IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 19.10.2010 CORAM THE HON'BLE MR. JUSTICE P.JYOTHIMANI O.P.No.190 of 2010 ORDER This Original Petition is filed challenging the award passed by the second respondent-sole arbitrator dated 23.06.2009 by which the claim made by the first respondent company before the arbitrator came to be allowed with a direction to the petitioner herein to pay the amount of Rs.1,05,462.95/- (Rupees One lakh Five Thousand Four Hundred and Sixty Two Paise Ninety Five only) with 12% interest from the date of application, i.e., 24.10.2008 till payment. 2.(i) The first respondent who was the petitioner before the arbitrator is a trading member and the petitioner herein has been trading with the first respondent through its Tuticorin branch till 13.6.2006 and later continued through its Nungambakkam branch. According to the first respondent, the trading activities have been done as per the contract notes and as per the orders of the petitioner and as on 28.05.2008 there has been a debit balance of Rs.1,05,462.95/- and in spite of the demand, the amount has not been paid. This claim was contested by the petitioner herein before the arbitrator. According to her, when she found some discrepancies in the debit balance, she was informed by the officials of the first respondent in the T.Nagar branch, by name, Mr.Karthick and Ms.Shankari on 03.04.2008 that some wrong entry has been made and in spite of it, the mistake was not rectified and her account showed a debit balance of Rs.15,94,313.96 and on 09.04.2008, a debit balance was shown as Rs.1,00,228.51/-. The branch officials assured again to rectify the mistake, but the same has not been done. It is stated that at the request of the officials, the petitioner has made further payment of Rs.25,000/- by way of cheque for the purpose of further trade and on 10.4.2008 since the mistake was not rectified, she has stopped trading with the first respondent. Of course, the said repudiation of the petitioner before the arbitrator was denied by the first respondent by additional statement of defence. (ii) The first respondent has filed six documents. While the petitioner has not chosen to file any document and the first respondent was throughout represented by the Manager, Legal, Mr.Hari Lal, while the petitioner was represented before the arbitrator through her counsel. It was found on evidence that the petitioner was an online trader and was receiving her contract notes through her e-mail and the statement of Accounts and contract notes for the period from 01.04.2007 to 31.03.2009 and from 01.04.2008 to 07.04.2008 respectively as seen in Exs.A2 and A3 were relied upon by the arbitrator to conclude that the petitioner was actually trading with the first respondent and Ex.A6 document shows about the online transaction effected by the petitioner. It appears that the petitioner has changed her stand before the arbitrator by appearing in person to state that the officials of the first respondent have traded online on her behalf which according to her is unauthorized. It was in those circumstances the arbitrator has found that the petitioner being the constituent has not stated as to what are the wrong entries made and in the statement of defence she has not chosen to give any materials and secondly, the petitioner having accepted to receive the contract notes by e-mail, had in fact received the contract notes for the date from 01.4.2008 to 07.4.2008 and it was only during that period she has sustained loss and in the normal course, as a constituent she should have brought it to the notice of the trading member, namely, the first respondent, if there is any unauthorized entry. The arbitrator has also found that even though the petitioner has taken a stand that she has contacted some of the officials in T.Nagar branch of the first respondent and thought that the mistake would be rectified, the petitioner has been deliberately waiting and therefore, the arbitrator has not believed the said version. Thirdly, when the petitioner has admitted having given a cheque for Rs.25,000/- on 10.4.2008, by that time, even according to the petitioner, the wrong entries continued and therefore, when the dispute is in existence it is not known as to how the petitioner has chosen to continue to trade by depositing further amount. While it was the contention of the learned counsel appearing for the petitioner before the arbitrator that the petitioner was a small investor which fact was disputed by the first respondent Company stating that she has been continuously trading, the arbitrator has taken note of the fact that the petitioner on 04.04.2008 has bought 3,500 JSW Steel shares with a view of trading, but due to fall in price, she has sold 1,500 JSW steel shares on the same day, allowed the remaining shares to be on delivery basis. The first respondent found that on the next day the petitioner has failed to pay the margin money. Therefore, the first respondent had to square off the position on the next day. The contention of the learned counsel for the petitioner before the arbitrator that in respect of 2000 shares went for delivery, the first respondent should have waited till T+2 days before squaring off the position which according to him was in violation came to be rejected. However, the arbitrator has found that the first respondent was entitled to square off the entire 3,500 shares on the same day, in which event the loss would have been much more and it was knowing that the petitioner has sold 1500 shares only with an intention to sell the remaining shares with the minimum loss, and even this allowing the client to take possession without margin money is in violation of NSE regulations, it cannot be said that the trade itself becomes void or illegal and only the trading member takes the risks of non-payment by the client. It was in those circumstances by accepting that the first respondent has proved the claim, the award came to be passed, against which the present petition is filed under Section 34 of the Arbitration and Conciliation Act, 1996. 3.(i) According to the learned counsel for the petitioner, it was the duty of the first respondent company when once its officials have admitted certain mistakes to rectify the accounts and non- performance of that function should be put against the first respondent which according to the learned counsel for the petitioner is a misconduct on the part of the arbitrator and the award should be termed as perverse. (ii) The learned counsel further contends that the arbitrator should have exercised his power under Section 27 of the Act in approaching the Court for examination of two persons as witnesses who are the officials of the first respondent company and it is further submitted that in the absence of his margin amount, the first respondents conduct in allowing the petitioner to trade should be treated as unauthorised and the first respondent is expected, in respect of the balance 2000 shares, to have wait for T+2 days. (iii) The learned counsel for the petitioner also submits that by relying upon the judgment of the Supreme Court in OIL AND NATURAL GAS CORPORATION LTD., v. SAW PIPES LTD (2003 (2) CTC 282 the award should be declared as unfair. 