-1- IN IN IN THE THE THE HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ARBITRATION ARBITRATION ARBITRATION PETITION NO.522 OF 2003 PETITION NO.522 OF 2003 PETITION NO.522 OF 2003 Citibank Citibank Citibank N.A. N.A. N.A. ......... Petitioners Petitioners Petitioners v/s v/s v/s SBI SBI SBI Capital Market Ltd. Capital Market Ltd. Capital Market Ltd. ......... Respondents Respondents Respondents Mr Mr Mr Janak Dwarkadas with Mr P.K. Samdani i/b M/s Dave Janak Dwarkadas with Mr P.K. Samdani i/b M/s Dave Janak Dwarkadas with Mr P.K. Samdani i/b M/s Dave and and and Girish and Co. for Petitioners. Girish and Co. for Petitioners. Girish and Co. for Petitioners. Mr Mr Mr Rohit Kapadia with Mr V.R. Dhond and Ms Alpana Ghone Rohit Kapadia with Mr V.R. Dhond and Ms Alpana Ghone Rohit Kapadia with Mr V.R. Dhond and Ms Alpana Ghone i/b i/b i/b M/s Little and Co. for Respondents. M/s Little and Co. for Respondents. M/s Little and Co. for Respondents. CORAM CORAM CORAM : D.K. DESHMUKH J. : D.K. DESHMUKH J. : D.K. DESHMUKH J. DATE DATE DATE : 22ND JUNE 2005. : 22ND JUNE 2005. : 22ND JUNE 2005. -2- P.C. P.C. P.C. :- 1.1.1. The The The petitioners by this petition challenge the petitioners by this petition challenge the petitioners by this petition challenge the award award award made by the learned Arbitrators. The Arbitral made by the learned Arbitrators. The Arbitral made by the learned Arbitrators. The Arbitral Tribunal Tribunal Tribunal consisted of three Arbitrators. There are two consisted of three Arbitrators. There are two consisted of three Arbitrators. There are two awards awards awards made, one award which is dated 14th April 2003 made, one award which is dated 14th April 2003 made, one award which is dated 14th April 2003 signed signed signed by two Arbitrators and the other award which is by two Arbitrators and the other award which is by two Arbitrators and the other award which is dated dated dated 17th April 2003 signed by one Arbitrator. Though 17th April 2003 signed by one Arbitrator. Though 17th April 2003 signed by one Arbitrator. Though two two two awards have been made and different reasons have awards have been made and different reasons have awards have been made and different reasons have been been been given, the conclusion reached by all the three given, the conclusion reached by all the three given, the conclusion reached by all the three Arbitrators Arbitrators Arbitrators is the same i.e. the claim made by the is the same i.e. the claim made by the is the same i.e. the claim made by the petitioners petitioners petitioners is is is liable to be dismissed. Accordingly, the liable to be dismissed. Accordingly, the liable to be dismissed. Accordingly, the claim claim claim made by the petitioners has been dismissed. The made by the petitioners has been dismissed. The made by the petitioners has been dismissed. The facts facts facts that are material and relevant for the purpose of that are material and relevant for the purpose of that are material and relevant for the purpose of deciding deciding deciding this petition are that the petitioners - this petition are that the petitioners - this petition are that the petitioners - Citibank Citibank Citibank on 30th April 1991 purchased from SBI Capital on 30th April 1991 purchased from SBI Capital on 30th April 1991 purchased from SBI Capital Market Market Market Ltd., which is a subsidiary of the State Bank of Ltd., which is a subsidiary of the State Bank of Ltd., which is a subsidiary of the State Bank of India, India, India, IRFC bonds of the face value of Rs.50/- crores. IRFC bonds of the face value of Rs.50/- crores. IRFC bonds of the face value of Rs.50/- crores. Instead Instead Instead of delivering the bonds, the respondents issued of delivering the bonds, the respondents issued of delivering the bonds, the respondents issued two two two bank receipts ( BR ) of Rs.25/- crores each, both bank receipts ( BR ) of Rs.25/- crores each, both bank receipts ( BR ) of Rs.25/- crores each, both the the the receipts were unnumbered. One of the BR of Rs.25/- receipts were unnumbered. One of the BR of Rs.25/- receipts were unnumbered. One of the BR of Rs.25/- crores crores crores was was was admittedly discharged against delivery of the admittedly discharged against delivery of the admittedly discharged against delivery of the bonds bonds bonds physically on 1st May 1991. Against the other BR physically on 1st May 1991. Against the other BR physically on 1st May 1991. Against the other BR for for for Rs.25/- crores, bonds worth Rs.15/- crores were Rs.25/- crores, bonds worth Rs.15/- crores were Rs.25/- crores, bonds worth Rs.15/- crores were admittedly admittedly admittedly delivered delivered delivered on 20th June 1991. Thus, so far as on 20th June 1991. Thus, so far as on 20th June 1991. Thus, so far