Urmil Modi v. Angel Commodities Broking Pvt Ltd

NAVIN CHAWLA, J MARCH 20, 2018/rv/Arya

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + OMP (COMM) 91/2017 Reserved on: 18th January, 2018 Date of decision: 20th March, 2018 URMIL MODI ..... Petitioner Through: Mr.Harish Malhotra, Sr. Adv. with Mr. R.K. Modi, Advocate versus ANGEL COMMODITIES BROKING PVT LTD ..... Respondent Through: Mr. Vikas Tomar, Advocate CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been filed by the petitioner challenging the Arbitral Award dated May, 2013 passed by the Arbitral Tribunal in Arbitration Case no. MCX/Legal/913A/12. 2. The petitioner claims that she had been dealing with M/s Angel Broking Private Limited, an associate company of the respondent since the year 2007. She submits that the said dealings were confined to the sale and purchase of shares against cash payments alone. 3. The petitioner entered into a relation with the respondent herein by executing Client Registration Form, Member Client Agreement, KYC and Risk Disclosure Statement on 23.08.2010 with regard to trading in Commodities. In the said agreement, the petitioner had expressly prohibited Contract Notes to be sent by e-mail in an electronic form and for receiving SMS alerts for the said agreement. The agreement further Page 2 prohibited the maintenance of account on a running account basis as also adjustment inter se between the group companies of the respondent, including and with respect to the Angel Broking Private Limited, for the trades carried out in any other Segments / Exchanges. 4. An important term of the contract was with respect to the daily settlement of the positions and the payment of margin before the commencement of trading on the next date. The same is quoted herein below:- "2. As far as Futures Commodity Derivatives are concerned, please note and get yourself acquainted with the following additional features:- Effect of "Leverage" or "Gearing": a) The amount of margin is small relative to the value of the commodity, derivatives contract so the transactions are 'leveraged' or 'geared'. Commodity Derivatives trading, which is conducted with a relatively small amount of margin, provides the possibility of great profit or loss in comparison with the principal investment amount. But transactions in commodity derivatives carry a high degree of risk. You should therefore completely understand the following statements before actually trading in commodity derivatives contracts and also trade with caution while taking into account one's circumstances, financial resources, etc. b) Trading in Futures Commodity Derivatives involves daily settlement of all positions. Every day the open positions are marked to market based on the closing price. If the closing price has moved against you, you will be required to deposit the amount of loss (notional) resulting from such movement. This margin will have to be paid within a stipulated time frame, generally before commencement of trading on the next day." 5. It was a condition of the contract that if the petitioner defaults in paying the daily margin and Market to Market (MTM), if any, the Page 3 respondent shall be entitled to liquidate / close out all or any of the petitioner's positions. 6. The parties were also to be governed by the guidelines and circulars of the Multi Commodity Exchange of India Ltd (hereinafter referred to as the 'MCX') and of the Forward Markets Commission (FMC). 7. The petitioner contends that though she had entered into the Member Client Agreement with the respondent, she did not carry out any transaction in the said account. It was only in September, 2011 that she came to know that a large number of transactions in commodity market had been carried out in her account causing her a huge financial loss. She further submits that as the group company of the respondent, namely Angel Broking Private Limited was holding petitioner's stocks and securities of the value of Rs. 40 la