2015 (3) TMI 369 - HC - Indian Laws

Circular issued by SEBI for extending time of Limitation for invoking the arbitration - Detrimental to the interest of the investors - Held that - A plain reading of the impugned circular also indicates that the increase in the period of limitation is available to both parties and is not limited only to claims made by brokers against their clients. Thus, no mala fides can be attributed to SEBI in framing the impugned circular. In this view, the impugned circular issued by SEBI which advises the recognised stock exchanges to make amendments in their relevant byelaws, rules and regulations only ensures that the period for invoking the arbitration clause is in conformity with the settled law. I, thus, find no infirmity with the impugned circular. The writ petition is, accordingly dismissed. - Decided against the appellant.

Summary

Issues: Impugning circular modifying period of limitation for arbitration.

The petitioner challenged a circular issued by SEBI that modified the period of limitation for invoking arbitration from six months to three years. The petitioner argued that the circulars issued by SEBI were detrimental to investors' interests and were influenced by brokers, contrary to the SEBI Act's object. The petitioner had an agreement with a stock exchange member and owed a sum, leading to arbitration. The Arbitrator made an award in favor of the stock exchange member, which the petitioner tried to set aside under the Arbitration and Conciliation Act, but failed in both the lower court and a Single Judge's appeal. The petitioner contended that the increase in the limitation period could not have a retrospective effect, but this argument was rejected by the court. The court noted that the challenge to the limitation increase had already been dismissed, and the current petition was an attempt to revisit concluded matters, leading to a recommendation for dismissal.

The SEBI's counsel argued that the impugned circular was issued to protect investors' interests under the SEBI Act and the Securities Contract (Regulation) Act. The circular aimed to ensure that the period of limitation for invoking arbitration was in line with the law. The court found that the circular applied to both parties and was not limited to claims by brokers against clients. Referring to a previous judgment, the court held that the circular was valid and served to align arbitration clauses with legal provisions. Consequently, the court dismissed the writ petition, emphasizing that no costs were to be awarded.