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TMI Blog2021 (5) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. It was the case of the appellant that the appellant is an investor whereas the respondent is a corporate member of the Bombay Stock Exchange Limited and is carrying on business as share, stock and finance broker. 3. On 3rd August, 1994, the appellant purchased 1000 shares of Prakash Tubes Ltd. through the respondent. On 27th August, 1994, 200 shares of the said company were returned to the respondent as the same were returned by the said company Prakash Tubes Ltd. on the ground that the signature differed. On 12th August, 1995, 100 shares were returned by the respondent after rectification along with 75 bonus shares on the said 100 shares to the appellant. It is the case of the appellant that the respondent was right to return 100 shares plus 75 bonus shares of the said Prakash Tubes Ltd. to the appellant. 4. It is the case of the appellant that on 4th January, 1995, the appellant purchased 100 shares of Brook Bond Ltd. through the respondent. On 23rd January, 1995, the respondent delivered 50 shares of the said Brook Bond Ltd. to the appellant and did not deliver the balance 50 shares of the said company. It is the case of the appellant that on 4th May, 1994, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the provisions of the Limitation Act, 1963 were applicable. 8. On 7th June, 2002, the Governing Board of the Bombay Stock Exchange passed a resolution and once again amended the bye-law 252(2) by the said amendment. It was provided that the claim has to be received by the exchange within a period of six months from the date of transaction. The said amendment empowers the Governing Board to appoint the committee to settle all claims and differences amicably. It was provided that the time taken by the Investor's Grievances Redressal Committee (IGRC) would be excluded while computing the period of limitation. It was also provided that all transactions done prior to the date on which the bye-laws came into effect, the limitation period of six months shall be computed from the date on which the bye-laws came into effect. SEBI granted its approval to the said amendment on 4th June, 2003. 9. It is an undisputed position that on 29th April, 1999, the appellant made a complaint which was referred to the IGRC against the respondent member. On 29th August, 1999, the respondent replied to the said complaint dated 29th April, 1999. It is the case of the appellant that the respondent f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warded their reconciliation statement to the respondent on 25th June, 1996. The appellant had called upon the respondent to return 175 shares of Surya Roshni Ltd., 50 shares of Brook Bond Ltd., 100 shares of Torrent Gujarat Bio Tech Ltd., 100 shares of Atlantic Spinning and demanded payment of Rs. 3,100/- as difference in settlement nos. 5527 and 7453. 13. It is submitted that during the period between 1996 to 1998, the appellant had exchanged about 12 correspondences with the respondent and had repeatedly requested for return of those shares and the amount. All those correspondences were placed before the arbitral tribunal. The respondent had neither denied the liability nor returned the said shares and the amount demanded by the appellant. He submits that even in the reply to the complaint filed by the appellant before the IGRC, the respondent had not specifically denied the claim of the appellant but had only contended that there was serious dispute between the appellant and the respondent. 14. In the minutes of the meeting dated 29th April, 1999, issued by the IGRC, it was observed that the respondent member wanted to oppose the claim only on the technical point such as limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the arbitration agreement between the parties and the provisions of law applicable on the date of transaction and not subsequent amendment to the bye-laws of the Bombay Stock Exchange. The rejection of the substantial claims of the appellant by means of a post facto amendment of bye-laws and by applying it to all past disputes in the absence of any such specific provision in the bye- laws and in the absence of any authority which is entrusted with the framing of such delegated legislation would clearly be against the clear legislative intent of section 2(4) of the Arbitration and Conciliation Act, 1996. Such amendment which is brought into effect on the later date could not have been applied to the earlier transaction and to place the appellant in disadvantage situation. 18. The learned Single Judge in paragraph (1) at page 83 of the paper-book has opined that if there was no period of limitation laid down for making a reference to arbitration, under the Bombay Stock Exchange bye-laws, the arbitration must be invoked within a reasonable period of time is contrary to the legislative intent and section 2(4) of the Arbitration Act. He submits that the learned Single Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided that a broker, shares a fiduciary relation with his client and carries out all the transactions as an agent. Since the shares in respect of which the arbitration shall be instituted still lie in trust of the respondent, the question of limitation did not arise. 22. It is submitted that the learned Single Judge failed to appreciate and came to the conclusion erroneously that since there was a debit entry in the statement of account of the appellant, the shares could not have been in the custody of the respondents. He submits that though there were debit entries in the statement of accounts of the appellant, but the debit entries were only pertaining to the part of the shares partly received by the appellant and those debit entries could not be inferred as debit entries for all the shares purchased by the appellant from the respondent. 