ORDER
S. Rajeswaran, J.
1. This Tr. O.P. No. 3920/2006 has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, hereinafter called ‘the Act’, to set aside the award dated 20.6.2000 passed by the 1st respondent in Arbitration matter No.CH 002/2000.
2. The petitioner is aggrieved by the award of 1st respondent dated 20.6.2000 directing the petitioner to pay a sum of Rs. 4,34,895.98.
3. It is the case of the petitioner that he submitted a printed application form to 3rd respondent, as desired by his brother-in-law Thiru A. Ramakrishnan, for the purpose of disposing some of the shares before his departure to U.S.A. But the said A. Ramakrishnan without any written authority traded in his account with the illegal approval of the 3rd respondent and caused a debit balance in his account. There was some dispute between the petitioner’s brother-in-law and 3rd respondent as regards brokerage payable by 3rd respondent which resulted in 3rd respondent sending a notice dated 26.5.1999 to the petitioner as well as his brother-in-law. Thereafter 3rd respondent issued a notice dated 25.11.99 in Form No. I for an arbitration as provided under Chapter XI of the bye-laws issued by National Stock Exchange (NSE) of India Ltd. The NSE appointed 1st respondent as the arbitrator. 1st respondent passed an award dated 20.6.2000 in favour of 3rd respondent and aggrieved by the same the above petition has been filed under Section 34 of the Act, 1996.
4. The 3rd respondent entered appearance and filed a counter affidavit supporting the award.
5. Heard the learned Counsel for the petitioner and the learned Counsel for the 3rd respondent. I have also perused the documents filed and the judgments referred to by them in support of their submissions.
6. The learned Counsel for the petitioner submitted that the notice of 3rd respondent seeking reference of the dispute for arbitration proceeding is beyond the time stipulated under Clause III Chapter XI of the bye-laws of NSE, the 2nd respondent herein. The learned Counsel further submitted that the arbitrator has no jurisdiction as according to condition No. III, in the member and constituent agreement, the civil courts in Chennai city only will have jurisdiction to decide the disputes. The learned Counsel for the petitioner further submitted that the petitioner was not given enough opportunity before the arbitrator, thereby 1st respondent is guilty of violation of principles of natural justice. The learned Counsel relied on the decision of the Supreme Court (Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd.) to submit that permitting a patently illegal award to operate will not promote justice and such illegal award is required to be set at naught. The learned Counsel further relied on the very same judgment to contend that if the award deals with a dispute not contemplated by or not falling within the terms of the submissions of arbitration, court can set aside the award. The learned Counsel placed reliance on the decision of the Supreme Court reported in 2004(3)L.W. 158 (Mallikarjun v. Gulbarga University) to submit that once the principles of natural justice are not complied with, the award made by the arbitrator would be rendered invalid. The learned Counsel finally relied on the decision of Kerala High Court (Sulaikha Clays Mines v. Alpha Clays) to contend that procedural irregularities would vitiate the award and when the arbitrator is not fair, the award can be remitted back to another arbitrator for fresh arbitration.
7. Per contra, the learned Counsel for 3rd respondent submitted that the reference of the dispute for arbitration proceeding is well within the time as stipulated under the bye-laws and as per the by-laws the dispute could be referred to arbitration only and not to any civil courts. He further submitted that enough opportunity was granted by the arbitrator to the petitioner and even otherwise, the petitioner was not able to show how he was unable to represent his case before the arbitrator. He relied on the decision of the Supreme court (Sohan Lal Gupta v. Asha Devi Gupta) in this regard.
8. I have considered the rival submissions carefully with regard to facts and citations.
9. First let me consider the question of limitation as contended by the learned Counsel for the petitioner.
10. It is not in dispute that Chapter XI of the Bye-laws issued by 2nd respondent deals with referring the dispute to arbitration. Clauses 1, 2 and 3 of Chapter XI of the bylaws are relevant and they are extracted below:
Reference to Arbitration
(1) All claims, differences or disputes between the Trading Members inter se and between Trading Members and Constituents arising out of or in relation to dealings, contracts and transactions made subject to the Bye-Laws, Rules and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their validity, construction, interpretation, fulfilment or the rights, obligations and liabilities of the parties thereto and including any question of whether such dealings, transaction and contracts have been entered into or not shall be submitted to arbitration in accordance with the provisions of these Byelaws and Regulations.
Provisions of these, Byelaws and Regulations deemed to form part of all dealings, contracts and transactions
(2) In all dealings, contracts and transactions, which are made or deemed to be made subject to the Byelaws, Rules and Regulations of the Exchange, the provisions relating to arbitration as provided in these Byelaws and Regulations and shall form and shall be deemed to form part of the dealings, contracts and transaction and the parties shall be deemed to have entered into an arbitration agreement in writing by which all claims, differences or disputes of the nature referred to in Clause (1) above shall be submitted to arbitration as per the provisions of these Byelaws and Regulations.
Limitation period for reference of claims, differences or disputes for arbitration
(3) All claims, differences or disputes referred to in Clause(1) above shall be submitted to arbitration within six months from the date on which the claim, difference or dispute arose or shall be deemed to have arisen. The time taken in conciliation proceedings, if any, initiated and conducted as per the provisions of the Act and the time taken by the Relevant Authority to administratively resolve the claim, differences or disputes shall be excluded for the purpose of determining the period of six months.
11. From the above it is very clear that any dispute could be referred to arbitration within six months from the date on which the claims, differences or dispute arose or shall be deemed to have arisen.
12. So it is very important to find out on which date the dispute arose or deemed to have arisen.
13. 3rd respondent sent a notice on 26.5.1999 to the petitioner calling upon him to pay a sum of Rs. 3,86,667.66 within 3 days from the date of receipt of the notice failing which they would take appropriate legal action. 3rd respondent sought for adjudication by arbitration on 25.11.99 and therefore the dispute was submitted to arbitration within 6 months as contemplated under the bye-laws.
