HARINARAYAN G. BAJAJversusRAJESH MEGHANI AND ANR.

                      HARINARA YAN G. BAJAJ                                   A
                                    v.
                    RAJESH MEGHANI AND ANR.

                          DECEMBER 6, 2004

      [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.]

     Securities Contract (Regulation) Act, 1956; Ss. 3(2), 8, 9/National
Stock Exchange Rules and Byelaws; Rule 33, Byelaws 1, 1-C, 2 and 23
of Chapter XI and Byelaws 19, 26 and 28 of Chapter XII :
                                                                              c
       Trading in shares-Purchaser defaulted in making payment-Broker
 declared defaulter by National Stock Exchange-Claim-Arbitration-
 Arbitral Tribunal awarded certain amount in favour of defaulter/broker-
 Right of defaulting member/broker in filing claim-Held : .Ex-trading
 member/defaulter remains party to the arbitration agreement and Bye/aw       D
 1-C does not restrict the right of the defaulter to refer the claim for
 arbitration-Defaulter's Committee precludes from referring defaulters
 claim to arbitration-Since amount which may be realized by defaulter must
'be made over to Defaulter Committee, purchaser's apprehension of
 misappropriation of the amount by the defaulter is without any basis-More
 so, Defaulter Committee competent to take action independently against the   E
 defaulter or his debtor or both-Further protection, if any required, could
 be provided by the Exchange by framing on appropriate Bye-law-
 Arbitration and Conciliation Act, 1996; Section 34-/nterpretation of
 Statutes.
                                                                              F
     Maxims

     Maxim "expressio unius est exclusio alterious"-Applicability of.

     Words and Phrases :
                                                                              G
      'Parties to the arbitration agreement '-Meangin of

     Appellant started trading in shares through the respondent, a
share-broker, however, he allegedly did not make payment to the broker.
National stock Exchange (NSE) declared the broker defaulter.                  H
                                    721
    722                  SUPREME COURT REPORTS (2.004] SUPP. 6 S.C.R.

A   Respondent referred his claim against the appellant to Arbitration
    under the Byelaws of NSE. The Arbitral Tribunal passed an award in
    favour of the respondent. Challenging the award, the appellant filed an
    application under Section 34 of the Arbitration and Conciliation Act in
    the High Court. The High Court directed the Arbitral Tribunal to give
B   a finding on the issue as to whether the respondent was in a position to
    deliver the shares to appellant when he was declared defaulter by NSE
    and appellant was directed to deposit the awarded amount in the Court.
    Division Bench of the High Court se aside the direction of the Single
    Judge relating to the deposit of the awarded amount and directed that
    any amount which may be recovered by the respondent as a result of
C   the arbitration proceedings be made over to the Defaulters' Committee
    to be dealt with in accordance with the Rules/Byelaws of NSE. Hence
    the present appeal.

          It was contended by the appellant that although the dispute relating
D   to a defaulter member survived, he loses his right to refer the dispute
    to arbitrator in terms of Rule 33 of the NSE Rules; and that the dispute
    could only be raised by the Defaulter's Committee in terms of Bye-law
    11 of Chapter XI since estate of the defaulter could be represented by
    the Defaulters' Committee.

E         Respondent submitted that Rule 33 of the NSE Rules could not be
    construed to cover the right to go to arbitration since the right is not
    part of the privileges of membership but arises out of the contract
    between the respondent and the appellant and, therefore, the respondent
    could not be deprived of this right under the Rules; that Rule 1-C of
    the Rules clearly indicates that the disputes arising out of a transaction
F   prior to a trading member being declared a defaulter survived and could
    be referred to arbitration only by the parties to the arbitration agreement;
    that there was limited vesting of certain assets of the defaulting members
    in the Defaulters' Committee which did not cover contractual rights of
    a defaulting member against a non-member and that neither the
G   Defaulters' Committee nor NSE had ever asserted the right to refer the
    disputes of a defaulting member to arbitration or had they questioned
    the locus standi of the respondent to do so.