as this this this transaction is concerned, bonds worth Rs.10/- transaction is concerned, bonds worth Rs.10/- transaction is concerned, bonds worth Rs.10/- -3- crores crores crores remained outstanding. The present dispute remained outstanding. The present dispute remained outstanding. The present dispute between between between the parties relates to this remaining bonds the parties relates to this remaining bonds the parties relates to this remaining bonds worth worth worth Rs.10/- Rs.10/- Rs.10/- crores. On 20th May 1991, the petitioners crores. On 20th May 1991, the petitioners crores. On 20th May 1991, the petitioners entered entered entered into a ready forward transaction in relation to into a ready forward transaction in relation to into a ready forward transaction in relation to the the the same IRFC bonds worth Rs.10/- crores. In the same IRFC bonds worth Rs.10/- crores. In the same IRFC bonds worth Rs.10/- crores. In the readyleg, readyleg, readyleg, the petitioners were to sell the bonds to the the petitioners were to sell the bonds to the the petitioners were to sell the bonds to the respondents respondents respondents and in the forward leg, the same bonds were and in the forward leg, the same bonds were and in the forward leg, the same bonds were toto to be be be purchased by the petitioners from the respondents. purchased by the petitioners from the respondents. purchased by the petitioners from the respondents. On On On 20th May 1992, in lieu of the bonds, the petitioners 20th May 1992, in lieu of the bonds, the petitioners 20th May 1992, in lieu of the bonds, the petitioners received received received BR No.5523. This transaction was to be BR No.5523. This transaction was to be BR No.5523. This transaction was to be reversed reversed reversed on on on 28th June 1991. Admittedly this transaction 28th June 1991. Admittedly this transaction 28th June 1991. Admittedly this transaction was was was reversed on 28th June 1991. According to the reversed on 28th June 1991. According to the reversed on 28th June 1991. According to the petitioners, petitioners, petitioners, this transaction was reversed by discharge this transaction was reversed by discharge this transaction was reversed by discharge and and and return return return of BR No.5523. The dispute arose between the of BR No.5523. The dispute arose between the of BR No.5523. The dispute arose between the parties parties parties in relation to this transaction. The dispute in relation to this transaction. The dispute in relation to this transaction. The dispute was was was referred to Arbitrators. Before the Arbitrators, referred to Arbitrators. Before the Arbitrators, referred to Arbitrators. Before the Arbitrators, the the the petitioners were claimants. The case of the petitioners were claimants. The case of the petitioners were claimants. The case of the claimants claimants claimants was that the ready forward transaction dated was that the ready forward transaction dated was that the ready forward transaction dated 20th 20th 20th May 1991 (hereinafter referred to as the second May 1991 (hereinafter referred to as the second May 1991 (hereinafter referred to as the second transaction) transaction) transaction) was was was completely settled on 28th June 1991 by completely settled on 28th June 1991 by completely settled on 28th June 1991 by return return return and discharge of BR No.5523 which was given by and discharge of BR No.5523 which was given by and discharge of BR No.5523 which was given by the the the petitioners to the respondents on 20th May 1991. petitioners to the respondents on 20th May 1991. petitioners to the respondents on 20th May 1991. According According According to to to the petitioners, the transaction dated 30th the petitioners, the transaction dated 30th the petitioners, the transaction dated 30th April April April 1991 in so far as bonds worth Rs.10/- crores is 1991 in so far as bonds worth Rs.10/- crores is 1991 in so far as bonds worth Rs.10/- crores is concerned, concerned, concerned, it was not settled and therefore claim in it was not settled and therefore claim in it was not settled and therefore claim in that that that regard was made. It was the alternate case of the regard was made. It was the alternate case of the regard was made. It was the alternate case of the petitioners petitioners petitioners that in case it is held that BR No.5523 was that in case it is held that BR No.5523 was that in case it is held that BR No.5523 was -4- discharged discharged discharged on 28th June 1991 in relation to the on 28th June 1991 in relation to the on 28th June 1991 in relation to the outstanding outstanding outstanding transaction dated 30th April 1991, the award transaction dated 30th April 1991, the award transaction dated 30th April 1991, the award should should should