23. It is submitted that there was continuous cause of action in view of the respondent having failed to pay the sale proceeds of the shares to the appellant or to deliver the shares lying in trust with the respondent and thus the question of commencement of the limitation would not arise. He submits that though all the original documents were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 is required to be excluded. He submits that even if the provisions of the Limitation Act, 1963 were made applicable, the period of three years would commence only after 29th September, 2000 when the IGRC directed the parties to refer their disputes to arbitration. The statement of claim was already filed by the appellant on 26th October, 2002. The claim thus filed by the claimant was within the period of limitation. 28. Mr. Purohit, learned counsel for the respondent on the other hand submits that it is not the case of the respondent that the said amendment brought to the bye-law of the Bombay Stock Exchange in the year 1998 was made effective with retrospective effect. He submits that since the appellant had invoked the arbitration agreement after the date of the said amendment to bye-law of the Bombay Stock Exchange in the year 1998, the provisions of the said bye-law stood apply to the said claims filed by the appellant after the date of the amendment. He submits that it is an undisputed position that last transaction between the appellant and the respondent took place on 6th December, 1995. The respondent sent the last statement of account to the appellant on 29th May, 1996 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the transaction in view of section 2(4) of the Arbitration Act was curtailed by providing the prescribed period of limitation under the provisions of Limitation Act, 1963, the limitation would commence from the date when the said amendment to bye-law 252 of the bye-law of the Bombay Stock Exchange was made. He submits that three years period of limitation thus would have commenced from 29th August, 1998. Even if the time period taken before the IGRC to hear the complaint made by the appellant is excluded, the claim made by the appellant before the arbitral tribunal would be still time barred. 33. Learned counsel for the respondent placed reliance on the judgment of Supreme Court in case of R.C. Jall Parsi vs. Union of India and another, AIR 1962 SC 1281 and in particular paragraph 5. He submits that right to sue has no connection with the period of limitation and such right is not taken away by the said amendment to bye-law 252 inserted in the year 1998. 34. Learned counsel for the respondent placed reliance on the judgment of Supreme Court in case of Vinod Gurudas Raikar vs. National Insurance Co. Ltd. & Ors., AIR 1991 SC 2156 and in particular paragraphs 2 to 11 in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law of the Bombay Stock Exchange to file claim in the line with the bye-law of the Bombay Stock Exchange. 37. Learned counsel for the respondent distinguished the judgment of this Court in case of Marwadi Shares & Finance Ltd. (supra) on the ground that this court in the said judgment had considered the rights of the parties to file an appeal as substantive right which is not the case in this matter. In that matter, the original proceedings were already filed prior to the date of amendment to the bye-law of the Stock Exchange. 38. It is submitted by the learned counsel that even in the statement of the account submitted by the respondent to the appellant, the respondent had demanded the amount from the appellant and thus it was clear that the cause of action had started even from such date of receipt of such statement of account from the respondent to the appellant. 39. Learned counsel for the respondent distinguished the judgment of this Court in case of Ashalata Lahoti (supra) on the ground that it was not the case of the respondent that 1998 amendment to bye-law 252 of the Bye-laws of the Bombay Stock Exchange does apply with retrospective effect. 40. Mr. Kumbhat, learned cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the General Clauses Act, 1897. Learned counsel distinguished the judgment of this Court in case of Gopaldas Ganpatdas and others (supra) on the ground that in the said judgment this Court had considered the retrospective effect of section 48 of the Code of Civil Procedure, 1882 in regard to the decree passed prior to the date of coming into force of the new Code. The said judgment does not state that on the amendment of the provisions relating to the period of limitation, the said provision would apply with retrospective effect. Learned counsel for the appellant distinguished the judgment of Supreme Court in case of R.C. Jall Parsi (supra) on the ground that the facts before the Supreme Court in the said judgment were different. 44. Learned counsel for the appellant relied upon following judgments:- (1) Judgment of Madras High Court delivered on 25th April, 2018 in case of The Project Director, Project Implementation Unit & Anr. vs. K. Periyasamy & Ors. in W.A. Nos. 308 to 312 of 2016 and other connected matters. (2) Judgment of this court in case of Savitra Khandu Beradi vs. Nagar Agricultural Sale & Ors., AIR 1957 Bom. 178. (3) Judgment of Supreme Court in case of T.N. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant had forwarded its reconciliation statement to the respondent. According to the statement of accounts submitted by the respondent to the appellant, the respondent were entitled to recover the sum of Rs. 18,379/- from the appellant. 48. It was the case of the appellant that during the period between 17th September, 1996 and 18th October, 1998, there was exchange of correspondence between the parties. On 29th August, 1998 Bye-law 252(2) was amended providing that the provisions of Limitation Act, 1963 would be applicable. The appellant made a complaint to the Investment Grievance Redressal Cell on 29th April, 1999. The Investment Grievance Redressal Cell directed the parties to go to arbitration on 29th September, 2000. The statement of claim was filed by the appellant on 26th October, 2002 with the Stock Exchange, Mumbai. 