          Dismissing the appeal, the Court

H         HELD : I.I. Under the NSE Byelaws, the parties to the reference
          HARINARAYAN G. BAJAJ v. RAJESH MEGHAN!                       723

are the parties to the agreement. This is also what is what is provided        A
under Section 2(h) of the Arbitration and Conciliation Act and a 'party'
is defined as "a party to an arbitration agreement". (730-B-C]

     1.2. Byelaw 1-C envisages claims, differences, disputes between the
parties mentioned in Byelaws (1), (IA), (lB) in respect of dealings,
contracts and transactions entered into prior to the date on which a           B
Trading Member was either declared defaulter or expelled or has
surrendered his trading membership. The parties remain parties to the
arbitration agreement despite the fact that as far as the Trading Member
is concerned, he may have ceased to be a Member when the reference
is made. Byelaw 1-C of NSE Rules does not in any way indicate that an
arbitration agreement between an ex-Trading Member and its constituent
                                                                               c
cannot be enforced at the instance of the ex-Trading Members, or that
a defaulter member ceases to the party to be a arbitration agreement.
                                                              (730-C-D-E)

     2.1. Rule 33 of the NSE Rules does not provide for the vesting of         D
any rights in the Defaulters' Committee. The Exchange and the
Defaulters' Committee are not the same. It cannot be said that all the
rights of a Trading Member who has been declared to be a defaulter
vests in the Defaulters' Committee including the right to go to arbitration.
By expressly providing for the powers in the Committee, it would follow
that other powers are excluded on the principle "expressio unius est
                                                                               E
exclusio alterius ". Thus the assets which may be called in or realized or
recovered by the Defaulters' Committee do not include monies payable
under a contract with a third party nor monies the recovery of which
are yet to be made. [731-B; 730-E-F; 731-H; 732-A-B)
                                                                               F
     2.2. Doubtless, the Defaulters' Committee has been given the power
to distribute the monies collected according to the priorities mentioned
in Byelaw 23 after defraying its expenses. But it is a very different
proposition to infer this that it is the Defaulters' Committee which is
responsible for or entitled to recover all such amounts that too by a
reference to arbitration under Byelaw 1-C of Chapter XI. On the other          G
hand the Defaulters' Committee is expressly empowered under Byelaw
28 of Chapter-XII to initiate proceedings in a Co1&rt of law in name of
the Exchange or in the name of the defaulter for the recovery of the dues
of the defaulter. The words do not convey any intention to permit the
Defaulters' Committee to also refer disputes in the name of the defaulter
    724                  SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A   to the arbitrator under Byelaw 1-C. (732-C-D-E-F]

          2.3. The effect of the express empowerment of the Committee "to
    initiate action in Courts of law" cannot be read as implying initiating
    a reference to arbitration. Had the intention behind the Byelaws been
B   to similarly authorize the Committee for the purposes of Byelaw 1-C,
    it would have been expressly so provided. The plain language of the
    Byelaw precludes the Defaulters' Committee from referring defaulters'
    claims to arbitration. Additionally, the Defaulters' Committee may take
    action independently against the defaulter or his debtor or both under
    Byelaw 28 in the name of the Exchange. If any further protection is
C   required by the Exchange it is a need that must be met by the Exchange
    by framing an appropriate Bye law under Section 9 of the Securities
    Contra~ts (Regulation) Act, 1956 and not an exercise for the .Courts to
    undertake by convoluted construction. [732-E-F-G; 733-D]

          Vinay Bubna v. Stock Exchange, Mumbai, (1999) 6 SCC 215,
D   distinguished.

        CIVIL APPELLATE JURISDICTION                 Civil Appeal No. 7890 of
    2004.

        From the Judgment and Order dated 17.10.2003 of the Bombay High
E   Court in A. No. 571/2003 in Arbitration Petition No. 366 of 2002.

