DHC upheld the time limit of six months for invoking arbitration in Stock Exchange Disputes

This post was written by Neeraj Aarora on December 5, 2009
Posted Under: Arbitration

In the recent judgment of Delhi High Court in Ashwani Kumar Mittal V’s Vimla Securities Pvt. Ltd, OMP no. 341/2006, Hon,ble Judge Sh. S.N. Dhingra held that ” It is an undisputed fact that the while applying to National Stock Exchange seeking adjudication of its claims, the petitioner had requested for adjudication of his differences with the respondent within the purview of byelaws, rules and regulations of the Stock Exchange. Since respondent was a member of Stock Exchange and the petitioner had invoked the arbitration clause contained in byelaws of the Stock Exchange, the petitioner cannot take a stand that the provisions of byelaws of the Stock Exchange would not be applicable. These byelaws have been framed by the Stock Exchange by virtue of powers conferred under Section 9 of Securities Contracts (Regulation) Act, 1956 and these byelaws take form of subordinate legislation and it cannot be said that these byelaws are in any way inferior to the statutory provisions of Limitation Act. Moreover, it is settled law that the parties to a contract can bind themselves to a period of action different from statutory provisions. Only those contracts can be said to be void which are covered under Chapter II of the Contract Act. If the parties had agreed that a dispute is to be referred within six months from the time of starting of cause of action, such a provision cannot be said to be void. I, therefore, consider that the learned Arbitrator rightly came to conclusion that the byelaws of NSE would be applicable in this case and the reference was to be made within six months.”

Now there are two judgments of Delhi High Court with different prepositions. In the earlier judgment of Delhi High Court63/2007 decided on 17th March, 2009 Hon’ble Judge, RAJIV SAHAI ENDLAW held that “the part of Byelaw 3 of Chapter XI of NSE Byelaws, to the extend prescribing limitation of six months for reference of disputes/claims to arbitration is void. The time therefore will be governed by the limitation act.”

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