RASHMI ADITYA GUPTA Vs. MANGAL KESHAV SECURITIES LTD

JUDGEMENT

(1.) The Appellant takes an exception to an order of 26/11/2018 (SC Gupte, J) in an Arbitration Petition under Sec. 34 of the Arbitration and Conciliation Act. The Appellant challenged the award of a sole Arbitrator in an arbitration held under the Bye-laws, Rules and Regulations of the National Stock Exchange India Ltd ("NSE"). The Claimant in arbitration was the 1st Respondent Mangal Keshav Securities Ltd ("MKSL") a trading member of the NSE. The 2nd Respondent, one Samir Kapadia, is one of MKSL's sub-brokers. The claim in reference was in respect of amounts said to be due from the Appellant as a constituent of MKSL. It was specifically identified as the amount due under certain Futures and Options (F&O) transactions that MKSL claimed to have executed on the Appellant's behalf.

(2.) Before the learned sole arbitrator, the Appellant contended that she dealt with MKSL only for share purchase transaction on a delivery basis and never dealt in the F&O segment. She said that the transactions that MKSL claimed were on her behalf in the F&O segment were entirely unauthorised. Hence, she had no liability. One of the contentions was that the NSE regulations, including Regulation 3.10(a), made it mandatory for a trading member to have a specified margin for F&O trades. MKSL maintained no such margin. Therefore, the Appellant argued, there could not have been any trading by MKSL on the Appellant's behalf in the F&O segment. The Appellant also said that the transactions that MKSL claimed to have done on her account were contrary to the terms of the contract as also contrary to NSE Regulations.

(3.) A copy of the impugned award is available from page 110. As regards Appellant's claim to innocence, or, more accurately, to being unaware and incapable of being aware of the transactions, the learned arbitrator found that the Appellant's case inspired no confidence. She was a commerce graduate with a fair income, a sizeable portfolio, three years of share market experience and, more importantly for our purposes. shown to be trading in both sectors, i.e. shares as also F&O. She was also shown as a director in at least three private companies. The learned arbitrator, on an assessment of this evidentiary material, rejected the Appellant's case and claims to innocence and incomprehension. Consequently, the learned Sole Arbitrator disbelieved the Appellant's case that she was not in a position to comprehend the purpose of the contract notes admittedly issued to her by MKSL.