         R.F. Narinian, Dhruv Mehta, Anurag Jain, Sriraj, Mohit Chaudhary
    and P.N. Puri for the Appellant.

F       S. Ganesh, C. Mukund, Ms. Sudha Sharma, G.K. Singh, Neeraj Kaseva
    and Bijoy Kumar Jain for the Respondents.

          The Judgment of the Court was delivered by

          RUMA PAL, J. : Leave granted.

G        The first named respondent is a share broker and was a member of the
    National Stock Exchange of India Ltd. (referred as the 'NSE'). The NSE
    which was initially named as the second respondent has been deleted frcrn
    the array of parties at the instance of the appellant. We will therefore refer
    to the first respondent as the respondent. The appellant started trading in
H   shares through the respondent. In March, 2001 three separate transactions
     HARIN/\RA YANG. BAJAJ v. RAJESH MEGHAN! [RUMA PAL, J.]               725

were entered into between the appellant and respondent for purchase of three      A
separate lots of shares of Amara Raja Batteries Ltd. The respondent's
allegation is that the appellant did not make payment for the shares bought
by the respondent for and on behalf of the appellant and that by reason of
the non-payment for the shares, the NSE declared the respondent as a
defaulter on 19th June 200 l. On 21st June 2001, the respondent referred his      B
claim against the appellant to Arbitration under the Bye-laws of the NSE.
The appellant contested the claim and contended that the Arbitration reference
under the Bye-laws was not maintainable on the ground that the same was
filed after the respondent had been declared a defaulter. The appellant also
filed a counter claim against the respondent before the Arbitral Tribunal.
                                                                                  c
      On 31st July 2002, the Arbitral Tribunal passed an award in favour of
the respondent for an amount ofRs. 3,46,89,636 after rejecting the preliminary
objection raised by the appellant as to the maintainability of the arbitration
proceedings. The Arbitral Tribunal held that the transactions in question had
been completed prior to the respondent being declared a defaulter and that        D
the respondent was not in any way debarred or prevented from pursuing his
claim to recover amounts due from the appellant in respect of such
transactions.

      Challenging the award the appellant filed an application under Section
34 of the Arbitration and Conciliation Act, 1996 in the High Court. The           E
learned Single Judge noted that the appellant had made only two submissions
in so far as the validity of the award was concerned. Firstly, it was submitted
that after the respondent had been declared a defaulter, the respondent did
not have the locus standi to refer the disputes to Arbitration or to carry on
the arbitration proceedings. The second submission was that the Arbitrators       F
had erred in holding that the appellant was liable to pay the purchase price
of the shares although the appellant had specifically submitted before the
Arbitrators that the respondent was not in a position to effect delivery of
the shares which were alleged to have been purchased.

     The learned Single Judge negatived the first submission but upheld the       G
second submission. Hearing of the petition under Section 34 of the 1996 Act
was adjourned and the Arbitral Tribunal was directed to give a finding
specifically on the aspect as to whether the respondent was in a position to
deliver the shares which were the subject matter of the reference. Because
of the failure of the appellant to make payment for the shares which had          H
    726                  SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A   according to the learned Single Judge resulted in "disastrous consequences"
    for the respondent, the order was made conditional upon the appellant's
    depositing the awarded amount in the Court within a period of four weeks
    failing which the petition under Section 34 would stand dismissed.

B       The appellant preferred an appeal challenging the order passed by the
 . Single Judge. The Division Bench dismissed the appeal but set aside the
   direction of the learned Judge directing the deposit of the awarded amount.
   The Division Bench also directed that any amount which may be recovered
   by the respondent in respect of the arbitration proceedings be made over to
   the Defaulters' Committee to be dealt with in accordance with the provisions
C of the Rules and Byelaws. The respondent has not challenged this direction
   and has given an undertaking that all amounts realised by him would be
   made over to the Defaulters' Committee for clearing his default.