49. In the statement of claim filed by the appellant, it was the case of the appellant that various shares were purchased by the appellant through the respondent broker which were either not delivered by the respondent or the sale price was not paid to the appellant. There was the difference of Rs. 3,100/- in two statements of account of the respondent. Vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act applicable to the transaction under Rules, Regulations and Bye-laws. The arbitral tribunal accordingly held that the claims made by the appellant on 26th October, 2002 were time barred. The appellant ought to have filed their claim on or before 28th August, 2001. 53. The arbitral tribunal corrected the said award by a rectification order dated 21st July, 2003. In the award at various places the date of 13th June, 2003 mentioned was corrected as 26th October, 2002. Similarly, the date of filing of statement of claim mentioned as 12th January, 2003 was corrected to 26th October, 2002. The learned Single Judge held that even if no period of limitation was laid down in the Bye-laws, there would be an obligation on the part of the petitioners to invoke the arbitration clause within a reasonable time from the date of accrual of the cause of action to the petitioner. The cause of action accrued in the month of January 1995 when according to the petitioner, the petitioner was entitled to receive the delivery of the shares purchased by the petitioner but was refused by the respondent. 54. It is held that even in cases where there is no period of limitation prescribed, justice demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin a specific period, the question of reading limitation into it will not arise. It is for the Exchanges to consider amending the Bye-laws in manner like dispute between members and members and providing for a suitable period of limitation. It is not in dispute that in the year 1998 Bye-laws 252(2) was amended so as to provide the period of limitation to the arbitration under the Stock Exchange Bye-laws. 57. A learned Single Judge of this Court in case of R.C. Goenka (supra) while dealing with a petition under Section 34 of the Arbitration and Conciliation Act, 1996 impugning the arbitral award rejecting the claim on the ground of limitation considered a situation where the transactions were effected before the bye-laws of Stock Exchange came to be amended. The earlier statement of claim was filed in the month of November 1997 and was withdrawn on 5th August, 1998. Fresh reference was filed on 6th November, 1998 i.e. after amendment of Bye-law 252(2) inserting the provision of Limitation Act, 1963 in the Bye-laws. The arbitral tribunal rejected the claim on the ground of limitation. The learned Single Judge in the said judgment held that there was no provision for limitation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he superior Court accrues to the litigant and exists as on and from the date the original cause of action commences and although it may be actually exercised when adverse judgment is pronounced. Such a right has to be governed by the law prevailing on the date of original cause of action and not as per the bye-law that prevails at the time of its decision or at the date of filing of an appeal. The petitioner had already filed proceedings before the learned Arbitrator. The vested right of filing an appeal against the impugned award, if any and the right to file an application for condonation of delay on showing sufficient cause on the date of filing the original proceedings would be continued. In our view, the said judgment would not assist the case of the appellant. In this case, the appellant had not filed any arbitral proceedings prior to the date of the amendment to Bye-law 252(2) w.e.f. 29th August, 1998 but filed the proceedings much later. No right had been thus accrued in favour of the appellant. 61. This Court in case of Savitra Khandu Beradi (supra) relied upon by the learned counsel for the appellant had considered an issue whether the Indian Limitation Act applies to cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the law in force at the date of the institution of the suit or the proceeding unless there is a distinct provision to the contrary. It is held that there was no vested right in the decree holder to wait for an indefinite period of time in order to apply for execution. Supreme Court in case of Ramprasad Dagaduram (supra) has held that the respondent had no vested right in the law of procedure for enforcement of mortgage though the period of limitation was abridged for the enforcement of the mortgage by Article 132 of the Indian Limitation Act, 1908. Such abridgment did not take away any vested right. 65. In our view, Mr. Purohit, learned counsel for the respondent is right in his submission that since the appellant had not filed any arbitral proceedings prior to the date of amendment to Bye-law 252(2) inserting the provision of Limitation Act, 1963 to arbitral proceedings, no right had been vested in favour of the appellant. The principles of law laid down by the Supreme Court in case of Ramprasad Dagaduram (supra) and the judgment of Allahabad High Court in case of Mt. Begam Sultan (supra) would apply to the facts of this case. 66. Allahabad High Court in case of The Allahabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal arising out of the order passed by the High Court dismissing the appeal arising out of the order passed by the Motor Accident Claim Tribunal. The Accident had taken place on 22nd January, 1989. The Motor Vehicle Act, 1988 came into force on 1st July, 1989. The period of limitation for filing a claim petition both under the old Act and the new Act was six months. The limitation period of six months expired on 22nd July, 1989 under the unamended provision. The claim petition was however filed on 15th March, 1990 with a prayer for condonation of delay. The Motor Accident Claim Tribunal rejected the claim on the ground that in view of provision of sub-Section 3 of Section 166 of the Motor Vehicles Act, 1988, delay of more than six months could not be condoned. The High Court also dismissed the appeal filed by the claimant. 