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TMI Blog2003 (12) TMI 333X X X X Extracts X X X X X X X X Extracts X X X X ..... e not delivered. ( iv )Rs. 30,000 towards the badla charges. ( v )Rs. 85,000 interest on the aforesaid amounts. The aforementioned claims were referred to arbitration under bye-law 248(C) of the Bye-laws of the Stock Exchange, Mumbai. By an award dated 16th December, 2002 the learned arbitrator passed an award against the petitioner allowing the claim of Rs. 3,47,500 towards the non-delivery of shares, Rs. 4,30,500 towards the sale proceeds of the shares and Rs. 4,075 towards the dividend. The claims for badla charges and the past interest were rejected. The claim against the respondent No. 2 who was the principal broker was also dismissed. Being aggrieved by the said award, the petitioner filed an appeal before the Appeal Bench of the Stock Exchange, Mumbai under bye-law 274A. By an order dated 4th July, 2003 the Appeal Bench of the Stock Exchange, Mumbai dismissed the appeal and confirmed the award. This order of the Appeal Bench is challenged in this petition which has been filed on 29th July, 2003. 4. Learned counsel for the respondent No. 1 submitted that as the original award was passed on 16th December, 2002, the petitioner should have filed an application for sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the controversy before us and reads as under : "260. (1) An arbitration award may be set aside by the court on an application made under section 34 of the Arbitration and Conciliation Act, 1996 on the grounds mentioned in that section. (2) Whenever an award made under these Bye-laws and Regulations is set aside by the court, the matter shall be again referred to arbitration as provided in these Bye-laws and Regulations and the claims, differences and disputes shall be decided by arbitration only." 6. Bye laws 261 to 274 are not material for the purpose of controversy before us. Bye law No. 274A provides for an appeal against the arbitral award and reads as under : 274A Appeal Bench : 1. The Executive Director of the Exchange shall constitute one or more Appeal Benches, each comprising of five arbitrators from the panel of arbitrators constituted by the Governing Board under Bye-law 262( b ). Out of the five arbitrators, three shall be non-members and two shall be members. 2. None of the arbitrators who have heard the reference or passed the award shall be a member of the Appeal Bench hearing an appeal against that award. 3. A party dissatisfied with an Award may ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them shall be deemed to be final and binding on the parties. The judgment of the Appeal Bench shall be a majority judgment and the award shall be as per majority decision. 8. Signing of the Award. The award made by the Appeal Bench shall be signed by all members of the Appeal Bench. 9. Publication of the Award. After the award is made, a signed copy of the award shall be delivered to each party. 10. The Appeal to be decided expeditiously : The Appeal shall be decided by the Appeal Bench expeditiously and as far as possible, within one month of the filing of the Appeal. 11. Application of provisions relating to arbitrations. All the other Bye-laws of this chapter as far as may be applicable shall apply mutatis mutandis to the proceedings before the Appeal Bench and the award of the Appeal Bench. However, there shall be no appeal from the award of the Appeal Bench. Bye-laws 275 to 281D are also not material for the purpose of controversy before us. 7. No provision is made in the Bye law 260 for setting aside of an award passed by the Appeal Bench. However, clause 11 of Bye law No. 274A prescribes that all other Bye-laws of the chapter as far as may be appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except insofar as the provisions of this Part are inconsistent with that other enactment or with any rules made thereunder." 10. In Stock Exchange, Mumbai v. Vinay Bubna AIR 1989 Bom. 266 ( sic ) a Division Bench of this Court had an occasion to consider effect of sub-section (4) of section 2. Agarwal J., in para 23 of the judgment, observed as under : "The aforesaid catena of decisions has taken a consistent stand that rules and bye-laws framed by the Exchange are framed under an authority conferred by enactment i.e. Regulation Act and have statutory force of law and the same prevailed and the provisions of section 46 of 1940 Act was no impediment in following provisions of the bye-laws." He further held that the Bye-laws of the Stock Exchange are framed in exercise of the powers, conferred under section 9 of the Contract Regulation Act and hence by virtue of sub-section (4) of section 2 of the Arbitration Act, the Bye-laws, in so far as they are inconsistent with the provisions of the Act would prevail over the Arbitration Act. Sawant, J. in his se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 34 of the Arbitration Act can be filed challenging the appellate award. 12. A difficult situation may arise where when the Arbitral Tribunal at the first instance partly grants a claim made by a person and partly rejects it. One of the parties say the claimant may prefer to file an appeal against the rejection of part of his claim and the other party against whom part of claim is granted may choose to straightaway approach the Court under section 34 of the Arbitration Act. As stated earlier, Bye law 260 allows him to do so and Bye law 274A does not provide that he must first exhaust the remedy of an appeal before approaching the Court under section 34 of the Arbitration Act. Thus, there would be a clear possibility of a conflicting decisions being rendered by two different bodies, one by the Appeal Bench and the other by the Court under section 34 of the Arbitration Act. The situation needs to be remedied. It is however, not necessary in the present case to consider what would be the effect when the two parties choose to adopt two different remedies and the two authorities pass conflicting orders. In the present case, no conflict arises because, none of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on this count is to the extent of Rs. 4,30,000." The Appeal Bench has dealt with this submission in one line by saying that : "On the facts and circumstances of the case, we are unable to accept the contention of the appellant and we uphold the award passed by the Lower Bench." 15. No reasons are given by the Appeal Bench for rejecting the contention of adjustment. Sub-section (3) of section 31 of the Arbitration Act states that the arbitral award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is under the agreed terms under section 30. The initial award as well as the appellate award suffers from the vice of absence of reasons which are mandatorily required to be given under sub-section (3) of section 31 and therefore, the award would have to be set aside. 16. Learned Counsel for the respondent No. 1 submits that it is not necessary to remand back the matter to the Arbitral Tribunal because, clause 2 of Bye law No. 260 provides that whenever an award is set aside by the Court, the matter can be again referred back to arbitration as provided under Bye-laws and the respondent No. 1 would the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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