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Issues: (i) Whether arbitration between a member and a non-member under the Bombay Stock Exchange bye-laws was an arbitration under the Securities Contracts (Regulation) Act, 1956, so that the Limitation Act, 1963 did not apply; (ii) whether the awards and the preliminary ruling were liable to be interfered with on the ground of error of law and, in the older matter, whether the arbitral tribunal could proceed after expiry of time; (iii) whether a tribunal composed of two arbitrators was contrary to section 10 of the Arbitration and Conciliation Act, 1996 and whether the Court could act under section 14(2) of that Act.
Issue (i): Whether arbitration between a member and a non-member under the Bombay Stock Exchange bye-laws was an arbitration under the Securities Contracts (Regulation) Act, 1956, so that the Limitation Act, 1963 did not apply.
Analysis: The arbitration clause and the contract notes were governed by the Bombay Stock Exchange bye-laws framed under section 9 of the Securities Contracts (Regulation) Act, 1956. The relevant bye-laws treated contracts for dealings in securities, including those between a member and a non-member, as subject to the rules, bye-laws, regulations and usages of the exchange, and made arbitration part of those terms. The dispute was therefore not a purely private contractual arbitration divorced from the statutory framework. Once the reference was held to be under the statutory regime, the exclusion operating through the Arbitration Act provisions had effect, and the Limitation Act could not be imported into the arbitration.
Conclusion: The arbitration was under the statutory scheme and the Limitation Act, 1963 did not apply.
Issue (ii): Whether the awards and the preliminary ruling were liable to be interfered with on the ground of error of law and, in the older matter, whether the arbitral tribunal could proceed after expiry of time.
Analysis: The finding that the Limitation Act applied was treated as an error of law because the point had not been referred as a substantive question for adjudication and the arbitrator had decided it only incidentally as a preliminary issue. On that basis the awards were liable to be set aside. On the question of expiry of time in making the award, the proceedings had continued without protest and the Court considered it appropriate to extend time on the facts.
Conclusion: The awards were set aside, but the objection based on expiry of time was rejected.
Issue (iii): Whether a tribunal composed of two arbitrators was contrary to section 10 of the Arbitration and Conciliation Act, 1996 and whether the Court could act under section 14(2) of that Act.
Analysis: A tribunal consisting of an even number of arbitrators was held to be contrary to section 10 of the Arbitration and Conciliation Act, 1996, since parties cannot derogate from that requirement. Because the mandate of arbitrators who are de jure unable to act can terminate under section 14(2), and the matter was still pending before the tribunal, the Court held that it could determine the issue under that provision even though the challenge was not one under sections 34 or 37.
Conclusion: The tribunal was improperly constituted and the proceedings stood liable to termination.
Final Conclusion: The common legal position accepted by the Court was that the exchange bye-laws controlled the reference, the Limitation Act could not be invoked to defeat such arbitrations, and the impugned arbitral proceedings could not continue in the form in which they stood.
Ratio Decidendi: Where arbitration between exchange members and non-members is governed by bye-laws framed under section 9 of the Securities Contracts (Regulation) Act, 1956, it is a statutory arbitration and the Limitation Act cannot be imported unless the governing statute so provides; a tribunal constituted contrary to the mandatory numerical requirement in section 10 of the Arbitration and Conciliation Act, 1996 is de jure incompetent to act.
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