within six minutes of the market opening, the trading was halted for an hour at 9.21am, due to heavy and unprecedented fall of 10%. In view of the sharp fall in the stock market, the respondent had incurred huge losses and thus, the margin shortfall in the account of the respondent, had also increased. It is the case of the appellant that the margin shortfall in the account of the respondent surged from Rs.9.17 crores at 9.07am at pre-opening of market to Rs.11.91 crores at 9.21am. It is contended that since the respondent failed to bring the additional margin, which was reflecting in his account at the time of the opening of the market, it had become imperative for the appellant to take necessary steps to regularize the account. Due to long standing relationship between the appellant and the respondent, the representative of the appellant got in touch with the respondent via a phone call and informed the respondent about the margin shortfall in his account. It was informed to him that th