Fraudulent agency trading and lack of written instructions did not absolve the broker or client from liability.

Absence of prior written trade instructions does not, by itself, allow a client to repudiate trading losses, and delayed objection will not defeat liability where the evidence shows fraudulent or unauthorized trading. The tribunal may rely on surrounding circumstances to determine what occurred, and here the trades were treated as part of a manipulated course of dealing rather than ordinary market losses. A principal is also liable for fraud, misrepresentation, and unauthorized acts committed by its agent within the scope of agency, even without express authorisation or direct personal benefit. The broker was therefore held responsible for its alliance partner's conduct, and the arbitral award fastening liability on the broker was sustained.

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Issues: (i) Whether the client could disown the trading losses on the ground that there were no prior written or recorded instructions for each trade and no timely objection was raised; (ii) whether the stock broker was liable for the fraudulent and unauthorized acts of its alliance partner and his employees.

Issue (i): Whether the client could disown the trading losses on the ground that there were no prior written or recorded instructions for each trade and no timely objection was raised.

Analysis: The Court applied the settled principle that absence of prior written or recorded authorisation does not, by itself, permit a client to wriggle out of trade consequences, and that the arbitral tribunal may examine surrounding evidence to determine what actually transpired. It also noted that delayed objections after the occurrence of losses ordinarily do not assist a client, unless the case falls within the exception of blatantly unauthorized or fraudulent trading. On the evidence accepted by the tribunal, the trades were not treated as ordinary market losses but as part of a manipulated course of dealing designed to benefit the broker and its representatives.

Conclusion: The client was not entitled to avoid liability for the trades merely on the ground of absence of prior instructions or delayed objection, and the case fell within the exception for fraudulent unauthorized trading.

Issue (ii): Whether the stock broker was liable for the fraudulent and unauthorized acts of its alliance partner and his employees.

Analysis: The Court held that a principal is liable for fraud and misrepresentation committed by its agent in the course of the agency and within the scope of authority, even if the principal did not expressly authorise the misconduct or personally benefit from it. It further held that the client was entitled to proceed against the broker directly, and that the absence of the alliance partner and his employees as parties did not defeat the claim. Applying these principles, the Court accepted the finding that the broker benefited from the impugned transactions through abnormal brokerage generation and could not avoid responsibility for the acts of its representatives.

Conclusion: The stock broker was liable for the acts of its alliance partner and his employees, and the award fastening liability on the broker was upheld.

Final Conclusion: The arbitral award and the order refusing to interfere with it were sustained, as the broker was held accountable for fraudulent trading carried out through its agency arrangement.

Ratio Decidendi: A principal is liable for fraud, misrepresentation, and unauthorized acts committed by its agent in the course of the agency and within the scope of authority, and a client cannot avoid trade consequences merely because prior written authorisation was not produced if the evidence establishes fraudulent manipulation or agency-based misconduct.

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