Arbitral Award Challenge Dismissed: Court Upholds Timeliness and Findings in Broker-Client Dispute.


14 August 2025 Arbitration Law >> Business & Commercial Law  

A petition filed by Bhanuchandra J. Doshi (Doshi) challenging an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. The dispute stems from Doshi's trading activities with Motilal Oswal Securities Limited (Motilal) through a sub-broker, Natwarlal Parekh Securities P. Ltd. (Natwarlal), beginning in 2004. Disputes arose in January 2008 when, due to a falling market, Motilal made a margin call on Doshi. Doshi issued a cheque for the required amount but later stopped payment, claiming that unauthorized trades, specifically a purchase of 125 shares of Jindal Steel, had occurred. This led to a dispute over margin shortfalls and the subsequent sale of Doshi’s collateral shares, including SBI shares, by Motilal.

The core of Doshi's challenge to the arbitral awards revolves around two main points: first, that the initial arbitral award (First Award) was passed beyond the statutory time limit of three months, and second, that the awards were flawed on their merits regarding the alleged unauthorized trades and the sale of his securities.


 

 

Regarding the time limit, the court found that the three-month period for passing an award, as per the National Stock Exchange of India Limited (NSE) bye-laws, is "normally" three months from the date of the first hearing. The court determined that while a hearing was scheduled for December 3, 2012, no hearing actually took place as Doshi himself requested an adjournment. The first hearing was therefore held on January 28, 2013. Since the award was passed on April 27, 2013, it was well within the three-month period. The court also noted that the three-month deadline is directory, not mandatory, and that the six-month extension period was also not exceeded. The court dismissed Doshi's claims of the award being backdated, stating there was insufficient evidence for such a serious charge.

On the issue of unauthorized trades, the court found no reason to interfere with the arbitral tribunal’s findings. The tribunal noted Doshi’s inconsistent behavior: stopping payment on a cheque for margin shortfall while later issuing another cheque for rights shares. The court also observed that Doshi had access to account statements and did not raise timely disputes for four years. The court concluded that the arbitral tribunal's findings were reasonable and plausible and did not warrant interference.

The petition was dismissed, and Doshi was ordered to pay costs of Rs. 10,000, bringing an end to a dispute that has lasted for more than 17 years and three rounds of arbitration.


Section 34, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996