          The decision of the Division Bench has been challenged only by the
D   appellant. The basic issue to be resolved, therefore, is whether a trading
    member of the NSE w~o has been declared a defaulter has the right to initiate
    arbitration proceedings under the NSE Rules and Byelaws.

          The appellant submitted that Rule 33 of the NSE Rules which were
    framed under Section 8 read with Section 3(2) of the Securities Contract
E   (Regulation) Act, 1956, provides for the cessation of a trading member's
    right of membership immediately he is declared a defaulter. It is submitted
    that Rule 33 read with Chapter XI of the Bye-laws would show that a
    defaultermember had no right to refer a dispute to arbitration. Our particular
    attention was drawn to Byelaws l and 1-C in which the right of trading
F   members to refer a dispute to arbitration not only in respect of on going
    transactions but also in respect of transactions prior to a member being
    declared a defaulter had been provided for. The appellant's contention is that
    although the dispute relating to a defaulter member sur~ived, the defaulter
    member loses his right to refer the dispute to arbitration by reason of Rule
    33. According to the appellant the dispute in respect of such period could
G   only be raised by the Defaulters' Committee in terms of Byelaw 11 of
    Chapter XI.

        Other bye-laws in Chapter XII were also referred to shov• that it is the
    Defaulters Committee which was required to collect and distribute the
H   moneys payable to the defaulter. Byelaw 28 specifically empowers the
     HARINARA YANG. BAJAJ v. RAJESH MEGHANI [RUMA PAL, J.)                  727

Defaulting Committee to initiate any proceeding in a Court of Law either            A
in the name of the Exchange or in the name of the defaulter for the purpose
of recovering any amount due to the defaulter. It is contended that once a
Trading Member was declared a defaulter he was 'dead' as far as the NSE
was concerned and the defaulter's estate could be represented by the
Defaulters' Committee under Bye-Jaw 26 of Chapter XII. It is contended
                                                                                    B
that similar provisions of the Bombay Stock Exchange Act had been construed
by this Court in Vinay Bubna v. Stock Exchange, Mumbai, [1999] 6 SCC
215 and it was held that once a member was declared a defaulter, his right
of membership was forfeited and vested in the Exchange. The defaulting
member retained no interest in his membership card which could be sold
and the proceeds distributed amongst his creditors. The decision in BSE             c
Exchange v. Jaya I Shah, [2004] I SCC 160 was relied upon for contending
that the Bye-laws of Exchanges being badly drafted should not be strictly
construed but be read harmoniously along with the Rules in order to give
effect to the object of the Rules. The appellant also relied upon the decision
of the Bombay High Court in Chandulallaxminarayan Agarwal v. Ramdayal               D
Onkarlal Agarwal, ILR (1996) Nagpur 392 which held that under Section
28(2) of the Provincial Insolvency Act, 1920 once the property of an
insolvent vests in the Insolvency Court or the receiver the insolvent is
completely divested of the property, and he can have no right to sue for any
declaration in respect of that property as the right to sue would also vest
in the Insolvency Court or the receiver. The decision of Chiranjilal                E
Ramchandra Loyalka v. Jatashankar N Joshi, (1942) 44 Born LR 692 was
also relied on to urge that the right to refer a dispute to arbitration was
granted to a member qua member of an Exchange.

