Bombay HC Confirms Unauthorised Trading and Arbitral Award
The petitioner is the registered trading member of the National Stock Exchange and the Bombay Stock Exchange.
The respondent made a complaint that all the trades from 21.1.2020 to 18.6.2020 are unauthorized.
By the Award dated 7.5.2024 the Sole Arbitrator allowed the claim of the respondent (husband and wife) for unauthorized transactions. By the appellate award dated 9.10.2024 of the Appellate Panel of Arbitrators of the National Stock Exchange of India Limited, it was modified granting prevalent rate of scrips on the date of said award.
The Appellate Tribunal has not rested its decision of the trades being unauthorised only on non-compliance of SEBI circular of 22nd March, 2018 but has taken into consideration the attendant circumstances (a) as regards misrepresentation of benefits of F&O segment by the Petitioner’s relationship managers (b) the transcript of call recordings, which showed that the Respondent was coached to respond affirmatively to scripted calls by simply saying “yes” or “ok. (c) Respondent’s lack of familiarity with F&O segment, non apprising of associated risks and (d) failure to consider the Respondent’s investment goals or incapability to operate the computer system necessary for F&O trading.
The findings of the Appellate Tribunal that the trades are unauthorised is a plausible view upon cumulative assessment of the material and attendant circumstances and does not deserve interference under Section 34 of Arbitration Act.
Insofar as the award of the prevalent scrip rate as on the date of award 7th May 2024 is concerned, the Learned Sole Arbitrator had directed the Petitioner to reinstate the original portfolio of the Respondent to his demat account, failing which the payment of the original portfolio value was calculated alongwith interest. The Appellate Tribunal modified the Award to grant the prevalent scrip rate/price as on the date of the imugned Award. The Respondent Vijay had claimed Rs. 17,76,581/ being the loss from unauthorised trades and sale of the Respondent’s shares alongwith interest @18% p.a and Pradnya had claimed Rs 15,32,073/ alongwith interest.
- In TJSB Sahakari Bank Vs. Amritlal Shah (supra) the Co-ordinate Bench has held that there is a breach of fundamental policy of Indian law by awarding relief not paid for by the claimant. In the case of John Peter Fernandes (supra) it has been held that the commercial arbitrators are not entitled to settle a dispute by applying what they conceive is fair and reasonable absent specific authorisation in an arbitration agreement and under Section 28(2) of the Arbitration Act. The Tribunal is required to decide ex aequo et bono only if the parties expressly authorises it to do so. 35. The Appellate Tribunal proceeded to award the scrip value as on the date of the Award in interest of fairness, equity and justice which is clearly erroneous. The entire Award is not required to be set aside on account of the error committed by the Appellate Tribunal. The Respondent had sought the payment of the original portfolio value along with interest @ 18%. Hence the erroneous part of the Award granting relief not prayed for by the Respondent can be severed and the amount awarded by the Learned Sole Arbitrator can be restored
Judgment dated 17.2.2026 of the High Court of Bombay in Commercial Arbitration Petition (L) No.1665 of 2025 of Dealmoney Commodities P Ltd Vs. Vijay Vithal Sawant with connected matter