70. Under the proviso to sub-Section 3 of Section 166 of the Motor Vehicles Act, 1988, maximum period of delay which could be condoned was six months which expired on 22nd January, 1990. The Supreme Court held that it is true that the appellant earlier could have filed an application for condonation of even more than six months after the expiry of limitation but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitation remained the same, there was no question of the appellant being taken by surprise. In this background, the appellant's further default has to be considered. It is held that having actually initiated the proceedings when the old Act covered the field the claimant could say that his right which had accrued on the date of filing of the petition could not be taken away. The present case is different. The right or privilege to claim benefit of a provision for condonation of delay can be governed by the law in force at the time of delay. In our view, the principles laid down by the Supreme Court in case of Vinod Gurudas Raikar (supra) applies to the facts of this case. 73. If the appellant would have filed the arbitration proceedings under the unamended Bye-laws and if such rights would have been taken away by amendment subsequently with retrospective effect, the appellant could have urged that such rights which are vested in him in view of the appellant already having filed proceedings for recovery of his claim cannot be taken away. In this case, admittedly the period of limitation which was not applicable prior to 29th August, 1998 was restricted to a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation Act, 1908 to Hyderabad and the consequential change in law prescribing a shorter period of limitation did not confiscate the existing cause of action and must be recorded as an alteration in the law of procedure for the enforcement of the cause of action. 77. It is held that the Court must therefore apply the normal rule that law of limitation applicable to the suit is the law in force at the date of the institution of the suit. The suit is therefore governed by the Indian Limitation Act, 1908. The plaintiffs not having instituted the suit within two years after 1st April, 1951 therefore could not avail themselves of all the benefit of Section 30 of the unamended provision to Section 30 of the Limitation Act, 1908. The Supreme Court accordingly held that the suit was barred by law of limitation. 78. In our view, the principles of law laid down by the Supreme Court in the said judgment squarely apply to the facts of this case. The unlimited period of limitation prescribed prior to the date of amendment to Bye-law 252(2) was reduced by a shorter period of limitation by three years. Such amendment did not confiscate the existing cause of action but was only as and by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disprove a stale claim and that persons with good causes of action should pursue them with reasonable diligence. 81. If the arguments of the learned counsel for the appellant is accepted that even after insertion of period of limitation under Bye- law 252 (2) of the Bombay Stock Exchange w.e.f. 29th August 1998, the appellant would still file his claim after any number of years, the respondent who has defence of limitation will lose his right of defence. The evidence that he would rely upon in such defence of period of limitation may be rendered nugatory and may be destroyed due to long duration during which the appellant had not filed the arbitration proceedings for recovery of the alleged dues. The whole purpose of enactment of the Limitation Act in public interest to dismiss the stale claims would be frustrated in such an event. 82. There is no substance in the submission made by the learned counsel for the appellant that the respondent had never denied the liability till the complaint was filed by the appellant before Investor's Grievances Redressal Cell. There is also no substance in the submission made by the learned counsel for the appellant that no period of limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the appellant that till such time, the said Bye-law 252 (2) was inserted, in view of Section 2(4) of the Arbitration and Conciliation Act, 1996, no limitation was applicable to the statutory arbitrations and more particularly it were governed by Bye-laws, Rules and Regulations of Bombay Stock Exchange. There is no merit in the submission of the learned counsel for the appellant that there was continuous cause of action in view of the respondent having failed to pay the sale proceeds of the shares to the appellant or to deliver the shares lying in the trust with the respondent. In our view, this submission of the learned counsel for the appellant is contrary to Bye- law 252 (2) brought into effect w.e.f. 29th August 1998. 87. Since this Court is of the view that limitation period of three years in this case would commence w.e.f. 29th August 1998, a question that arise for consideration is whether within the period of three years from 29th August 1998, the appellant had filed the claim before the Stock Exchange, Mumbai or not. It is not in dispute that the statement of claim was filed by the appellant on 1st July 2002. It is not in dispute that complaint filed by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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