be made in relation to the ready forward be made in relation to the ready forward be made in relation to the ready forward transaction transaction transaction dated dated dated 20th May 1991 which was to be reversed 20th May 1991 which was to be reversed 20th May 1991 which was to be reversed on on on 28th 28th 28th June 1991. According to the petitioners, if the June 1991. According to the petitioners, if the June 1991. According to the petitioners, if the BR BR BR No.5523 is taken to have been discharged in relation No.5523 is taken to have been discharged in relation No.5523 is taken to have been discharged in relation toto to the transaction dated 30th April 1991, then the the transaction dated 30th April 1991, then the the transaction dated 30th April 1991, then the transaction transaction transaction which requires to be closed on 28th June which requires to be closed on 28th June which requires to be closed on 28th June 1991 1991 1991 has remained unsettled and therefore, the has remained unsettled and therefore, the has remained unsettled and therefore, the petitioners petitioners petitioners would be entitled to award in relation that would be entitled to award in relation that would be entitled to award in relation that transaction. transaction. transaction. The respondents filed reply. Perusal of The respondents filed reply. Perusal of The respondents filed reply. Perusal of the the the reply shows that the respondents mainly denied the reply shows that the respondents mainly denied the reply shows that the respondents mainly denied the allegations allegations allegations made in the statement of claim. The made in the statement of claim. The made in the statement of claim. The respondents respondents respondents have not come with any clear and specific have not come with any clear and specific have not come with any clear and specific stand stand stand in relation to the settlement of second in relation to the settlement of second in relation to the settlement of second transaction. transaction. transaction. Though the respondents clearly stated Though the respondents clearly stated Though the respondents clearly stated relying relying relying on the correspondence between the parties that on the correspondence between the parties that on the correspondence between the parties that BR BR BR No.5523 was discharged in relation the first No.5523 was discharged in relation the first No.5523 was discharged in relation the first transaction transaction transaction and though the respondents claimed that the and though the respondents claimed that the and though the respondents claimed that the second second second transaction was also settled, they did not state transaction was also settled, they did not state transaction was also settled, they did not state as as as to by what method that transaction was closed, by to by what method that transaction was closed, by to by what method that transaction was closed, by discharge discharge discharge of of of any other BR than BR No.5523 or by delivery any other BR than BR No.5523 or by delivery any other BR than BR No.5523 or by delivery of of of goods. Both the parties filed documents before the goods. Both the parties filed documents before the goods. Both the parties filed documents before the Arbitral Arbitral Arbitral Tribunal. The petitioners led oral evidence, Tribunal. The petitioners led oral evidence, Tribunal. The petitioners led oral evidence, seven seven seven witnesses were examined on behalf of the witnesses were examined on behalf of the witnesses were examined on behalf of the petitioners. petitioners. petitioners. There was no oral evidence led on behalf There was no oral evidence led on behalf There was no oral evidence led on behalf of of of the respondents. Two Arbitrators made the award the respondents. Two Arbitrators made the award the respondents. Two Arbitrators made the award -5- dated dated dated 14th April 2003 (hereinafter referred to as the 14th April 2003 (hereinafter referred to as the 14th April 2003 (hereinafter referred to as the majority majority majority award) holding that the first transaction was award) holding that the first transaction was award) holding that the first transaction was completed completed completed by by by discharge of BR No.5523 and further holding discharge of BR No.5523 and further holding discharge of BR No.5523 and further holding that that that the the the second transaction was completed by delivery of second transaction was completed by delivery of second transaction was completed by delivery of physicals physicals physicals by the respondents to the petitioners. The by the respondents to the petitioners. The by the respondents to the petitioners. The third third third Arbitrator who made the award on 17th April 2003 Arbitrator who made the award on 17th April 2003 Arbitrator who made the award on 17th April 2003 arrived arrived arrived at the same conclusion but for different at the same conclusion but for different at the same conclusion but for different reasons. reasons. reasons. 