9911796707
TMI Blog1996 (6) TMI 303X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of disputes arising prior to the contracts only; in the alternative ( c )permit the petitioner to revoke the authority of the second and third respondents as arbitrators and to appoint a person other than members of the 4th respondent to act as sole arbitrator in their place. 3. The 4th respondent is the Madras Stock Exchange Ltd. The 1st respondent is a member of the Madras Stock Exchange Ltd. with whom the petitioners had entered into contracts for the sale/purchase of shares. 4. The contract is contained in the contract note issued by the 1st respondent which, inter alia contained the following conditions on the face of the contract note "This contract is made subject to the Rules, Bye-laws and Regulations and Usages of the Madras Stock Exchange Ltd., Madras. Brokerage has been charged at rates not exceeding the official scale of brokerage and is included in the price. This contract is subject to the jurisdiction of the Courts in Madras. In the event of any claim (whether admitted or not) difference or dispute arising between you and me/us out of these transactions the matter shall be referred to arbitration in Madras as provided in the Rules, Bye-laws and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government in terms of section 9(2) and the bye-laws so approved include the bye-laws 244 to 277." 7. The memorandum of association of the Madras Stock Exchange in clause III-sub-clause ( 8 ) expressly provides for encouraging the settle- ment of disputes by arbitration by the exchange. The relevant part of that clause reads thus: " Clause III - Sub-clause (8) To encourage settlement of disputes by Arbitration, to act as or to nominate arbitrators or umpires on such terms in such cases as may seem expedient and to provide for arbitration of all disputes in respect of all transactions relating to or arising out of or pertaining to transactions in securities and including arbitration of disputes between members and persons who are not members and to provide Arbitration Tribunals, Boards or Courts and subject to the provisions of the Securities Contracts (Regulation) Act, 1956 and the Rules framed thereunder to make Rules, Bye-laws and Regulations in relation to all such arbitration proceedings and to regulate the procedure with regard to the same and for enforcement of awards". 8. The articles of association of the said exchange in article 129 provides for the consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmittee, being under the said Bye-laws; even after the petitioners had themselves invoked bye- laws to have their disputes settled by Arbitration; and the petitioners had further nominated his Arbitrator from out of the members of the Arbitration Committee, the Arbitration Clause is invalid in so far as it provides that the choice of arbitrators shall only be from among the members of the Madras Stock Exchange, who are members of the Arbitration Committee. 12. This contention of the petitioners has no substance. The Security Contracts (Regulation) Act is a special enactment which has been enacted to regulate the transactions in securities including the dealings in shares and stocks. The aforementioned Act refers to the settlement of disputes by arbitration. The policy of the Act is to encourage the settlement of disputes concerning shares and securities which are subject to the regulation of the Act, by means of arbitration. In order to ensure that such arbitration is possible at the places where the disputes have arisen; the Bye-laws of the Stock Exchange have provided for the constitution of Arbitration Committees. The Bye-laws so framed by the Exchange are required to be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any tenable ground. 15. There is no prescribed qualification for person to function as an Arbitrator under the Arbitration Act. The ability to comprehend, and deal with the dispute in a fair objective, impartial and judicious manner is sufficient. The award should be supported by reasons, wherever the parties require a reasoned award and the award should not be vitiated by misconduct on the part of the arbitrators. 16. The members of the Arbitration Committee are members of the Exchange who have experience in dealings in stocks and shares and who are capable of grasping and dealing with issues arising out of dealings in securities. The members of the Arbitration Committee chosen to function as arbitrators, are persons, who are not themselves party to the transac- tions. The Arbitration also is not by a single individual, but is a panel of at least two arbitrators in choosing one of whom the claimant as also the respondent have a say. 17. There is no allegation of bias in this case against either arbitrator on any personal ground or on the ground that he was a party to the transaction or that he had personal interest in the out-come of the arbitration. 18. The arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of dispute, if they do not feel it is not necessary to permit the counsel's appearance, it cannot be said that such refusal itself is indictive or bias on the part of the arbitrator. Therefore, the contention of the learned counsel for the petitioners that the refusal to permit counsel in itself is indictive of bias on the part of the arbitrator is untenable. 24. The counsel for the petitioners invited my attention to the decision of the Supreme Court in the case of International Airport Authority of India v. K.D. Bali 1988 SC 1099 wherein the Court emphasised the need for purity in the administration of justice. The counsel in particular referred to the following passage in the judgment "The purity of administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party". That statement in the judgment is, however, immediately followed by the following: "But it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from a healthy, reasonable and average point of view an ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
