TMI Blog2007 (1) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... t guarantee fund and Rs. 5 lakhs had been provided as interest-free security amount The petitioner has relied on the stock exchange's written confirmation that the petitioner had ceased to be a member with effect from June 9, 2000. Upon cessation of membership, the petitioner claims, the entirety of the security deposit, in various forms, ought to have been returned and the failure on the part of the stock exchange to refund the deposit amounts to inability to pay. The petitioner has also relied on a letter of August 28, 2001, issued by the stock exchange in response to the petitioner's demand for refund of the deposit, to substantiate his claim that a sum of Rs. 2.5 lakhs had been kept deposited towards the guarantee fund and the remaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petition is resisted on three counts. It is urged that in view of the arbitration agreement between a member and the stock exchange, disputes arising between the two ought to be resolved by arbitration. It also contended that the claim is barred by the law of limitation as the petitioner had ceased to be a member with effect from June 9, 2000, but the statutory notice was dated December 31, 2004. Finally, it is submitted that out of the sum of Rs. 10.5 lakhs, Rs. 7.5 lakhs had been utilised by the stock exchange, in accordance with its bye-laws, for meeting a crisis in March, 2001. It was sought to be argued in furtherance of the third ground that in terms of clause 11( d ) of its bye-laws, the stock exchange was permitted to utilise an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the stock exchange may exercise thereon. I would think that the stock exchange would cease to have the right to apply the security deposit of a ceased member in the manner permitted by its bye-laws. That apart, if the letter of February 25, 2002, is read in the context in which it was issued, there is clearly the debtor-creditor jural relationship established therefrom. Section 18 of the limitation Act, 1963, does not require the acknowledgment to be a promise to pay or specify the quantum of indebtedness. All that is necessary is whether the document can be construed as an acknowledgment of the jural relationship of debtor and creditor. Read against the backdrop of the repeated demands of the petitioner, the letter of February 25, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-defaulting member to be temporarily utilised to meet a crisis. Clause 11( d ) cannot be read to mean that a non-defaulting member would not be penalised for the default of another and that his deposit would stand forfeited for no fault of his. Further, in this case, clause 11( d ) would have had no operation as by the time the stock exchange claims that it utilised the petitioner's contribution in the guarantee fund, the petitioner had ceased to be a member. However, the conduct of the petitioner is relevant in this context. It has not been denied in the reply that the petitioner functioned or attempted to function as a member in March, 2001. If this is the case then notwithstanding the stock exchange certifying that the petitioner had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished but mere is an arguable point as to when such money should be returned. There is no doubt that this money, if it was part of the guarantee fund, cannot be altogether appropriated by the stock exchange, but it is a matter of argument and evidence as to when the stock exchange is liable to refund the contribution to the guarantee fund of a non-defaulting member utilised in terms of clause 11( d ) of the bye-laws. For such principal amount of Rs. 7.5 lakhs and interest thereon, if any, the petitioner is relegated to a suit. The petitioner will be restrained from instituting such suit for a period of five weeks from date. The petition is admitted for the sum of Rs. 3 lakhs together with interest at the rate of 10 per cent, per annum f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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