Arbitration award induced by fraud
Ramaprasad
(Querist) 19 February 2014
This query is : Resolved
My stock broker carried out unauthorised trades in my and my family members' four accounts resulting in losses. The concerned dealer said she would be put behind bars and requested me to help her by paying Rs 5 lakhs into my trading acccount, and she would recover it in a few days. I paid, but she could not recover the amount as the market movement was adverse. I filed for arbitration. The broker argued that all four accounts were treated together a family account and the payment I had made extended to all four accounts regularising the unauthorised trades. The arbitrator held that the payment had ratified the unauthorised trades in all four accounts and losses up to the date of payment were to be borne by us, and after that date to be borne by the broker. The broker filed application in the district court u/s 34 of arbitration act to set aside the part of the order affecting him. During the hearings, it has now emerged that the accounts were delinked (i.e., no longer family account) well before the unauthorised trading took place. The award was therefore induced by fraud. The case is under arguments at present. Can I simultaneously ask for/start criminal or contempt of court proceedings against him? If so, what is the procedure? Would be grateful for replies.
Devajyoti Barman
(Expert) 19 February 2014
You can file petition u/s 340 CRPC but focus on merit of the case more.
Rajendra K Goyal
(Expert) 20 February 2014
May proceed as advised by the expert.
T. Kalaiselvan, Advocate
(Expert) 20 February 2014
In my opinion you can file an appeal against the arbitration award quoting your valid grounds, you may find some respite through it.
Ramaprasad
(Querist) 21 February 2014
Thanks to all experts!
Devajyotiji, can I file petition u/s 340 CRPC now itself, when the main case is still in argument stage? Can I file it in the same civil court? The broker is a company. Should I file the petition against the chairman and MD? Should I also include the officer who swore to their affidavit, who has quit the company a couple of months ago? Thanks in advance for answers.
krishna mohan
(Expert) 21 February 2014
When the case is referred to arbitration under A&C act based on relevant provisions of contract terms already agreed to, it may not be right on your part to file another case on the same case when it is pending before a competent court. Your concern may be addressed by the court through quashing the award if fraud is established before the court. Hence I go with Mr.Kalaiselvan in advising you to go for appeal after disposal of the case.