2.2.2. The The The learned counsel appearing for petitioners learned counsel appearing for petitioners learned counsel appearing for petitioners submits submits submits that the petitioners had gone before the that the petitioners had gone before the that the petitioners had gone before the Arbitral Arbitral Arbitral Tribunal with the specific case that BR No.5523 Tribunal with the specific case that BR No.5523 Tribunal with the specific case that BR No.5523 was was was discharged. It was also issued in the second discharged. It was also issued in the second discharged. It was also issued in the second transaction. transaction. transaction. He submits that it is nobody’s case that He submits that it is nobody’s case that He submits that it is nobody’s case that there there there is any other BR than the BR No.5523 which was is any other BR than the BR No.5523 which was is any other BR than the BR No.5523 which was outstanding outstanding outstanding between between between the parties at the relevant time and the parties at the relevant time and the parties at the relevant time and therefore, therefore, therefore, accordingly the first transaction dated 30th accordingly the first transaction dated 30th accordingly the first transaction dated 30th April April April 1991 was not settled and therefore, the 1991 was not settled and therefore, the 1991 was not settled and therefore, the petitioners petitioners petitioners were entitled for the award. The learned were entitled for the award. The learned were entitled for the award. The learned counsel counsel counsel submits that however, on the basis of the submits that however, on the basis of the submits that however, on the basis of the correspondence correspondence correspondence between the parties, in the majority between the parties, in the majority between the parties, in the majority award, award, award, a finding has been recorded that BR No.5523 was a finding has been recorded that BR No.5523 was a finding has been recorded that BR No.5523 was discharged discharged discharged in in in relation to the first transaction. It was relation to the first transaction. It was relation to the first transaction. It was not not not the case of the respondents that for completing the the case of the respondents that for completing the the case of the respondents that for completing the second second second transaction, physicals were delivered. The transaction, physicals were delivered. The transaction, physicals were delivered. The respondents respondents respondents never pleaded that it had delivered never pleaded that it had delivered never pleaded that it had delivered physicals physicals physicals for completing the second transaction. It is for completing the second transaction. It is for completing the second transaction. It is -6- submitted submitted submitted that the fact that the documents that were that the fact that the documents that were that the fact that the documents that were produced produced produced by the respondents were not recording this by the respondents were not recording this by the respondents were not recording this aspect, aspect, aspect, and therefore, it could not be the case of the and therefore, it could not be the case of the and therefore, it could not be the case of the respondents respondents respondents that that that the second transaction was completed by the second transaction was completed by the second transaction was completed by delivery delivery delivery of physicals because the documents written by of physicals because the documents written by of physicals because the documents written by the the the respondents respondents respondents show that the second transaction was not show that the second transaction was not show that the second transaction was not completed. completed. completed. It is submitted that the second transaction It is submitted that the second transaction It is submitted that the second transaction has has has totally been ignored. It is submitted that even totally been ignored. It is submitted that even totally been ignored. It is submitted that even assuming assuming assuming that that that the finding recorded in the majority award the finding recorded in the majority award the finding recorded in the majority award that that that because BR No.5523 was issued after 28th September because BR No.5523 was issued after 28th September because BR No.5523 was issued after 28th September 1991, 1991, 1991, it was returned and discharged in relation to the it was returned and discharged in relation to the it was