The Petitioner is not entitled to interest until the date of Award. As regards the period subsequent to the date of Award, the rate of 18% per annum, which was specified in Section 31(7)(b) of the Arbitration Act prior to the 2015 amendment, would not apply because no amount was directed to be paid under the Award. Accordingly, it is proposed to apply the SBI marginal cost of funds based lending rate (MCLR)/base rate during the relevant period, which was in the region of 9%, as a reasonable benchmark for the grant of interest. Therefore, the sum of Rs.3,05,883.50 shall carry interest at the rate of 9% per annum from the date of Award until the date of realisation.

JUDGMENT :

(Prayer:- Original Petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Award dated 15.06.2009 passed by Arbitrator in F and O/C-0016/2009 and allow the claim of this Petitioner to the extent of Rs.5,00,000/- together with interest at 18% p.a. from 31.08.2006 till date of realisation of the amount.)

1. The Claimant is the Petitioner before this Court. The Petitioner intended to invest in shares and debt instruments and for this purpose he availed the services of the first Respondent. The first Respondent is a securities broker with a membership in the National Stock Exchange (NSE). For purposes of investment, the Petitioner is stated to have provided a sum of Rs.3 lakhs to the first Respondent with directions to invest Rs.2 lakhs in debt instruments and Rs.1 lakh in shares. According to the Petitioner, in March 2006, he was informed that there was a credit balance of Rs.3,20,000/- in his account. However, contrary to expectations, the first Respondent invested the money in the futures market. Therefore, the Petitioner requested for a refund of the money, which request was refused by the first Respondent. Eventually, a dispute arose between the parties and the Petitioner invoked the arbitration clause in the bye-laws of the NSE and made a claim for a sum of Rs.5 lakhs with interest thereon at 18% per annum from 31.8.2006 till the date of realisation of the claim.

2. The first Respondent filed a statement of defence wherein it was stated that the claims are barred by limitation because the dispute arose on 25.06.2006 and, consequently, the claim should have been made within six months from that date, whereas the claim was made on 29.12.2008. On the merits, the first Respondent stated that the Petitioner had entered into an agreement to trade both in the cash and futures and options(F&O) segment and that pursuant to such authorisation, transactions were entered into and the relevant contract notes and statements of account were sent to and accepted by the Petitioner. Moreover, according to the first Respondent, the Petitioner had given a letter on 28.02.2006 to the effect that the contract notes may be retained in the branch and that he would collect them periodically. In effect, the case of the first Respondent was that the Petitioner made the claim because he sustained losses while trading in the securities market. The Petitioner exhibited seven documents, which were marked as Exhibits A1 to A6. The first Respondent exhibited one document, Exhibit R1. There was no oral evidence. Based on the pleadings, the learned Arbitrator framed four issues. The first two issues were on the merits of the dispute whereas the third issue related to limitation and the last issue was a consequential issue relating to the entitlement of the Petitioner. On the first issue, namely, whether the Petitioner had traded in the F&O segment, the learned Arbitrator concluded that the evidence does not disclose that the Petitioner either authorised or was aware of the trading in the derivatives segment purportedly on his behalf by the first Respondent. With regard to the second issue, which is whether the claim of the Petitioner is true and acceptable, the learned Arbitrator concluded that the Petitioner would be entitled to a sum of about Rs. 3.05 lakhs but for the decision on the question of limitation. With regard to the third, which relates to limitation, the learned Arbitrator concluded that the bye-laws of the NSE and, in particular, bye-law 3 of Chapter XI, constitute a special law prescribing a period of limitation as per Section 29 (2) of the Limitation Act, 1963(the Limitation Act) and that, therefore, the said bye-law does not violate Section 28 of the Contract Act, 1872 (the Contract Act). Consequently, the learned Arbitrator held, by Arbitral Award dated 15.06.2009 (the Award), that the claims are barred by limitation because they were made after the six month period specified in the bye-laws