S.B. Sinha, J. - (1.) INTERPRETATION of Securities Contract (Regulation) Act, 1956 (hereinafter referred to as 'the Act') vis-a-vis rules, bye- laws and the regulations framed thereunder as regard the right of a third party to realise his dues out of the corpus of the Defaulters' Committee is the question involved in this appeal which arises out of a judgment and order dated 25th July, 1997 passed by the High Court of Judicature at Bombay in Appeal No. 17 of 1996.
(2.) THE Background Fact : THE appellant herein is Bombay Stock Exchange (Exchange). It is recognized by the Central Government under the Rules, Bye-laws and Regulations framed in the year 1957 pursuant to or in furtherance of the provisions of 'the Act'. THE said rules, bye-laws and regulations are approved by the Central Government. Rights and obligations of the members of the Exchange as also the constituents/investors dealing with or through the members are governed by the Rules, Bye-laws and Regulations framed under the Act. One C.S. Shah was a registered broker. He was a member of the Exchange. He carried on his business as a stock broker. He was entitled to a personal privilege under the Rules of trading as a broker member. The said privilege is inalienable. As he failed to fulfill his obligations and liabilities, on or about 4th November, 1997 he was declared a defaulter in terms of Bye-law No. 316 whereupon he ceased to be a member of the Exchange under Rule 53. His membership vested in the appellant-Exchange free of all rights, interests and claims. The Defaulters' Committee constituted in terms of the Rules, Bye-laws and Regulations took charge of his assets as were within the Control of the Exchange. The respondent herein had certain claims against the said C.S. Shah. She invoked the arbitration clause in terms of the Bye-laws of the Exchange pursuant to or in furtherance whereof an arbitration award dated 10-8-1993 was made in her favour for a sum of Rs. 2,96,000/- together with interest at the rate of 15% per annum. The said award was filed in the High Court of Judicature at Bombay. The award was made a rule of court and a decree in terms thereof was prepared on 15-2- 1994. In execution of the said decree a Warrant of Attachment purported to be under Order 21, Rule 46 of the Code of Civil Procedure, 1908 was issued on 27-7-1994 for attaching the debt owed by the Exchange to C.S. Shah. A Garnishee Notice was also issued by the High Court on 7-12-1994 in terms whereof the Exchange was called upon to pay to the respondent/Sheriff of Bombay a sum of Rs. 4,15,157.80.
(3.) SEVERAL affidavits were filed by the Exchange disclosing the amount lying in its hands. In the first affidavit filed on 12-1-1995, it was disclosed that sufficient fund is available to meet the claim of the respondent. In an additional affidavit filed on 8-12-1995 it was alleged that the total amount lying with the Exchange for distribution amongst the constituent creditors of C.S. Shah was Rs. 53,56,159/-. It was further contended that in addition to that amount each creditor constituent was entitled to receive a maximum sum of Rs. 25,000/- from the Petitioner's Customer Protection Fund towards his/her claim and the said available sum of Rs. 53,56,159/- was required to be distributed on a prorata basis in terms whereof the respondent would be entitled to receive a sum of Rs. 1,16,530/- making an aggregate sum of Rs. 1,141,530/-. A consolidated list setting out the names of the constituents who had obtained Arbitration Awards along with the relevant details was annexed to the affidavit. The respondent's claim was set out at item No. 72 of the list. The Exchange expressed its readiness and willingness to pay the said sum of Rs. 1,41,530/- to the respondent simultaneously with the payments to be made to the other creditor constituents of C.S. Shah.;