        The respondent has submitted that Rule 33 could not be construed to         F
  cover the right to go to arbitration. It is said that the right was not part of
  the privileges of membership but arose out of the contract between the
  respondent and the appellant and that there was no question, therefore, of
  the respondent being deprived of this right under Rule 33. It is also submitted
  that the requirement of referring the dispute in the Bye-laws between the
  trading members and their constituents to arbitration could not be said to        G
  be a right simpliciter. Parties to the arbitration agreement were obliged to
  refer disputes to arbitration. Rule 1C, according to the respondent clearly
  indicated that the disputes arising out of a transaction prior to a trading
· member being declared a defaulter survived and could be referred to
  arbitration only by the parties to the arbitration agreement. The Defaulters'     H
    728                   SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A   Committee was not a party to the arbitration agreement. The decisions cited
    by the appellant have been distinguished. It has been emphasized that the
    provisions of the Provincial Insolvency Act, 1920 relied upon by the appellant
    were vastly dissimilar with the provisions of the Rules and the Byelaws of
    NSE. It is submitted that Byelaw 11 did not envisage a complete vesting
B   of all assets of the defaulting member in the Defaulters' Committee. There
    was a limited vesting of certain assets which did not cover contractual rights
    of a defaulting member against a non-member. It was finally submitted that
    neither the Defaulters' Committee nor NSE had ever asserted the right to
    refer the disputes of a defaulting member to arbitration nor had they questioned
    the locus standi of the respondent to do so.
c
          The fulcrum of the appellants' argument is Rule 33. The Rule reads:

             "A trading member's right of membership shall lapse and vest with
             the Exchange immediately he is declared a defaulter. The member
D            who is declared a defaulter shall forfeit all his rights and privileges
             as a member of the Exchange, including any right to use of or any
             claim upon or any interest in any property or funds of the Exchange,
             if any."

          The Rule speaks of the lapsing of a Trading Members right of
E   membership and forfeiture of his rights and privileges as a member of the
    exchange on a member being declared as defaulter. The Rule further provides
    for the vesting of the right of membership of the defaulting members with
    the NSE. The question is whether these rights and privileges include the
    right to refer a dispute to arbitration between the defaulting member and
F   another party.

          Reliance on Jaya Shah's case by the appellant was unnecessary. There
    is no dispute that the NSE Rules and Bye laws have to be read harmoniously
    particularly when: Rule (1) of the Rules provides:

G            "( 1) The rights and privileges of a trading member shall be subject
             to the Bye Laws, Rules and Regulations of the Exchange."

         The NSE Bye laws which have been framed by the Exchange-under
    Section 9 of the Securities. Contracts (Regulation) Act, 1956 contain a
H   separate chapter, (Chapter XI), which deals exclusively with arbitrations.
    HARINARA YANG. BAJAJ v. RAJESH MEGHAN! [RUMA PAL, J.]                  729

Rule 2 of Chapter XI makes the provisions of the Byelaws and Regulations           A
part of all dealings, contracts and transactions. It says:

        "In all dealings, contracts and transactions, which are made or
        deemed to be made subject to t.he Byelaws, Rules and Regulations
        of the Exchange, the provisions relating to arbitration, as provided
                                                                                   B
        in these Byelaws and Regulations shall form and shall be deemed
        to form part of the dealings, contracts and transactions and the
        parties shall be deemed to have entered into an arbitration agreement
        in writing by which all claims, differences or disputes of the nature
        referred to in Bye laws (1), (lA), (lB) and (10) above shall be
        submitted to arbitration as per the provisions of these Byelaws and        c
        Regulations".

      The arbitration proceedings as provided in the Byelaws and Regulations
are subject to the provisions of the Arbitration and Conciliation Act, 1996
to the extent not provided for in the Byelaws and Regulations (Byelaw 14).         D
Byelaw 1 prescribes requirements for reference to arbitration with regard
to claims, differences and disputes inter alia between Trading Members and
Constituents in the following manner:

        (I) "All claims, differences or disputes between the Trading Members
        inter se and between Trading Members and Constituents arising out          E
        of or in relation to dealings, contracts and transactions made subject
        to the Bye-Laws, Rules and Regulations of the Exchange or with
        reference to anything incidental thereto or in pursuance thereof or
        relating to their validity, construction, interpretation, fulfillment or
        the rights, obJigations and liabilities of the parties thereto and         F
        including any question of whether such dealings, transactions and
        contracts have been entered into or not shall be submitted to
        arbitration in accordance with the provisions of these Bye laws and
        Regulations'~:...


