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THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment delivered on: 16.10.2014

+ W.P.(C) 1531/2014

RAJ KUMAR GURSAHANI ..... Petitioner

versus

SECURITIES & EXCHANGE BOARD

OF INDIA ..... Respondent

Advocates who appeared in this case:

For the Petitioner : Mr Ashok Kriplani.

For the Respondent : Mr Neeraj Malhotra with Mr Prithu Garg,

Mr Virat K. Anand for SEBI along with

Ms Rajamany K., AGM, SEBI.

CORAM:-

HONBLEMRJUSTICE VIBHU BAKHRU

JUDGMENT

VIBHU BAKHRU, J

1.

The petitioner impugns the circular No. PR No. 03/2011 dated

06.01.2011 issued by the respondent (SEBI).

2. The grievance of the petitioner is that the impugned circular (PR No.

03/2011) modifies the period of limitation for invoking the arbitration from

six months to three years.

3. According to the petitioner, the circulars issued by SEBI are

detrimental to the interest of the investors and have been issued at the

instance of brokers and thus, are contrary to the object of the Securities and

Exchange Board of India Act, 2002 (hereafter SEBI Act).

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4.

The petitioner had entered into an agreement with M/s India Infoline

Ltd. (hereafter IIL), a member of the National Stock Exchange of India

Ltd., for carrying on transactions in shares of listed companies. According

to IIL, the petitioner owed a sum of `3,57,176/- to the said company as on

31.03.2009. IIL invoked the arbitration agreement as contained in the

byelaws of the National Stock Exchange of India. And on 10.01.2011, IIL

preferred a claim before the Arbitral Tribunal for a sum of `5,03,703/-

including interest for a period 31.03.2009 to 15.12.2012 amounting to

`1,46,550/-. The said claim was filed, admittedly, within a period of three

years - but beyond the period of six months - from the date the amounts

claimed became due. The Arbitrator made an award on 15.06.2011

awarding a sum of `4,30,451/- in favour of IIL. It was also directed that

interest @12% on the said amount would be payable in case of delay in

payment of the awarded amount. The petitioner preferred an application

under Section 34 of the Arbitration and Conciliation Act, 1996 for setting

aside the said award before the Additional District Judge, Delhi. The said

application was dismissed by an order dated 20.05.2013. Aggrieved by the

same, the petitioner preferred an appeal under Section 37 of the Arbitration

and Conciliation Act, 1996 before the Single Judge of this Court which was

also rejected by an order dated 04.10.2013.

5. In view of the above, the award made by the Arbitrator in respect of

disputes between petitioner and IIL have attained finality. It is also relevant

to note that the petitioner had specifically challenged the arbitral award on

the ground that it was beyond the period of limitation of six months and the

subsequent amendment increasing the limitation period to three years could

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not be given a retrospective effect. The petitioners contention was rejected

by the Additional District Judge in the following words:-

5. Given the facts I am unable to concur with the Ld.

Counsel for the petitioner that the NSEs increasing the

limitation to three years would not applicable to the

present case.

The arguments of the Ld. Counsel for the petitioner thatthe amendments would not be applicable retrospectively

can apply to cases which have been disposed off. The

amendment of the Rules and Byelaws of StockExchange in increasing the period of termination wasmade so as to facilitate looking into the grievance of

parties who may have lost out in filing their claim

within six months and bringing it at par with the

statutory provisions.

6. It is, thus, seen that the petitioners challenge to the increase in the

period of limitation has already been negated by the ADJ and the present

petition is another attempt to open concluded issues. Therefore, in this

view, this petition is liable to be dismissed.

7.

The learned counsel for the SEBI has pointed that the circular

impugned by the petitioner has been issued in exercise of powers conferred

on SEBI under Section 11(1) of the SEBI Act read with Section 10 of the

Securities Contract (Regulation) Act, 1956 to protect the interest ofinvestors.

8. 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 Biba

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Sethi v. Dyna Secur ities Limited: 2009 (112) DRJ 512, a Single Judge of

this Court had held that Byelaws of the National Stock Exchange of India

(NSE) prescribing a limitation period of six months for making a reference

of disputes/claims to arbitration were void as the relevant byelaw restricting

the period of limitation would run contrary to the provisions of Section 28

of the Indian Contract Act, 1972.

9.

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. No order as to costs.

VIBHU BAKHRU, J

OCTOBER 16, 2014

RK