AJN 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.394 OF 2008 IN ARBITRATION PETITION NO.303 OF 2005 Dhansukh K. Shetia .... Appellant Vs. Rajchandra Capital Services Pvt. Ltd. .... Respondents Mr. Zyal Andhyarujina with Mr. Ajay Khandhar i/b Ajay Khandhar & Co. for the appellant. Mr. S.U. Kamdar with Mr. Simil Purohit i/b Purohit & Co. for the respondents. CORAM : SMT. RANJANA DESAI & K.K. TATED, JJ. DATE ON WHICH THE ORDER IS RESERVED : 6TH OCTOBER, 2008. DATE ON WHICH THE ORDER IS PRONOUNCED : 21ST OCTOBER, 2008. P.C.:- 1. By the impugned order, learned Single Judge has dismissed arbitration petition filed by the appellant and, hence, this appeal. AJN 2 2. Few facts need to be stated before dealing with the submissions of learned counsel appearing for the appellant. 3. The gist of the facts, as evident from the statement of claim filed by the respondents, is as follows : An agreement was entered into on 3/10/2000 between the appellant and the respondents whereby the appellant was appointed as a sub-broker affiliated to the respondents, who are brokers. BOLT was installed at the appellant's office and he effected various transactions from the said BOLT. According to the respondents, a sum of Rs.28,14,323.62 remained due and payable by the appellant as on 30/8/2001. The respondents, therefore, filed a claim for the said amount with interest thereon at the rate of 8% per annum. The appellant contended that he is entitled to recover a sum of Rs.1,01,17,447/- from the respondents and after deducting the amount claimed by the respondents, a counter claim was made in the sum of Rs.73,03,123.38. The Arbitral Tribunal held that the appellant had admitted the liability to the extent of Rs.28,14,323.62. The Arbitral Tribunal gave a credit for the shares lying with the respondents in the sum of Rs.10,97,870/- and credit AJN 3 for the sum of Rs.6,50,000/- and interest at the rate of 12% per annum from 9/10/2001 to 31/10/2001. An award was made in the sum of Rs.13,04,999.16 against the appellant. The counter claim of the appellant to the extent of a sum of Rs.10,97,870 was accepted. 4. The appellant preferred an appeal challenging the arbitral award. The said appeal was not entertained as the appellant did not comply with the condition of deposit of the requisite amount as per the regulations. In the appeal filed by the respondents challenging the arbitral award, the appellant filed cross-objections. The Appellate Bench held that the cross-objections of the appellant were not maintainable on account of the dismissal of his appeal. The Appellate Bench modified the award. It gave credit of certain amounts to the appellant and passed an award in the sum of Rs.23,29,147.71. The appellant challenged the award made by the Arbitral Tribunal and the award made by the Appellate Bench by filing the Arbitration Petition No.303 of 2005. The said petition having been dismissed, the appellant has filed the present appeal. 5. We have heard Mr. Andhyarujina, learned counsel appearing AJN 4 for the appellant. Mr. Andhyarujina submitted that the Arbitral Tribunal had no jurisdiction to entertain the claim because the transaction involved in this case is Vyaj Badla transaction. It was not carried on the floor of the Stock Exchange and, hence, reference was not tenable. In this connection, learned counsel relied on the judgment of the Division Bench of this court (R.M.S. Khandeparkar & D.G. Karnik, JJ.) in Appeal No.626 of 2000 in Arbitration Petition No.126 of 2000 (M/s. Syntrex Corporation v. Rajkumar Keshardev & Anr.) decided on 19/6/2007. Learned counsel submitted that assuming that part of the transaction was not Vyaj Badla transaction, even then the Arbitral Tribunal could not have entertained the reference because there is no provision in the Arbitration and Conciliation Act, 1996 (for short, “the said Act”) for bifurcating the claim in two parts; one to be referred to the arbitration for adjudication and the other to be referred to the civil court. The Arbitral Tribunal should not have, therefore, entertained the reference. In this connection, learned counsel relied on the judgment of the Supreme Court in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya & Anr. (2003) 5 SCC 531. Learned counsel then submitted that the appeal filed by the appellant was not AJN 5 dismissed but it was returned. He further submitted that when the appeal was filed, there was no requirement of pre-deposit and, therefore, there was no question of dismissing the appeal. Learned counsel submitted that learned Single Judge erred in holding that the award of the Arbitral Tribunal merged in the Appellate Bench's judgment and, since there was no challenge to the Arbitral Tribunal's award, the appellant cannot challenge the Appellate Bench's judgment, Arbitral Tribunal's award having attained finality. He submitted that merger did not preclude the appellant from challenging the findings of the Arbitral Tribunal which stood upheld by the Appellate Bench. 6. We are not in a position to accept any of the submissions made by learned counsel. It is pertinent to note that the respondents arranged finance by way of Vyaj Badla of Rs.46,96,900/- for the appellant and issued Bill dated 21/3/2000. On the face of the Bill, there is a confirmation signed by sub-broker on 24/3/2000. Entry of Vyaj Badla transaction was reversed and, on 4/9/2001 there is an acknowledgment by the appellant of outstanding of a sum of Rs.28,14,323.61 as on 28/8/2001. In fact, in the counter claim, that claim has been adjusted by the appellant AJN 6 and his claim has been restricted to the balance amount. In the circumstances, in our opinion, judgment of this court in M/s. Syntrex Corporations' case (supra) is not applicable to the facts of this case. Admittedly, the appellant did not deposit the requisite amount when he filed the appeal before the Appellate Bench. Therefore, the appeal was returned by the Appellate Bench. The appellant's attempt to draw a distinction between “return” of the appeal and “dismissal” of the appeal must fail. Assuming for the sake of argument that it was returned and not dismissed, it is not contended by the appellant that, at any point of time, the deposit amount was paid. Learned counsel for the appellant is not right when he says that when the appeal was filed, there was no requirement of pre-deposit. The appeal was filed on 3/3/2004. Amended bye-laws came into force on 12/3/2003. By the amendment, requirement of payment of deposit before filing the appeal was made mandatory. Since, the appeal along with the application for exemption was made on 3/3/2004, it was covered by the amended bye-laws. Therefore, the appeal was rightly not entertained because of non payment of deposit. Since the appeal of the appellant was not entertained, his cross-objections also AJN 7 could not have been entertained. The appellant cannot be allowed to agitate the same issues which he had raised in the appeal through cross-objections when the appeal was dismissed because of non payment of deposit amount. The result of the appellant's appeal not having been entertained is that there is no challenge to the award of the Arbitral Tribunal. Learned Single Judge is right in coming to the conclusion that the award of the Arbitral Tribunal has attained finality and it has merged in the order of the Appellate Bench. The appellant, therefore, cannot be permitted to challenge the Arbitral Tribunal's award. In any case, as we have already stated, the appellant has acknowledged the claim of the respondents and after adjusting it, he had made a counter claim. Therefore, the award of the Arbitral Tribunal which is modified by the Appellate Bench and confirmed by learned Single Judge does not merit any interference. Needless to say that under section 34 of the said Act, it was not open to learned Single Judge to re- appreciate the evidence or to go into the question of inadequacy of the evidence. In our opinion, no interference is necessary with the impugned judgment and order. Appeal is dismissed. [SMT. RANJANA DESAI, J.] AJN 8 [K.K. TATED, J.]