https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=765868 https://www.taxtmi.com/caselaws?id=765868 Joint and several liability to repay debit balance in the bank account - Whether respondent no. 1, who is the husband of respondent no. 2, could have been made a party to the arbitration that was invoked by the appellant, who is a registered stock broker, and held to be jointly and severally liable for the debit balance that had accrued in the wife s (respondent no. 2 s) account with the appellant?. Perversity of the finding of joint and several liability - HELD THAT:- Applying the test for perversity under Section 34, it is clear that the High Court, while exercising jurisdiction under Section 37, adopted an incorrect approach. The arbitral tribunal s findings are definitely based on evidence, as has been rightly held by the Section 34 court. The High Court, at the stage of the Section 37 appeal, took an alternative view on this finding of fact by reappreciating evidence. The arbitral tribunal s conclusion was based on oral and documentary evidence regarding the conduct of the parties, which leads to a reasonable and possible view that there is joint and several liability. Hence, the High Court, while exercising jurisdiction under Section 37, has incorrectly held the award to be perverse. Patent illegality - HELD THAT:- The High Court held that despite noting the need for a client s express authorisation for adjustment of accounts, the arbitral tribunal approved an illegal transfer of the credit balance from respondent no. 1 s account to that of respondent no. 2. On going through the arbitral award, the finding of the arbitral tribunal is based on past experience meaning the conduct of respondent no. 1 all along acting on behalf of respondent no. 2, joint and several liability, and the respondents marital relationship. Bye-law 247A provides that a broker shall not withdraw money from a client s account other than money required for payment on behalf of the client, for payment of debt due to the broker from the client, or money in respect of which there is a liability of the client to the broker. Once the arbitral tribunal arrived at a finding that respondent no. 1 is jointly and severally liable for the debit balance in respondent no. 2 s account, which we have upheld above, Bye-law 247A in fact permits the withdrawal of the credit balance from respondent no. 1 s account. Therefore, the adjustment of accounts on 05.03.2001 is legal and valid. Although the arbitral tribunal has held that written authorisation for such adjustment is required, we find nothing in Bye-law 247A or in the SEBI Guidelines, on which this Bye-law is based, that mandates the same. Conclusion - The arbitral tribunal had jurisdiction over respondent no. 1, and the High Court erred in setting aside the arbitral award. The arbitral award was upheld in its entirety, holding both respondents jointly and severally liable for the debit balance in respondent no. 2 s account. Appeal allowed. Case-Laws Indian Laws Mon, 10 Feb 2025 00:00:00 +0530