Motilal Oswal Securities Ltd v. Rakshak Kapoor & Anr

NAVIN CHAWLA, J NOVEMBER 26, 2019/Sanjana

Page 1 IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 20.08.2019 Date of Decision : 26.11.2019 + O.M.P. (COMM) 169/2016 MOTILAL OSWAL SECURITIES LTD. ..... Petitioner Through: Mr.Pradeep Dewan, Sr. Adv. with Mr.Sunil Goyal, Ms.Anupama Dhingra, Mr.Deepak, Advs. versus RAKSHAK KAPOOR & ANR. ..... Respondents Through: Mr.Sanjeev Anand, Mr.Suresh Khadav, Mr.Varun K.Bala, Advs. for R-1. Mr.Anuj Aggarwal, Adv. for R-2. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") has been filed by the petitioner challenging the Appellate Arbitral Award dated 03.02.2015 passed by the Panel of Appellate Arbitral Tribunal at the National Stock Exchange of India Ltd. (hereinafter referred to as the "NSE") under the Byelaws, Rules and Regulations of the NSE. 2. The brief facts of the case are that the petitioner is a stock-broker and a member of the NSE and had engaged respondent no.2 as its Sub- Broker, executing Broker-Sub Broker Agreement dated 06.10.2005. Page 2 3. On the other hand, respondent no. 1 is an individual investor registered as a client with the petitioner. 4. Upon completion of various formalities, a Member- Client Agreement (MCA) was executed between the petitioner and the respondent no.1 on 14.10.2005 whereby a Dematerialization (Demat) account was opened to give effect to the transactions for sale and purchase of the shares. Consequently, respondent no.1 started placing orders for sale and purchase of shares at NSE Cash and Future and Options (F&O) segments with the petitioner. The said transactions were executed by the respondent no.2 in the name of the respondent no.1. The petitioner charged brokerage from the respondent no.1 and the share of respondent no.2"s sub- brokerage was credited to its account. Regular trading took place between the parties from June, 2006 onwards. 5. The alleged existence of Rs.78,95,958.42 as a debit balance of the respondent no.1 in the ledger account of the petitioner has been the genesis of dispute between the parties. 6. On account of non-payment of the said outstanding amount, the petitioner issued a demand notice to the respondent no.1 and upon failure of the respondent no.1 to pay the same, the petitioner made its first arbitration reference on 16.08.2012 only against the respondent no. 1. The same was withdrawn on 23.11.2012, with liberty to the petitioner to file a fresh claim also impleading respondent no.2 as a party. 7. The petitioner filed its claim afresh on 30.11.2012, which has resulted in the Impugned Appellate Award. Page 3 8. An Award dated 30.12.2013 was passed by the panel of arbitrators constituted under the Regulations –Part A (Capital Market Segment) of the NSE in favor of the petitioner and against the respondents no. 1. In the said Award, the Arbitral Tribunal, on the basis of various receipts of the transactions sent by the petitioner to the respondent no.1, came to the conclusion that the last transaction in the account of the respondent no.1 maintained by the petitioner was dated 21.08.2009, and by declaring that the account between the parties was a running (current) trading account, it applied Article 1 of the Schedule of the Limitation Act, 1963 (hereinafter referred to as the "Act") and awarded a sum of Rs.78,95,958.42 along with the interest at the rate of 10% per annum payable by the respondent no.1 to the petitioner from the date of the receipt of reference, that is, 28.12.2012. 9. The Arbitral Tribunal held that the account maintained by the petitioner was a running, mutual and open account wherein reciprocal demands were arising between the parties. It examined the Statement of Accounts and observed that whenever money was paid by respondent no.1, it went to the credit of the account and whatever pay- out was taken by him was entered in the debit. Therefore, the debit and credit balances went on increasing and decreasing with pay-in and pay-out which