Figures In Conciliator's Report Do Not Bind Arbitrator: Bombay High Court

The Bombay High Court on 17 March dismissed a petition filed by ICICI Securities Ltd, holding that the amount indicated in a conciliator's report does not constitute an award and does not bind the Arbitral Tribunal in determining the final claim.

Justice Sandeep V. Marne upheld an arbitral award of Rs. 23.30 lakh passed in favour of Ridhi Siddhi Investment in a stock trading dispute arising out of margin trading transactions. The Court observed:

“Thus, the amount indicated in the report of the Conciliator does not become the amount awarded to any party or against any party. The said amount has relevance only for the purpose of determination of payment of fees by the claimant for online arbitration. The amount reflected in the report of the Conciliator does not bind the arbitrator, who is not precluded from awarding the claim in the sum higher than the one reflected in the report of the Conciliator.”

The dispute relates to trades executed in November 2023, where shares purchased by the investor were auctioned due to an admitted error by the broker in failing to create a pledge under the Margin Trading Facility. The investor claimed compensation of about Rs. 75,00,000, while the broker admitted only minimal loss.

During conciliation, the claim value was indicated as Rs. 75,00,000, leading both parties to mistakenly treat it as an award. The Arbitral Tribunal later delivered a split verdict, with the majority awarding Rs. 23.30 lakh after assessing the actual loss.

Before the High Court, ICICI Securities challenged the award, inter alia, on the basis of the conciliator's determination.

Rejecting this, the Court held that the Arbitral Tribunal is not bound by such figures and is free to determine compensation on merits. It also noted that no specific ground regarding the absence of a counterclaim had been raised in the petition, and the challenge was confined to the nature of the claim awarded. The Bench observed:

“More importantly, Petitioner has not raised a plea in the present Petition that counterclaim was not filed by Respondent No.1 on account of which nothing could have been awarded in its favour. Absence of pleading about non filing of counterclaim assumes significance on account of the fact that the Petition is filed after noting the observations of the Presiding Arbitrator in the dissenting Award, who has rejected the claim for the compensation only on the ground that Respondent No.1 did not file any counterclaim.”

Accordingly, the Court dismissed ICICI Securities' petition and upheld the arbitral award.

For Petitioner: Advocate Victor K. Fernandes

For Respondents: Advocates S.L. Shah, Anushka Shetty, Nikhil Dhole, Shah Legal, MLS Vani and Associates