Back
2025 Supreme(Online)(Del) 3246
$~J * IN THE HIGH COURT OF DELHI AT NEW DELHI Judgment reserved on: 20.03.2025 Judgment pronounced on: 01.07.2025 + O.M.P.(COMM.) 83/2024 RAM KAWAR GARG .....Petitioner Through: Petitioner in person.
versus BAJAJ CAPITAL INVESTOR SERVICES LIMITED NOW NEW NAME IS JUST TRADE SECURITIES LIMITED AND ORS. .....Respondents Through: Mr. Dhruv Dewan, Ms. Smarika Singh, Ms. Yashna Mehta, Mr. Arjun Singh Rana, Ms. Sanjukta Roy, Advs.
for R-1.
Mr. Sujoy Sur, Mr. Aubert Sebastian, Mr. Vedant Kumar, Advs. R-2&3.
Mr. Ashish Aggarwal, Mr. Rahul Malik, Ms. Shivangi Shokeen, Advs.
for R-4.
CORAM:
HON’BLE MR. JUSTICE JASMEET SINGH
Arbitral awards exceeding statutory time limits are void ab initio, emphasizing the necessity of upholding public policy regarding timely dispute resolution.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Challenge to Appellate Arbitral Award - Original Arbitral Award dated 16.05.2014 dismissed the claim of Rs. 2.25 crores. Appellate Award dated 31.07.2015 upholding this dismissal is challenged as time-barred due to exceeding prescribed timelines under the NSE Bye-Laws and SEBI Circulars. The court found both awards to be void ab initio due to failure to meet statutory time limits, asserting the necessity of expeditious resolution in arbitration. (Paras 77-104)
(B) Public Policy - Limitation periods in arbitration as matters of public policy. Judicial intervention mandated when arbitrary delays occur, underscoring the importance of timely dispute resolution. (Paras 86-88)
Facts of the case:
Petitioner entered into an agreement with a stockbroker allegedly resulting in substantial financial losses due to unauthorized trading. Arbitration awards were rendered beyond legally prescribed limits, raising issues of validity.
Findings of Court:
Court held the Appellate Award void as it was rendered past statutory time limits and failed to uphold principles of justice and expeditious resolution mandated by law.
Issues: Whether the Appellate Award was valid in light of alleged delays and procedural irregularities, and implications of time-barred arbitration awards.
Ratio Decidendi: The court ruled that delays in the arbitration process are contrary to public policy, reinforcing the notion that adherence to statutory timelines is imperative to uphold the integrity of arbitration proceedings.
Result: Petition allowed; Appellate Award set aside.
JUDGMENT
JASMEET SINGH, J
1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity “the Arbitration Act”) seeking to challenge the Appellate Arbitral Award dated 31.07.2015 (for brevity “the Appellate Award”) whereby the Appellate Arbitral Tribunal dismissed the appeal of the petitioner against the Original Arbitral Award dated 16.05.2014 (for brevity “the Original Award”) vide which the Original Arbitral Tribunal dismissed the claim of the petitioner of Rs. 2.25 crores against the respondent No. 1.
2. In the present case, the respondent No. 1 is the stock broker, respondent No. 2 is the National Stock Exchange of India Limited (for brevity “the NSE”), the respondent No. 3 is the Arbitration Department of the NSE and the respondent No. 4 is the Securities and Exchange Board of India (for brevity “the SEBI”).
FACTUAL BACKGROUND
3. The brief facts of the case as per the pleadings are that on 13.07.2007, the petitioner entered into a Member Client Agreement (for brevity “the MCA”) with the respondent No. 1. According to the MCA, the petitioner, being “the client”, agreed to invest and trade in securities, contracts and other instruments admitted for trading on the NSE. The MCA also allowed the petitioner to trade in the derivatives segment and enter into derivative contracts through the respondent No. 1, being “the stock broker”.
4. In 2007, the petitioner opened its trading account with the respondent No. 1. From September 2010 to June 2011, the petitioner, with the client ID No. PP 14 RG 012, traded in Nifty Futures through the respondent No. 1. The petitioner deposited a total of Rs. 1,46,00,000/- into the trading account via RTGS, including Rs.1,21,00,000/- on 11.10.2010 and Rs.25,00,000/- on 19.10.2010. As per the respondent No. 1, the petitioner incurred losses during trading and on 29.06.2011, the respondent No. 1 issued a cheque for Rs.31,525.19/- along with the statement of accounts, reflecting the credit balance available in the account of the petitioner.
5. Subsequently, the petitioner invoked the arbitration mechanism under Regulation 5.9(h) of the NSE (Futures & Options Segment) Trading Regulations (for brevity “NSE Regulations”) by filing a Statement of Case dated 20.09.2013 before the NSE. The petitioner alleged that the losses incurred were solely due to the actions of the respondent No. 1, alleging unauthorized trades in the derivatives segment, violations of the Securities and Exchange Board of India Act, 1992 (for brevity “the SEBI Act”) and incompetence of the respondent No. 1. The petitioner stated that the respondent No. 1 failed to provide contract notes, allowed excessive leverage and squared off positions erratically without notice. Consequently, the petitioner made a claim of Rs. 2.25 crores against the respondent No. 1, which included the principal amount of Rs.1,46,00,000/- plus interest at 15% per annum for three years.
6. The Original Arbitral Tribunal dated 16.05.2014 concluded that all trading transactions during the relevant period were within the knowledge of the petitioner and subsequently dismissed the entire claim.
7. Thereafter, the petitioner challenged the Original Award before the Appellate Tribunal through an appeal dated 23.06.2014. In this appeal, the petitioner argued that the funds of Rs.1,46,00,000/- were provided for delivery-based share trading in the cash market. The petitioner also contended that the recordings of conversations between him and the respondent No. 1, submitted to the Original Arbitral Tribunal, were false and fabricated and that his positions were squared off without prior notice.
8. The Appellate Arbitral Tribunal, in the impugned award, dismissed the appeal of the petitioner and upheld the findings of the Original Tribunal.
9. Hence, the present petition with the following substantial prayers:
“i. In view of the above humble respectful submission of the petitioner client it is prayed that the full claim of Rs. 2.25 crores of the
