Justice Hurried is Justice Buried in SEBI-ODR Arbitral Award
Judgment dated 9.6.2026 of the High Court of Bombay (OS) in Commercial Arbitration Petition (L) No.32954 of 2024 of ABB India Limited Vs. Sunil Hariram Jaisingh and others
- Whether a dispute of the instant nature can at all form the subject matter of the ODR mechanism is a wider question that has arisen in the matter.
However, it is not necessary to pronounce upon a wider question of this nature when in the facts of this case, it would suffice to hold that the fraud in issuance of share certificates lies at the heart of the proceedings, making the dispute non-arbitrable. Suffice it to say that the BSE’s bye-laws in Chapter XIII – Clause D reads thus: “All claims, differences or disputes arising between an Issuer or its Registrar to an Issue and Share Transfer Agent and a Constituent pertaining to transfer or transmission of securities, demat or remat of securities, issue of duplicate securities, transposition of holders of securities, entitlements like corporate benefits, dividend, bonus shares, rights entitlements, credit of securities in public issue, interest/coupon payments on securities and delay in processing or wrongful rejection of the investor’s requests and/or such other matters as specified by SEBI, shall be submitted to arbitration in accordance with BSE Limited Bye-laws” [Emphasis Supplied] 54. The bye-laws of a stock exchange constitute subordinate law and are tabled in Parliament, having the force of statutory provisions. While such disputes of the nature set out in the aforesaid clause are made subject to arbitration, the law on arbitrability of disputes cannot be given a go-by. Indeed, every grievance raised by a shareholder cannot be said to be brought within the ambit of arbitration – for example, a grievance about accounting fraud by a listed company, made by a shareholder cannot be arbitrable. A shareholder who contends that a decision by the board of a listed company was taken negligently and that has resulted in losses for which damages are claimed, could arguably not be the intended beneficiary of the Master Circular. Likewise, a grievance about oppression and mismanagement cannot be made amenable to arbitration.
Justice Hurried and Buried
- The Learned Arbitral Tribunal appears to have fallen for the adage that justice delayed is justice denied and forgotten the adage that justice hurried is justice buried. In any case, how the Learned Arbitral Tribunal has computed delay and how it infers a mandatory 60-day deadline to complete an arbitration of this nature is unexplained.
The Impugned Award has been passed by a three-member Arbitral Tribunal appointed by an independent online arbitral institution that facilitates and administers online dispute resolution (“ODR”), empanelled with the BSE Limited (“BSE”) under the Securities and Exchange Board of India’s (“SEBI”) ODR framework for disputes in the securities market.
SEBI’s ODR Master Circular dated July 31, 2023 (updated as of December 28, 2023) (“Master Circular”).
The claimant Jaising had applied for transfer of 177 ABB shares of his late father. However, this was returned for want of probate of the will.
In the meanwhile, the shares had changed with issuance of duplicate certificates. They ere dematerialised by a number of institutional investors.
The multiple complaints of Jaisingh were closed as time barred and outside the purview of SEBI.
Thereafter, the claimed filed arbitration claim. ABB filed section 16 application objecting to the arbitration.
In a nutshell, effectively what the Learned Arbitral Tribunal has done is adjudicate a claim in tort in a summary manner, all in the name of a purportedly mandatory deadline under the Master Circular, without even indicating the trigger date to compute such deadline.
- The prime reason for the hurried adjudication by the Learned Arbitral Tribunal is the deadline of 60 days contained in the Master Circular, that it claimed to be bound by. The refusal to schedule a hearing after July 9, 2024 and the failure to frame issues after completion of pleadings are both based on the premise that the Learned Arbitral Tribunal ought to have rendered an award in 60 days. Yet, the Learned Arbitral Tribunal has not even indicated when the 60-day deadline would commence. Even under the statutory timeframe under Section 29A of the Act, the timeframe of one year for the mandate of an Arbitral Tribunal commences from the date on which pleadings are completed. There is no indication of how the mandate period was computed by the Learned Arbitral Tribunal.
- All the foregoing point to a serious shortcoming in justice delivery as a matter of process, rendering the Impugned Award to be an outcome that can hardly be considered to be just, judicial and adhering to basic principles of natural justice. This to my mind, presents a perversity and patent illegality that renders the Impugned Award unsustainable.