14. It is the case of the petitioner that the notice dated 26.5.1999 referred to a letter dated 15.5.99 issued by the petitioner through his brother-in-law and only on 15.5.99 the dispute deemed to have arisen and considering the fact that the adjudication was sought on 25.11.99 only, the claim itself is barred by limitation.
15. I am unable to accept the contention of the petitioner. First of all the question of limitation was not raised before the arbitrator and even otherwise I am of the considered view that the dispute deemed to have arisen on 26.5.1999 when the notice was sent by 3rd respondent and therefore the award could not be assailed on the ground of limitation prescribed by the bye-laws of 2nd respondent.
16. Coming to the question of jurisdiction of 1st respondent, it is not for the petitioner to contend that the notice of 3rd respondent seeking reference of dispute to arbitration is beyond the time stipulated by the bye-laws on the one hand and still contend that the arbitration itself is without jurisdiction and only civil courts will have jurisdiction as per condition No. 3 in the member constituent agreement.
17. All that is stated in condition No. 3 is all trade, transaction, and contract are subject to rules and regulations of the exchange and it is an admitted fact that 3rd respondent is a trading member of 2nd respondent and the petitioner is a constituent and in such circumstances, the bye-laws of 2nd respondent will hold the field and as per the bye-laws the dispute will have to be referred to arbitration only. Further the petitioner has not questioned the jurisdiction of 1st respondent as contemplated under Section 16(2) of the Act, 1996. Therefore the petitioner cannot be permitted to contend that 1st respondent has no jurisdiction to try the claim petition filed by the 3rd respondent.
18. Insofar as the contention of violation of principles of natural justice by 1st respondent is concerned, I do not find any such violation depriving the petitioner from putting forward his case effectively before 1st respondent. The allegation of the petitioner is that after calling of certain documents and particulars and after the same were furnished by the petitioner, 1st respondent passed the award straight away without giving further opportunity to the petitioner. I am of the considered view that the award under challenge cannot be set aside on this ground as the Supreme Court in 2003(7) SCC 492(cited supra) has held that the party complaining of denial of reasonable opportunity must show that it was otherwise unable to represent his case. In the present case the petitioner was not able to show how he was unable to represent his case and therefore the award cannot be interfered with on this score.
19. Further a perusal of the award will show that to the claim petition filed by 3rd respondent, a reply was filed by the petitioner and the petitioner was represented by Thiru A. Ramakrishnan his brother-in-law and the petitioner’s daughter and in the first sitting held on 4.4.2000, 1st respondent framed the necessary issues namely, (I) Whether 3rd respondent allowed the petitioner’s brother-in-law A. Ramakrishnan to trade in the account of the petitioner with proper authorisation, (II) was this authorisation limited only to the extent of placing sales orders and is the petitioner liable to pay the debit in his account as claimed by 3rd respondent.
20. The findings of 1st respondent to the above issues are as under:
The respondent claims that the account of Mr. V. Sundaresan was opened in order to sell shares of Mr. V. Sundaresan, but from the statement of accounts issued by the applicant to the respondent, it is clear that the account has been used by Mr. A. Ramakrishnan, as his own trading account. This is also substantiated by a letter addressed to Mr. Sarath Reddy, Managing Director, Mercantile Securities, dated 19.6.98, written by Mr. A. Ramakrishnan, in which he refers to the account code S273 (Code given to Mr. V. Sundaresan) as ‘my account code’ and wherein he refers to the account as ‘my account’. He has also asked in the letter, for a waiver of Rs. 1,00,000/-(Rupees One lakh only) from the debit balance and offers to pay the balance within three months. Mr. A. Ramakrishnan has given the orders for share transactions and taken contracts and account statements for Mr. V. Sundaresan’s account. He has given cheques for credit in Mr. V. Sundaresan’s account towards debit balance. He has agreed to pay the debit in Mr. V. Sundaresan’s account within a time frame. With Mr. V. Sundaresan not disputing the fact that he had authosized Mr. A. Ramakrishnan to operate his account at Mercantile Securities, but contending that the authorisation was only for the limited extent of selling certain shares, in the absence of any such written authorisation restricting the extent of authorisation given to Mr. A. Ramakrishnan, the applicant could not be in a position to distinguish or limit Mr. A. Ramakrishnan’s authority to transact on behalf of Mr. V. Sundaresan in Mr. V. Sundaresan’s account.
Even should Mr. A. Ramakrishnan himself have traded on his own behalf in Mr. V. Sundaresan’s account, the liability to pay the dues to Mercantile Securities arising therefrom shall still accrue to Mr. V. Sundaresan on account of his delegating authority to Mr. Ramakrishnan to place orders, without evidence of any clear-cut limitation.
AND WHEREAS having fully considered the statement of facts filed by the applicant and the respondent and all other documents, papers and records placed before me and having heard and duly considered all matters submitted to me by the applicant and the respondent concerning the said claim I, PARVATHI PALANIAPPAN, ARBITRATOR, do hereby come to the conclusion that the applicant’s claim is substantiated, where as the respondent has failed to substantiate his counter-claim. Hence I hereby pass an award directing the respondent to pay the amount of Rs. 4,34,895.98/- (Rupees Four lakhs thirty four thousand and eight hundred and ninety five and paise ninety eight only). The fees and charges of arbitration shall be borne equally by both parties. No costs.
21. Thus it is very clear that a reasoned award has been passed by the 1st respondent on the basis of evidence and facts and I find no ground as set out under Section 34 of the Act, 1996 to interfere with the same.
22. In the result, the O.P., is devoid of merits and the O.P., is dismissed. No costs.