         Rule l(C) deals with disputes of defaulting members. It says:             G

        (lC) The provisions of Byelaws (1), (lA) and (lB) shall become
        applicable to all claims, differences, disputes between the
        parties mentioned therein for all dealings, contracts and
        transactions made subject to the Bye laws. Rules and · H
    730                   SUPREME COURT REPORTS (2004] SUPP. 6 S,C.R.

A            Regulations of the Exchange provided such dealings, contracts and
             transactions had been entered into between the parties mentioned
             therein prior or to the date on which the Trading Member was either
             declared a defaulter or expelled or has surrendered his trading
             membership."
B
          Under these Byelaws the parties to the reference are the parties to the
    agreement. This is also what is provided under Section 2(h) of the Arbitration
    and Conciliation Act,. 1996 and a 'party' is defined as "a party to an
    arbitration agreement".

C         Byelaw (IC) envisages claims, differences, disputes between the parties
    mentioned in Bye-laws (I), (lA), (lB) in respect of dealings, contracts and
    transactions entered into prior to the date on which a Trading Member was
    either declared defaulter or expelled or has surrendered his trading
    membership. The parties remain parties to the arbitration agreement despite
D   the fact that as far as the Trading Member is concerned, he may have ceas~d
    to be a Member when the reference is made. Byelaw 1C does not in any
    way indicate that an arbitration agreement between an ex-Trading Member
    and its constituent cannot be enforced at the instance of the ex-Trading
    Members, or that a defaulter member ceases to be a party to the arbitration
    agreement.
E
          The argument that all the rights of a Trading Member who has been
    declared to be a defaulter vests in the Defaulters' Committee including the
    right to go to arbitration appears to be incorrect. For one this would amount
    to a rewriting ofByelaw IC. For another it would necessitate a rewriting of
F   the arbitration agreement by substituting the Defaulters' C0mmittee iri place
    of the Trading Member as a party to the agreement.

          Furthermore even if one were to assume that the reference to arbitration
    is part of the membership rights of a Trading Member which are forfeited
    under Rule 33, in terms of that Rule the right lapses and vests in the
G   Exchange and if at all it would be the Exchange which could enforce the
    arbitration agreement. However, Byelaw 18 of Chapter XI clearly states:

             "For removal of doubts, it is hereby clarified that the Exchange
             shall not be construed to be a party to the dealings, contracts
H            and transactions referred to under these Byelaws; and the
     HARINARA YANG. BAJAJ v. RAJESH MEGHAN! [RUMA PAL, J.]                731

         provisions of this Chapter shall not apply in case of claims,            A
         differences or disputes between the Exchange and a Trading Member
         and no arbitration shall lie between the Exchange and a Trading
         Member".

      Rule 33 does not provide for the vesting of any rights in the Defaulters'   B
Committee. The Exchange and the Defaulters' Committee are not the same.
The Defaulters' Committee is set up under Chapter XII Byelaw 30 and may
be constituted by the Board of Directors from time to time at any point of
time. Not less than 60% of the members of the Defaulters' Committee shall
be from among non-trading members who shall be nominated by the Exchange
with the prior approval of Securities and Exchange Board of India.                c
     Byelaw 11 on which particular emphasis has been placed by the
appellant to support his argument that the Defaulters' Committee could refer
the disputes of a defaulting member to arbitration reads thus:
                                                                                  D·"
         "The Defaulters' Committee shall call in and realize the security
         deposits in any form, margin money, other amounts lying to the
         credit of and securities deposited by the defaulter and recover all
         moneys, securities and other assets due, payable or deliverable to
         the defaulter by any other Trading Member in respect of any
         transaction or dealing made subject to the Bye-laws, Rules and           E
         Regulations of the Exchange and such assets shall vest ipso facto,
         on declaration of any trading member as a defaulter, in the Exchange
         for the benefit of and on account of any dues of the Exchange,
         National Securities Clearing Corporation Limited, Securities and
         Exchange Board of India, other trading members, Constituents and         F
         registered sub-brokers of the defaulter, approved banks and any
         other persons as may be approved by the Defaulters' Committee
         and other recognized stock exchanges."

