AC Chokshi Share Broker Private Limited Vs Jatin Pratap Desai & Anr. (Supreme Court of India)
The Supreme Court allowed the appeal in AC Chokshi Share Broker Private Limited Vs Jatin Pratap Desai & Anr. and set aside the Bombay High Court Division Bench order dated 29.04.2021 that had annulled the arbitral award against respondent no. 1, the husband of respondent no. 2. The appellant, a registered BSE stock broker, had initiated arbitration under Bye-law 248(a) of the BSE Bye-laws, 1957 to recover the debit balance in respondent no. 2’s trading account. The respondents, husband and wife, had opened individual trading accounts in 1999. Respondent no. 1 had a credit balance of Rs. 9,40,020/-, which the appellant transferred to respondent no. 2’s account on 05.03.2001 based on his oral instructions. Following a stock market crash, the debit balance in respondent no. 2’s account increased to Rs. 1,18,48,069/- as on 12.04.2001. The arbitral tribunal held both respondents jointly and severally liable for Rs. 1,18,48,069/- with 9% interest from 01.05.2001 and dismissed respondent no. 1’s counter-claim.
The High Court Single Judge had dismissed the respondents’ Section 34 of the Arbitration and Conciliation Act, 1996 petitions, but the Division Bench, exercising jurisdiction under Section 37, set aside the award against respondent no. 1. It held that the alleged oral understanding was a separate private transaction outside Bye-law 248(a), and that the arbitral tribunal’s finding of joint and several liability was perverse and patently illegal. The Supreme Court rejected these conclusions.
