TMI Blog2003 (12) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... to arbitration under the rules, regulations and bye-laws of the National Stock Exchange. The Petitioner invoked proceedings in arbitration on 28th April, 2001. On 14th May, 2002 an award was passed in favour of the Petitioner in a total amount of Rs. 38,23,758 together with interest thereon at the rate of 15% p.a. from 28th April, 2001 till the date of payment. Apprehending that on receipt of the award, an effort would be made by the Respondent to alienate its properties and assets, the Petitioner filed a Petition under section 9 of the Arbitration and Conciliation Act, 1996 ("the Act"). On 6th June, 2002, an ad interim order was passed by S.A. Bobde, J. in respect of the operation of the depository account of the Respondent. The Respondent instituted a petition in this Court for setting aside the arbitral award under section 34 of the Act. By a judgment and order dated 13th January, 2003 F.I. Rebello, J., dismissed the Petition filed by the Respondent. Upon the dismissal of the Petition under section 34, the petition that was filed under section 9 was also disposed of continuing the ad interim order for a period of four weeks. The Learned Single Judge, however, directed that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated on enquiry that instructions to transfer these shares to the applicant were issued immediately after the purchase of the shares, but neither the Stock Holding Corporation, nor Ankit Securities and Finance Company Pvt. Ltd. who were acting as depositories complied with the transfer instructions. At this stage, what is material is that the affidavit in support is entirely silent in regard to the underlying contract notes on the basis of which transactions were concluded or in regard to the payment of consideration for the purchase of the shares. 5. There is no dispute about the fact that the attachment which has been levied in the present case is in respect of four D-Mat Accounts of the Respondent. In respect of three of those accounts, the depository is Stock Holding Corporation of India Ltd. while in the case of one account the depository is Ankit Securities Ltd. which is claimed to be a sister concern of the Petitioner. Counsel appearing on behalf of the applicant urges that in February 2003, the applicant instituted a declaratory suit in the Civil Court at Muzaffarpur (Suit No. IS 8 of 2003) after which the warrant of attachment came to be issued in 2003. Counsel urged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a daughter, sons and a daughter-in-law. If the applicants were indeed to be bona fide purchasers of these shares for value, the first thing that one would expect is a disclosure of the un-derlying contract notes and details of the payment of consideration by the applicants. In the present case, the record is completely silent in regard to the payment of any consideration whatsoever which is the sine qua non for a valid transaction of the purchase and transfer of shares. 7. In the affidavit in reply to the Chamber Summons, the Petitioner has submitted that the case put forth of a purchase of shares by the applicants is bogus and fictitious inasmuch as shares purchased by the applicants at the end of August 2001 and/or in January 2002 through the Respondent should have been delivered by the Stock Exchange on any day after the date of the execution of the transaction. In the present settlement cycle, shares should have been delivered by the Stock Exchange three days after the transfer. However, in the present case, shares purported to be purchased by the applicants through the Respondent were already lying in the personal account of the Respondent prior to 31st March, 2001 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-broker shall buy, sell or deal with any security unless he holds a certificate granted by the Board under the Regulations, similarly there are regulations known as the Securities and Exchange Board of India (Stock Broker and Sub-broker) Regulations, 1992. Regulation 11 provides that it shall be compulsory for all members/brokers to keep monies of the client in a separate account and their own monies in a separate account. The respondent was neither a broker nor sub-broker registered with the BSE or NSE. The shares which have been attached were in the D-mat accounts of the respondent. Despite the attempt of learned counsel appearing on behalf of the respondent to establish that there were valid transactions, neither the applicants nor the respondent have been able to establish the essentials of a valid transaction for the purchase and sale of shares. No payment of consideration has been shown to the court. An Income-tax Return would not by itself establish the existence of a valid transaction in pursuance of which the applicants became owners of the shares. The shares stand in the D-mat account of the Respondent and it is impossible to hold that any of the applicants held a valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summons is maintainable in view of the provisions of order 21 Rule 58 of the Code of Civil Procedure, 1908. Order 21 Rule 58 provides that where any claim is preferred to or any objection is made to the attachment of any property attached in execution of a decree on the ground that such property is not liable to such attachment, the court shall proceed to adjudicate upon the claim or objection in accordance with the provisions contained therein. Sub-rule (2) of rule 58 provides that all questions including questions relating to right, title or interest in the property attached arising between the parties to the proceedings or their representatives and relevant to the adjudication of the question or objection shall be determined by the court dealing with the same and not by a separate suit. Under sub-rule 3, the court may allow the claim or objection and release the property from attachment in whole or in part; disallow the claim or objection; continue the attachment subject to mortgage, charge or other interest or pass such order as it deems fit in the circumstances of the case. Rule 4 provides that upon the adjudication of a claim or objection the order made shall have the same fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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