returned and discharged in relation to the transaction transaction transaction dated 30th April 1991 which does not lead dated 30th April 1991 which does not lead dated 30th April 1991 which does not lead one one one to to to the conclusion that because BR No.5523 was due in the conclusion that because BR No.5523 was due in the conclusion that because BR No.5523 was due in relation relation relation to the transaction dated 30th April 1991, to the transaction dated 30th April 1991, to the transaction dated 30th April 1991, physicals physicals physicals were delivered for completing the second were delivered for completing the second were delivered for completing the second transaction. transaction. transaction. According to the learned counsel, such According to the learned counsel, such According to the learned counsel, such finding finding finding will be contrary to the documents produced on will be contrary to the documents produced on will be contrary to the documents produced on record record record on behalf of the respondents. It was also urged on behalf of the respondents. It was also urged on behalf of the respondents. It was also urged that that that the Arbitral Tribunal has not also appreciated oral the Arbitral Tribunal has not also appreciated oral the Arbitral Tribunal has not also appreciated oral evidence evidence evidence led on behalf of the respondents. led on behalf of the respondents. led on behalf of the respondents. 3.3.3. On On On behalf of the respondents on the other behalf of the respondents on the other behalf of the respondents on the other hand, hand, hand, it is submitted that perusal of the awards, both it is submitted that perusal of the awards, both it is submitted that perusal of the awards, both majority majority majority and the minority award, show that the and the minority award, show that the and the minority award, show that the Arbitrators Arbitrators Arbitrators have appreciated the entire evidence on have appreciated the entire evidence on have appreciated the entire evidence on record record record and they have recorded findings of facts. The and they have recorded findings of facts. The and they have recorded findings of facts. The findings findings findings recorded by the Arbitrators are possible recorded by the Arbitrators are possible recorded by the Arbitrators are possible -7- findings findings findings and therefore, this Court should not interfere and therefore, this Court should not interfere and therefore, this Court should not interfere with with with the award. The learned counsel submitted that the award. The learned counsel submitted that the award. The learned counsel submitted that though though though it was not pleaded by the respondents that the it was not pleaded by the respondents that the it was not pleaded by the respondents that the second second second transaction was completed by delivery of transaction was completed by delivery of transaction was completed by delivery of physicals, physicals, physicals, documentary evidence led on behalf of the documentary evidence led on behalf of the documentary evidence led on behalf of the petitioners petitioners petitioners show that the second transaction was show that the second transaction was show that the second transaction was completed completed completed by delivery of shares and therefore, as the by delivery of shares and therefore, as the by delivery of shares and therefore, as the evidence evidence evidence produced on behalf of the petitioners itself produced on behalf of the petitioners itself produced on behalf of the petitioners itself establish establish establish that the second transaction was closed by that the second transaction was closed by that the second transaction was closed by delivery delivery delivery of the physicals and in the face of the clear of the physicals and in the face of the clear of the physicals and in the face of the clear finding finding finding recorded on the basis of correspondence recorded on the basis of correspondence recorded on the basis of correspondence exchanged exchanged exchanged between the parties that BR No.5523 was between the parties that BR No.5523 was between the parties that BR No.5523 was completely completely completely separate transaction, no fault can be found separate transaction, no fault can be found separate transaction, no fault can be found with with with the the the finding recorded by the Arbitral Tribunal. The finding recorded by the Arbitral Tribunal. The finding recorded by the Arbitral Tribunal. The learned learned learned counsel for both the sides have also taken me counsel for both the sides have also taken me counsel for both the sides have also taken me through through through the documents on record. the documents on record. the documents on record. 4.4.4. On On On the