1 ARBP499/10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.499 OF 2010 Sabina Sanghvi ...Petitioner v/s Sharekhan Ltd. ...Respondents WITH ARBITRATION PETITION NO.1361 OF 2010 Sanghvi Erectors Pvt.Ltd. ...Petitioners v/s Sharekhan Ltd. ...Respondents WITH ARBITRATION PETITION NO.1362 OF 2010 Maharashtra Erectors Pvt.Ltd. ...Petitioners v/s Sharekhan Ltd. ...Respondents 2 ARBP499/10 Mr Siraj Rustomji with Mr A. Daver i/b M/s Chambers of Corporate Attorneys for Petitioners. Mr P.N. Mody i/b Mr Rajesh Desai for Respondents. CORAM : D.K.DESHMUKH J. DATE : 16TH JUNE 2011. P.C. :- 1] All these three petitions can be conveniently disposed off by a common order because the respondent in these petitions is the same and the transaction to which these petitions relate is also the same. 2] Sabina Anilkumar Sanghvi, Anilkumar P. Sanghvi, husband of Sabina and two companies viz. Sanghvi Erectors Pvt.Ltd. And Maharashtra Erectors Pvt.Ltd. had entered into an agreement with the respondent which is a member of Bombay Stock Exchange and functions as stock broker. After entering into member-client agreement, the four entities viz. two individuals and two private 3 ARBP499/10 limited companies had executed a document on 24 th January 2008 authoring the respondent  stock broker to treat the four accounts opened by these four entities as one for the purpose of transactions on the Stock Exchange. It is common ground that the respondent had purchased on behalf of Sabina shares of Century Textiles Ltd. For Rs.2,23,60,781.67. The purchase was made on 7 th February 2008. Sabina did not pay the purchase price of the shares. Therefore, ultimately those shares and the shares belonging to the aforesaid two companies were sold by the respondent in the month of November 2008 to recover the purchase price of the shares. After selling the shares, in the account of the respondent an amount of Rs.46,31,386.70 was shown as due to the respondent from Sabina. Therefore, the respondent filed a claim before the Arbitral Tribunal of the Stock Exchange for recovery of Rs. 46,31,386.70 against Sabina. The two companies filed their individual claims against the respondent taking exception to the act of the respondent of selling shares belonging to the companies to meet 4 ARBP499/10 the liabilities of Sabina because according to the two companies, the letter dated 24 th January 2008 did not authorise the respondent to sell their shares to meet the liability of Sabina. The claims made by the companies and the respondent were decided by the Arbitral Tribunal by award dated 18 th November 2009. The Arbitral Tribunal held that the respondent did not have the authority to sell the shares owned by the companies to meet the liability of Sabina. Therefore, an award was made against the respondent and in favour of the two companies. So far as the claim made by the respondent against Sabina is concerned, that claim was upheld and an award in the amount of Rs.46,31,386.70 was made in favour of the respondent and against Sabina. Feeling aggrieved by that award, Sabina has filed arbitration petition No.499 of 2010. The respondent, feeling aggrieved by the award made in favour of the companies and against the respondent preferred appeals before the Appellate Arbitral Tribunal of the Bombay Stock Exchange. Those appeals were decided by the Appellate Arbitral 5 ARBP499/10 Tribunal by award dated 30 th April 2010. The Appellate Arbitral Tribunal held that because of the letter dated 24 th January 2008, the respondent had the authority to sell the shares belonging to the two companies to meet the liability of Sabina and set aside the awards made in favour of the companies by the lower Arbitral Tribunal. Feeling aggrieved by that award, arbitration petition Nos.1362 of 2010 and 1361 of 2010 have been filed by the two companies challenging the award made by the Appellate Arbitral Tribunal. 3] So far as the petitions filed by the two companies are concerned, perusal of the award made by the Appellate Arbitral Tribunal shows that three contentions were raised on behalf of the two companies. It was contended that there was no resolution of the Board of Directors authorizing anybody to sign the letter dated 24 th January 2008 on their behalf and therefore the letter is not binding on them. That contention has been rejected by the Appellate Arbitral Tribunal relying on the 6 ARBP499/10 doctrine of  indoor management . After having heard learned counsel appearing for petitioner, I do not see any reason to disturb the conclusion recorded by the Appellate Arbitral Tribunal in that regard. It was also contended on behalf of the two companies relying on the wording of the letter dated 24 th January 2008 that that letter does not authorise the respondents to sell the shares belonging to the companies to meet the liability of Sabina. According to the companies, that letter authorises only withholding of the securities belonging to the companies. The Appellate Arbitral Tribunal has considered that argument in detail and interpreted that letter and has held that the said letter authorises even sale of shares belonging to the companies to meet the liability of Sabina. The interpretation of the document is within the jurisdiction of the Appellate Arbitral Tribunal. Court hearing petition under section 34 of the Act can interfere with the finding recorded by the Appellate Arbitral Tribunal on the basis of interpretation of the document only if the Court 7 ARBP499/10 finds that the construction of the document accepted by the Tribunal is impossible or is unjust. After having gone through the letter, I find that the construction of the letter by the Tribunal is a possible construction and therefore, in my opinion, that part of the award cannot be interfered with. On behalf of the companies, it was also contended that the letter dated 24 th January 2008 was superseded by another letter dated 25 th January 2008. That contention has also been dealt with by the Tribunal and has been rejected relying on the documents on record. The Tribunal has relied on the correspondence between the parties and the conduct of the parties to draw an inference that the purpose of the letter dated 25 th January 2008 was not to supersede the letter dated 24 th January 2008. The conclusion recorded by the