HARINARAYAN G. BAJAJ versus RAJESH MEGHANI AND ANR.

HARINARAYAN G. BAJAJ versus RAJESH MEGHANI AND ANR.

A trading member of NSE who is declared a defaulter does not lose the right to initiate arbitration arising out of contracts entered into before default; Rule 33 and Byelaw 1-C do not exclude such right, and the Defaulters' Committee is not entitled to pursue arbitration under the arbitration agreement in place of the defaulter member.

Parties
Appellant: HARINARAYAN G. BAJAJ; Respondent: RAJESH MEGHANI
Jurisdiction
India
Judgment Date
06 December 2004
Procedural Posture
Civil Appeal / Final Appeal Before Supreme Court
Outcome
Appeal dismissed with costs.
Legal Topics
Rights of Defaulter Member, Arbitration After Default, Interpretation of Exchange Byelaws
Securities Regulation Arbitration Law Rights of Defaulter Member Arbitration After Default Interpretation of Exchange Byelaws

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Parties

HARINARAYAN G. BAJAJ

Appellant

RAJESH MEGHANI

Respondent

Procedural Posture

Civil Appeal / Final Appeal Before Supreme Court

Legal Issues

  1. 1 Whether a trading member of NSE declared as defaulter can initiate arbitration under NSE Byelaws
  2. 2 Whether Defaulters' Committee alone can enforce claims after declaration of default
  3. 3 Scope of Rule 33 and Byelaw 1-C under NSE Byelaws

Ratio Decidendi

A trading member of NSE who is declared a defaulter does not lose the right to initiate arbitration arising out of contracts entered into before default; Rule 33 and Byelaw 1-C do not exclude such right, and the Defaulters' Committee is not entitled to pursue arbitration under the arbitration agreement in place of the defaulter member.

Court Disposition

Appeal dismissed with costs.

Orders

  • Affirmed decision of Bombay High Court Division Bench.
  • Amount recovered by respondent in arbitration to be handed to Defaulters' Committee as per Byelaws.