The Delhi High Court on Thursday upheld a 2011 SEBI circular that increased the period of limitation for invoking arbitration from six months to three years..The petitioner, Raj Kumar Gursahani, had entered into a contract with India Infoline Ltd (IIL), listed on the National Stock Exchange (NSE), for carrying on transactions in shares of listed companies. Claiming that Gursahani owed the company a sum of Rs. 3,57,176, it invoked the arbitration clause under the NSE bylaws. This clause was invoked after the expiry of a period of six months but within a period of three years, reports Livemint. .After the Arbitral Tribunal ruled in favour of the company, the petitioner specifically challenged the award on the ground that it was beyond the period of limitation of six months and the subsequent amendment increasing the limitation period to three years could not be given a retrospective effect. The petitioner also claimed that the circulars issued by SEBI are detrimental to the interest of the investors and have been issued at the instance of brokers..Rejecting this contention, Justice Vibhu Bakhru of the Delhi High Court held that,.“The amendment of the Rules and Byelaws of Stock Exchange in increasing the period of termination was made so as to facilitate looking into the grievance of parties who may have lost out in filing their claim within six months and bringing it at par with the statutory provisions.”.The judge went on to say,.“The circular impugned by the petitioner has been issued in exercise of powers conferred on SEBI under Section 11(1) of the SEBI Act read with Section 10 of the Securities Contract (Regulation) Act, 1956 to protect the interest of investors. A plain reading of the impugned circular also indicates that the increase in the period of limitation is available to both parties and is not limited only to claims made by brokers against their clients. Thus, no mala fides can be attributed to SEBI in framing the impugned circular.”
The Delhi High Court on Thursday upheld a 2011 SEBI circular that increased the period of limitation for invoking arbitration from six months to three years..The petitioner, Raj Kumar Gursahani, had entered into a contract with India Infoline Ltd (IIL), listed on the National Stock Exchange (NSE), for carrying on transactions in shares of listed companies. Claiming that Gursahani owed the company a sum of Rs. 3,57,176, it invoked the arbitration clause under the NSE bylaws. This clause was invoked after the expiry of a period of six months but within a period of three years, reports Livemint. .After the Arbitral Tribunal ruled in favour of the company, the petitioner specifically challenged the award on the ground that it was beyond the period of limitation of six months and the subsequent amendment increasing the limitation period to three years could not be given a retrospective effect. The petitioner also claimed that the circulars issued by SEBI are detrimental to the interest of the investors and have been issued at the instance of brokers..Rejecting this contention, Justice Vibhu Bakhru of the Delhi High Court held that,.“The amendment of the Rules and Byelaws of Stock Exchange in increasing the period of termination was made so as to facilitate looking into the grievance of parties who may have lost out in filing their claim within six months and bringing it at par with the statutory provisions.”.The judge went on to say,.“The circular impugned by the petitioner has been issued in exercise of powers conferred on SEBI under Section 11(1) of the SEBI Act read with Section 10 of the Securities Contract (Regulation) Act, 1956 to protect the interest of investors. A plain reading of the impugned circular also indicates that the increase in the period of limitation is available to both parties and is not limited only to claims made by brokers against their clients. Thus, no mala fides can be attributed to SEBI in framing the impugned circular.”