4. As far as the first submission of the learned counsel for the petitioner that the petitioner has not traded, the arbitrator based on the evidence, especially, Ex.A6 has found that the petitioner has been trading online with the first respondent. Regarding the next contention that without trading margin money, the petitioner should not have been allowed to trade, as stated by the arbitrator in the award, that will not make the trading activities as null and void. As far as the purchase of 3,500 shares is concerned, on fact, the arbitrator has found that on the very same day of purchase she has sold 1500 shares by trading by keeping the remaining 2000 shares and it cannot be said that the conduct of the first respondent is not to minimize the loss. In my considered view, there is no public policy involved on the facts and circumstances of the case to declare the award as null and void. 5. The Honble Apex Court in the decision rendered in OIL AND NATURAL GAS CORPORATION LTD., V. SAW PIPES LTD (2003(2)CTC 282) while referring to section 34(2)(b)(ii) of the Arbitration and Conciliation Act 1996 which explains about public policy in no uncertain terms held that the patent illegality should go to the root of the matter and if the illegality is trivial that cannot be a ground to set aside the award on the basis that it is against the public policy. To enable the Court to interfere with the validity of the award under Section 34(2) of the Arbitration and Conciliation Act, the unfairness and unreasonableness must shock the conscience of the Court so as to declare the contract as void. I do not think that any of the grounds and the points decided by the Honble Apex Court has application to the facts of the present case. 6. As far as section 27 of the Act which enables the arbitrator to seek the assistance of the Court for the purpose of taking evidence is concerned, the power vests with the arbitrator as well as the party with the approval of the arbitrator to apply to the Court for assistance in taking evidence. For the arbitrator to approach the Court for the purpose of taking evidence, to direct the parties to record the evidence will arise in cases where the arbitrator entertains a doubt about the correctness of the document which requires an experts opinion. It is in these circumstances he is to approach the Court since as an arbitrator he decides only a dispute between the parties as per the contract and he cannot call any third party to give evidence before him and therefore in order to decide the dispute he makes a reference. If he entertains a doubt about the correctness of a document and so on, which requires evidence, it is for him to approach the Court for assistance. On the facts of the present case simply because the petitioner has chosen to make a statement in the counter before the arbitrator that she has contacted two of the officials of the first respondent company in T.Nagar who have admitted certain mistakes in the entry in respect of the account of the petitioner, it does not mean that the arbitrator should exercise his power under Section 27 of the Act. In fact very curiously as noted by the arbitrator it is seen that the petitioner having admitted of her transactions by e-mail as it is seen under Ex.A6 in trading with the first respondent and of course, stated that when there was some entries which were not to her satisfaction, she contacted the officials of the first respondent in T.Nagar branch while admittedly she was transacted in Tuticorin and the said two officials have informed her of some mistakes in the Account. But she has appeared in person before the arbitrator and took a different stand that she has not transacted by e-mail and the transactions were done by two officials unauthorisedly. In view of the stand taken by the petitioner, certainly it was not mandatory on the part of the arbitrator to invoke his power under Section 27 of the Act. That apart, as I have stated earlier, there are absolutely no ground for the arbitrator to approach the Court for assistance in order to call the said witnesses. 7. Even otherwise under Section 27 of the Act which is as follows "27.Court assistance in taking evidence.(1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence. (2)The application shall specify- (a)the names and addresses of the parties and the arbitrators; (b)the general nature of the claim and the relief sought; (c)the evidence to be obtained, in particular,- (i)the name and address of any person to be heard as witness or expert witness and a statement of the subject-matter of the testimony required; (ii)the description of any document to be produced or property to be inspected. (3)The Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal. (4)The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it. (5)Persons failing to attend in accordance with such process, or making any other default, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences in suits tried before the Court. (6)In this section the expression Processes includes summonses and commissions for the examination of witnesses and summonses to produce documents. it is not as if the petitioner being the party before the arbitrator is left in lurch. It is not known as to what step she has taken before the arbitrator seeking to invoke his powers under section 27 as to whether she has filed any application before the arbitrator, because section 27(1) contemplates that even a party can apply to the Court with the approval of the arbitral tribunal. In the absence any specific application made by the petitioner before the arbitrator asking for any witnesses to be called for in which event it would have been incumbent on the part of the arbitrator to decide about the relevancy of such evidence so as to exercise his power under section 27 of the Act, I am of the considered view that the contention of the learned counsel for the petitioner that the non-invoking of the powers under Section 27 would vitiate the award is totally misconceived. On the facts of the present case on evidence when the arbitrator has taken a decision, it is not for this Court to reappreciate the evidence by sitting as an appellate authority while exercising its power under Section 34 of the Arbitration and Conciliation Act 1996. The award of the arbitrator is not perverse. There is no illegality or misconduct attributable against the award of the arbitrator. 8. In view of the same, this Original Petition fails and the same is dismissed. sal