Ashok Kumar Mathur, CJ. - (1.) This is an appeal directed against the order passed by the learned single Judge dated 2nd May, 2002 whereby the learned single Judge has dismissed the writ petition holding that the present dispute can be referred to arbitration at the instance of the constituent of a trading member.
(2.) The brief facts which arc necessary for disposal of the present appeal are that the writ petitioner is a company registered under the Companies Act, 1956 (hereinafter referred to as the petitioner-company) and the writ petitioner No. 2 is one of the Directors of the petitioner-company. The appellant/writ petitioner company is a registered Stock Broker and is a trading member of National Stock Exchange of India Limited (hereinafter referred to as the NSE). The respondent No. 5 is also a company registered under the Companies Act and it has opened an account with the petitioner-company (share broker) and purchased certain shares.
(3.) The case of the petitioner-company is that in the year 1996 under instructions from respondent No. 3 the petitioner-company opened an account being No. K-005 in the name of respondent No. 3 Thereafter in 1997 respondent No. 3 introduced his son, the respondent No. 4 and on their joint requests, the petitioner-company opened another account being No. S-025 in the name of respondent No. 4 with respondent No. 3. It is alleged that the petitioner-company on 17th April, 1999 in terms of the instruction given by respondent Nos. 3 and 4 purchased 4000 equity shares of GMDC Limited with its own fund and that purchase was duly entered in the account No. S-025 of the respondent Nos. 3 and 4 but the price including commission of the petitioner-company remained due. It is alleged that the respondent Nos. 3 and 4 subsequently introduced respondent No. 5 to the petitioner-company as their sister concern and on the request of respondent Nos. 3 and 4 the petitioner-company opened an account in the name of respondent No. 5 being account No. B-037. On or about 23rd April, 1999 respondent Nos. 2 and 3 made over a cheque to the petitioner-company for a sum of Rs. 1,95,047 drawn by respondent No. 5 in favour of the petitioner-company with a request to the petitioner-company to transfer the said 4000 equity shares, so purchased in the name of respondent No. 4, in favour of respondent No. 5 and the petitioner-company accordingly transferred the said shares in favour of respondent No. 5. On or about 18th May, 1999 as instructed by respondent No. 3, the petitioner-company sold and transferred 1000 equity shares of GMDC out of the 4000 equity shares so purchased and the sale proceeds of Rs. 69,550 was entered into the account of respondent No. 5. Thereafter, on 11th June, 1999, respondent No. 5 requested the petitioner-company to transfer remaining 3000 equity shares of GMDC Limited in favour of respondent No. 5. To that the petitioner-company demanded the dues of respondent No. 5 as per its account duly maintained by the petitioner-company. The case of the petitioner-company is that respondent No. 5 failed to make payment of the dues of the petitioner-company. As the petitioner-company refused to transfer the shares, the respondent No. 5 by letter dated 8th June, 1999 informed the NSE of the said conduct of the petitioner-company and in the said letter a request was made of the NSE to directed the petitioner-company to immediately deliver 3000 equity shares of GMDC to respondent No. 5 and if the petitioner-company fails to do so, refer the case to arbitration. A copy of this letter was also sent to the petitioner-company. The petitioner-company wrote to the NSE refuting the claim of respondent No. 5. However, the petitioner-company did not raise any objection to the claim for arbitration raised by respondent No. 5 in its letter dated 8th June, 1999.;