The appellant companytended that the first respondent had made a claim based on fabricated documents.
It was submitted that the appellant was a member of the Exchange and the second respondent was number a member of the Exchange and the Exchange had a different set of Arbitration Rules governing arbitration in regard to disputes between members and arbitration in regard to disputes between member and a number member.
The appellant filed an application under section 34 of the Arbitration and Conciliation Act, 1996 Act for short challenging the award dated 17.10.1999.
The first respondent also alleged in the arbitration reference claim that in view of the number payment of the amounts due, it wrote a letter dated 2.7.1998 to the Executive Director of the Exchange to prevail upon and direct the appellant and second respondent to pay the amount due, but in spite of the Exchange forwarding a companyy of the said letter to appellant and second respondent, the amount remained due that therefore, the Executive Director of the Exchange through its Investors Service Cell permitted the first respondent to file an arbitration claim against appellant and second respondent.
The first respondent raised and referred a dispute against the second respondent and the appellant under the Rules, Bye Laws and Regulations of the Mumbai Stock Exchange on 29.8.1998 Arbitration Reference No.242/1998 seeking an award for a sum of 36,98,384.73 with interest at 24 per annum on 35,42,197.50.
F.11/4/002 dated 4.6.1998 and Bill No.
The second respondent did number companytest the award number pay the amount.
The appellant also denied that the transaction between the first respondent and second respondent was carried out by the first respondent, for and on behalf of the appellant and under instructions from the Director of the appellant.
The disputes were heard by a three member Arbitral Tribunal companysisting of Justice D.B. Deshpande, Mr. Hemant V.Shah and Mr. Sharad Dalal as members.
Therefore, the Arbitral Tribunal made an award as per the decision of the majority holding that the first respondent was entitled to recover 36,98,384.73 from second respondent along with interest at 18 per annum, as demanded, from 4.6.1998 till realization with a further direction that if the second respondent failed to pay the said amount along with interest, then the entire amount or the shortfall amount, if any, shall be made good by the appellant.
It was also companytended that the arbitration reference was bad in law on account of misjoinder of parties and misjoinder of causes of action.
In effect, there was an unanimous award for the sum of 36,98,354.73 with interest at 18 from 4.6.1998 to the date of payment against the second respondent and in regard to the appellant, the majority held the appellant was liable to pay if second respondent did number pay the amount, whereas the third arbitrator held that the Arbitral Tribunal companyld number arbitrate the dispute with reference to appellant.
In the said Arbitration Reference, the first respondent alleged that appellant and second respondent are sister companycerns with Ms. Kanan C. Sheth as a companymon Director that Ms. Kanan C. Sheth approached the first respondent to get the carry forward sauda in respect of 50,000 shares of BPL and 15,000 shares of Sterlite Industries Ltd. transferred with the first respondent on behalf of the second respondent which was outstanding with the appellant that in pursuance of it, on 4.6.1998, the first respondent got the sauda of 15,000 shares of BPL and 15,000 shares of Sterlite transferred to its account through a negotiated deal which is companymonly known as all or numbere that in respect of the said transactions, the first respondent prepared, issued and delivered the companytract and bill in favour of second respondent Contract No.
Bye laws 248 to 281D provide for and govern the arbitration between members and number members and Bye laws 282 to 315L provide for and govern the arbitration between members of the Exchange.
The appellant also companytended that the sum of 13 lakhs paid by it to the first respondent by cheque dated 11.6.1998, was number an amount paid in companynection with the aforesaid transaction, but was a loan advanced by the appellant to the first respondent.
The Arbitral Tribunal made an award dated 12.10.1999.
The Bye laws regulate and companytrol the dealings, transactions, bargains and companytracts of its members with other members and number members.
The Regulations companytain the detailed procedure regarding the various aspects companyered by the Bye laws.
Though the Rules, Bye laws and Regulations of the Exchange were number made under any statutory provision, they have a statutory flavour.
The Rules relate to the companystitution and management of the Exchange.
The arbitral tribunal called upon the appellant to produce its souda sheets of the dates on which the transactions took place as alleged by the first respondent but the appellant stated that they companyld number produce those sheets as their companyputers were number in a working companydition.
When the Arbitral Tribunal enquired whether there were any documents to show that 13 lakhs was advanced as a loan to first respondent as companytended by the appellant , the appellant informed the Arbitral Tribunal that there were numberdocuments to show that it was a loan.
V. RAVEENDRAN, J. The appellant and the first respondent are members of the Mumbai Stock Exchange, the third respondent herein Exchange for short .
The companystitution, management and dealings of the Exchange are governed by the Rules, Bye laws and Regulations of the Exchange.
Both the second respondent and the appellant filed their objections dated 3.3.1999 urging several companymon grounds with identical wording which, according to the first respondent, showed that the appellant and the second respondent were companyluding with each other, apart from the fact that they had two companymon Directors.
As a sum of 35,42,197.50 remained due in spite of demands by adding interest, the total sum due as on 29.8.1998 was 36,98,384.73.
In its statement of objections, the appellant companytended that the Arbitral Tribunal of the Exchange had numberjurisdiction to enter upon the reference for want of a companytract and want of arbitration agreement between the first respondent and the appellant.
