sachin (GM) 27 September 2010

Civil Court or Arbitration in case of arbitration clause

I have sent a complaint to NSE /SEBI/ EOW on 24 / 06 / 10, in respect of Fraud / Cheating amounting to Rs 70 Lacs (approx.) by the Officials of M/s Religare Securities Ltd in stock market. In this regard I was advised to go to the Arbitration of NSE because of arbitration clause in the agreement.

I have come to know that according to the Supreme Court Judgment in the serious allegations of Fraud and Criminal Misappropriation the matter can only be decided by court and not by the Arbitrator. In my case fraud / Cheating and Cyber Crime involving sending of fraudulent statements through e- mail is noticed against which i have lodged the complaint to EOW / Police Dept.

SC Ruling - Arbitration and conciliation act - Serious allegations of fraud and criminal misappropriation - Can only be decided by Court when parties lead detailed evidence and not by the Arbitrator. 2009(3) Apex Court Judgments 643 (S.C.).

As i have consulted lawyers i am highly confused , they say i should not avoid arbitration. It may get time barred ( six Months limit only). However it seems,arbitration does not have powers to decide in this case. Others say i should go to civil court + criminal court to get justice. I am confused.

I am unable to find the proper guidance from the SEBI / NSE Website. In this very case what should be my Legal course of action. Pls. guide accordingly, to seek justice. Will arbitration be of any help to me? Will the judgment of arbitration hold good in the case of fraud / criminal misappropriation? Will the revised fees of Rs. 30,000/- be reversed in that case?

Also pls. suggest some competent Lawyer with relevant experience with Contact No’s.

Looking Forward to an early reply.

Thanks,

SACHIN BHARDWAJ

Mobile – 98109 33322

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4 Replies

R.Ranganathan (Advocate) 29 September 2010

You have to first go through the arbitration proceedings to prove the fraud. Otherwise certain times, the civil courts will straight away reject the plaint stating that there is an arbitration clause. Fraud committed has to be proved beyond doubt and this is possible only through the process of law. First go for arbitration, then if not satisfied approach appellate authorities and the High Court. This will involve time and also money which cannot be avoided. Your query that the amount of Rs. 30,000/- will be reversed or not depends on the result of the case. If you win then you can claim everything with costs and interests.

sachin (GM) 01 October 2010

This is my view also that instiutional Arbitrators ( NSE) are biased and I have recieved similar comments like- :

Please do not commit the mistake of going in for arbitration in NSE. A large number of Arbitrators retained by NSE, are biased in favour of Stock Brokers, they are corrupt and are cheats. They do not care for documentary evidence but give awards for some 'other considerationbs'. According to a recent survey, over 80 percent cases go against the investors. Once you go in for arbitration and get a negetive award, you will be looser. Do not waste time and hire some good criminal lawyer and file a case under 156(3) Cr.PC and section 200 private complaint.

As a victim myself, I know it from first hand. Please do not apply for arbitration. File a criminal case as advised by some other member in this forum. If you want a personal advice, I am available in New Delhi.

I want to go for civil case but i think it will take a lot of time.

SACHIN AGARWAL (ADVOCATE) 19 October 2010

You cannot file a civil suit as in case of filing teh civil suit, the Company may appeara nd may file an application under section 8 of the Arbitration and Conciliation Act, 1996 and in that case the court would certainly refer the parties for arbitration.

You should go for arbitration and in case during arbitration proceedings, you feel taht the arbitrator is biased, you can move to High Court for change of arbitrator.

You should also lodge a F.I.R. or Criminal Complaint in the matter.

In a criminal case, there is the provision of prosecution of accused but the civil liability to pay the amounts cannot be decided by the criminal courts and in the civil or arbitration matter the civil liability to pay the amounts can be decided.

K.K.Malhotra (Chairman) 13 February 2011

There various judgments which says taht in case of arbitration agrement, the civil court must refer the disputes to larbitation and section 8 of the arbitration and coincialiationact says that the proceedings sghholuld be reffered to arbitration. However in case of fraud FIR sholuld be lodged and under the fear of arrest , the paym,ent may be made.