The main legal point established in the judgment is that the findings of the Arbitrator and the Arbitration Appellate Tribunal must be based on plausible views and not be perverse, and the grounds for challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act were outlined.

1. The instant petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award dated 04.06.2011 made in appeal (A.M) No.CM/C-0055/2010 on the file of the second respondent confirming the Award dated 03.01.2011 made in Arbitration Matter (A.M) No.CM/C-0055/2010.

2. The brief facts leading to the filing of the instant petition are as follows: The petitioner is a trading member of the National Stock Exchange dealing with Capital Market/Cash segment and Futures and Options segment. The first respondent was a registered sub broker of the petitioner. The petitioner and the first respondent entered into an agreement on 01.04.2006, under which, the first respondent was provided with a terminal by the petitioner and he was permitted to trade on the said terminal on behalf of his clients and the brokerage has to be shared between the petitioner company and first respondent in terms of the said agreement. As per SEBI, every trading member shall enter into a Tripartite Agreement between trading member, Sub-Broker and Client. According to the petitioner, the client under the said Tripartite Agreement is free to change his Sub-Broker by entering into another Tripartite Agreement with another Sub-Broker of trading member. Accordingly, the petitioner company entered into Tripartite Agreements with the first respondent and his clients. According to the petitioner, as per the Tripartite agreement, the first respondent has been receiving the brokerage amounts from the petitioner company for the transactions traded for his clients.

3. The petitioner states that five of the clients of the first respondent decided to shift their accounts from the first respondent to another Sub-Broker and accordingly issued letters to that effect on 03.03.2009 to the petitioner company. It is further submitted that the petitioner company informed the same to the first respondent vide its letter dated 09.03.2009. The first respondent after the receipt of the said letter, issued a reply dated 18.03.2009 giving his no objection for shifting the accounts of his five clients from him to another Sub-Broker of the petitioner company. Subsequently, the said five clients have shifted their accounts to another Sub-Broker of the petitioner company i.e., Pawan Securities, Godavarikhani, Karimnagar District, Andhra Pradesh. The petitioner further states that the Tripartite agreement dated 01.04.2009 was executed by each of the said five clients with the petitioner company and the said Pavan Securities. According to the petitioner, since the said five clients ceased to be the clients of the first respondent with effect from 01.04.2009 and become the clients of the said Pawan Securities, the first respondent is not entitled to the sub-brokerage for the transaction traded by the said five clients and the said Pawan Securities is entitled for the said sub brokerage.

4. According to the petitioner, the said five clients are the existing clients and therefore, there was no need to allot new client IDs and the petitioner company continued with the existing client Ids. It is submitted that the petitioner has changed the software of their computer system. However, inadvertently the directory of the said five clients in the computer system of the petitioner company was not changed in the changed software and the names of the said five clients continued to appear under the first respondent group in the changed software in the computer system of the petitioner company. It is further submitted that due to non-shifting of the accounts of the said five clients in the computer system from the first respondent group to the group of new sub broker i.e., Pavan Securities, the computer system of the petitioner company continued to show the said five clients as the clients of the first respondent and accordingly, appropriate sub brokerage was wrongly credited to the account of the first respondent for a period from April 20