The grounds available under Section 34 of the Arbitration and Conciliation Act are very limited and the Court cannot vary or set aside the award on the ground that a different interpretation is possible. The court found that the Arbitrators had overlooked Clause 10 and awarded the entire loss claimed by the appellant, which was not justified under the limited grounds available under Section 34 of the Arbitration and Conciliation Act.

JUDGMENT

(Prayer: Original Side Appeal filed under Order XXXVI Rule 1 of the Original Side Rules read with Clause 15 of the Letters Patent, to set aside the judgment and decree dated 30.09.2009 made in O.P.No.844 of 2005.)

R. Subramanian, J.

1. The instant Appeal under Section 37 of the Arbitration and Conciliation Act 1996, is filed at the behest of the claimant/applicant, who had sought for an Arbitration of the dispute relating to the sale of his shares by the first respondent herein, purportedly pursuant to the ‘stop loss orders’ issued by him.

2. The facts that led to the filing of the Appeal are as follows:

2.1. The first respondent is a member of the National Stock Exchange of India and the appellant is a Constituent Trading Member of the first respondent. The appellant was mainly engaged in trading Futures and Options. It is admitted that the appellant is one of the valuable trading members of the first respondent and he has been transacting in crores of rupees on a daily basis.

2.2. While things stood thus on the fateful day i.e. on 05.01.2005, the terminals of the first respondent were deactivated, allegedly, for its failure to maintain a trading balance with the National Stock Exchange. As soon as the anomaly was rectified and the terminals were reactivated, the first respondent had closed several open positions that were held by the appellant which led to a heavy financial loss to the appellant as the market saw a huge downward trend on the said date.

2.3. Contending that the action of the first respondent in closing the positions without honouring the stop loss orders placed by him is in violation of the contract and hence the first respondent is liable to make good the loss, the appellant sought for Arbitration as per Regulation 5.9.(A) of the Regulations of the National Stock Exchange. The statement of claim annexed to the application seeking a reference inter alia alleges that the appellant has been using the respondent’s portals and his turnover runs to several crores of rupees. It is claimed that the appellant had placed stop loss orders (a stop loss order is generally placed away from the current price of the stock/contract and such order gets activated if and when the stock/contract reaches or trades through the stock price). When the price reaches the predetermined price or trade through such price the stop loss orders are implemented for all open positions.

2.4. On 05.01.2005 the entire terminals of the respondent crashed or lost their connectivity at about 11.40 a.m. The stop loss orders were not triggered at that time. According to the appellant, he had immediately instructed the Chief of the appellant at Tiruppur, that he has placed stop loss orders for all open positions in the market at the opening itself and if there is any problem in the net work, the appellant would be responsible for the losses. It is also claimed that there was a margin amount around Rs.25,00,000/- in the client account code of the appellant at the time when the terminals got deactivated. In the afternoon on 05.01.2005, it is claimed that the appellant was informed by the Chief of the first respondent at Tiruppur that all his stop loss orders have been cancelled by the National Stock Exchange and the first respondent is taking steps to sell the positions in the market and close the positions. This was unacceptable to the appellant since the market had crashed by more than 100 points at that time. Despite his objections, the first respondent had gone ahead with closing the positions thereby causing a huge loss to the tune of about Rs.30,00,000/-.

3. This claim was resisted by the first respondent contending that the deactivation was only for 9 minutes between 11.41 a.m. and 11.50 a.m. on 05.01.2005. It is claimed that the appellant had not placed stop loss orders after the terminals got reactivated and in view of the short fall or falling prices, the first respondent had no other go but to close positions to avoid furthe