Tribunal thus on this point is on the basis of the evidence on record and there is definite material available on record in support of that finding. Therefore, it being a finding of fact recorded on the basis of evidence on record, cannot be disturbed in the limited 8 ARBP499/10 jurisdiction of this Court under section 34 of the Act. It is pertinent to be noted that the two companies have not contended that the shares belonging to them ought not to have been sold in November 2008 but at any pointed of time earlier than that. Therefore, that aspect is not to be considered. So far as the petition filed by Sabina is concerned, the learned counsel appearing for respondents, in my opinion, has rightly contended on the basis of the statement made by Sabina in paragraph 17 of her written statement that she has admitted her liability. In paragraph 17, Sabina has stated thus :- Without prejudice to the above, the Respondent states that there was a mutual unwritten understanding that the Respondent would purchase 24,225 shares on Century Textiles and would meet her payment obligation anytime by 31.03.2008. If the Respondent failed to meet her pay in obligation on or before 31.03.2008, the 9 ARBP499/10 Applicant had the right to close out the same and recover the same from the sale proceeds and losses if any would be borne by the Respondent. Thus, the Applicant states that her liability to the Applicant is limited to Rs.46,59,024.49 which is computed as follows :- Purchase/sale Date Quantity Total consideration (Rs) 07.02.2008 24,225 2,23,26,316.99 31.03.2008 24,225 1,76,67,292.50** Difference between purchase and closing market value as on 31.03.2008 46,59,024.49 ** The closing price of Century Textiles as on 31.03.2008 was Rs.729.30. In view of the above, the Respondent respectfully submits that she is willing and agreeable to pay the difference of Rs. 46,59,024.49 as per the unwritten mutual agreement between the parties. 10 ARBP499/10 The learned counsel appearing for respondents submits that Sabina has accepted that she is liable to pay to the respondents an amount of Rs.46,59,024.49. The award that is made by the Tribunal in favour of the respondents is of a smaller amount and therefore, according to the respondents, in fact Sabina cannot file a petition challenging the award because the award is for a lesser amount than the amount for which liability has been accepted by Sabina. The learned counsel appearing for petitioners submits that the statement quoted above does not admit the liability. However, I find that Sabina has made a clear and unequivocal statement that she is wiling and agreeable to pay Rs.46,59,024.49 to the respondents. The only method by which she could have explained the statement, which amounts to an admission, is by entering the witness box. She has not entered the witness box. Therefore, the Arbitrator and the Court will be justified in relying on that statement. 11 ARBP499/10 4] It is further to be seen that according to Sabina, after she bought the shares in February 2008 there was an agreement between her and the respondents that the respondents have to wait till 31 st March 2008 and that by that date, she would make the payment. Therefore, there was no question of the respondents, according to that agreement, selling the shares which were purchased for Sabina or the shares belonging to the two companies before 31 st March 2008. As per this agreement which is pleaded by Sabina, the respondents would be free to sell the shares only in the first week of April 2008, but there is no evidence placed on record by Sabina as to what would have been the position had the shares been sold by the respondents in the first week of April 2008 and therefore, there is nothing on record to indicate that the amount of which award is passed against Sabina is wrong or award for any lesser amount should have been passed against her. Sabina could have placed evidence on record to show as to for how much amount the shares would have been sold in the first week of April 2008 and if 12 ARBP499/10 that amount is more than the amount for which the shares were actually sold in November 2008, she could have asked for reduction in the amount for which the respondents had made the claim. But, as observed above, no such material has been produced on record, on the contrary she in her statement admits liability to pay Rs.46,59,024.49 to the respondents. Therefore, in my opinion, in this situation, when Sabina admits that she is wiling to pay an amount of Rs.46,59,024.49, it is safe to base the award on that admission. It was also contended on behalf of Sabina that the shares which were purchased on her behalf as also the shares belonging to the companies should have been sold earlier than when they are actually sold i.e. November 2008. In my opinion, so far as shares belonging to companies are concerned, Sabina cannot be heard to say anything because it is her case that the shares were belonging to the companies and they could not have been sold to meet her liability and the companies which were owners of the shares do not contend that the shares could not have been sold in November 2008 13 ARBP499/10 but earlier than that. So far as the sale of shares belonging to Sabina are concerned, her case is that those shares should have been sold in February 2008. The calculation that has been given in paragraph 17 is based on sale of shares in February 2008 whereas in the same written statement she pleads about agreement between the parties that the respondents were to wait till 31 st March 2008 to sell the shares. There is also calculation given as on 31 st March 2008 but if one goes by the statement made in the same paragraph, that the respondents were to wait till Sabina makes payment and she was to make payment by 31 st March 2008, then the figures given in relation to the period before 31 st March 2008 are of no relevance. In my opinion, no further discussion of this aspect of the matter is necessary in view of the clear admission contained in the written statement filed by Sabina. In the result therefore, all the three petitions fail and are rejected. Parties to act on the copy of this order 14 ARBP499/10 duly authenticated by the Associate / Private Secretary of this Court. Certified copy expedited. ( JUSTICE D.K. DESHMUKH )