      This Rule gives the Defaulters' Committee limited powers to call in
and realize (i) security deposits (ii) margin money (iii) other amounts lying     G
to the credit of the defaulting member and (vi) securities deposited by the
Defaulting Member. The Defaulting Committee has also the right to recover
all moneys, securities and other assets, due, payable or deliverable to the
defaulters by any other Trading Member. By expressly providing for these
powers in the Committee, it would follow that other powers are excluded           H
    732                   SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A   on the principle "expressio unius est exclusio alterius ". Thus the assets
    which may be called in or realized or recovered by the Defaulting Committee
    do not include monies payable under a contract with a third party nor monies
    the recovery of which are yet to be made. Chapter XI Rule 11 is markedly
    different from the provisions of Section 28(2) and Section 29 of the Provincial
B   Insolvency Act, 1920 which expressly provide for the complete vesting of
    all assets of an insolvent with the Insolvency Court or receiver. Had the
    intention been to bring about the same consequence as far as the Defaulting
    Members are concerned, the Rules or Bye-laws would have said so. Instead
    particular assets have been picked out for the purpose of realization by the
    Defaulters' Committee.
c
          Doubtless, the Defaulting Committee has been given the power to
    distribute the moneys collected according to the priorities mentioned in Bye
    law 23 after defraying its expenses. But it is a very different proposition to
    infer from this that it is the Defaulting Committee which is responsible for
D   or entitled to recover all such amounts that too by a reference to arbitration
    under Byelaw ( 1C) of Chapter XI.

          On the other hand the Defaulters' Committee is expressly empowered
    under Byelaw 28 of Chapter-XII to initiate proceedings in a Court of law
    in the name of the Exchange or in the name of the defaulter for the recovery
E   of the dues of the defaulter. The words do not convey any intention to permit
    the Defaulters' Committee to also refer disputes in the name of the defaulter
    to the arbitrator under Rule l C. The effect of the express empowerment of
    the Committee "to initiate action in Courts of law" cannot be read as
    implying initiating a reference to arbitration. Had the intention behind the
F   Bye laws been to similarly authorize the Committee for the purposes of
    Byelaw 1C, it would have been expressly so provided. The plain language
    of the Byelawprecludes the Defaulters' Committee from referring defaulters'
    claims to arbitration. This may be contrasted with Section 59(h) of the
    Provincial Insolvency Act, 1920 which in terms authorizes the Receiver of
    an insolvent's property to refer any dispute to arbitration in order to realize
G   the property of the insolvent.

          The submission of the appellant then was that if the defaulter were left
    free to pursue the arbitration to recover monies due to him, it would be
    possible that he may misappropriate any amounts realized thereby. The
H "'argument is an arg.ument of desperation and is not based on any known
                i ,,


     HARINARA YANG. BAJAJ v. RAJESH MEGHAN! [RUMA PAL, J.]                733

principle of interpretation.                                                      A
      The provisions of Chapter XII would show that the amount which may
be realised by the defaulter in respect of the transactions covered by Rules
(1 C) cannot be retained by him but must be made over by him to the
Defa•1lters' Committee. Bye-law 19 accordingly provides:-                         B
         "(19) The Defaulters' Committee shall keep a separate account in
         respect of all monies, securities and other assets payable to a
         defaulter which are received by him and shall defray therefrom all
         costs, charges and expenses incurred in or about the collection of
         such assets or in or about any proceedings it takes in connection        C
         with the default."

      Additionally, the Defaulters' Committee may take action independently
against the defaulter or his debtor or both under Bye law 28 in the name
of the Exchange. If any further protection is required by the Exchange it         D
is a need that must be met by the Exchange by framing an appropriate Bye
law under Section 9 of the Securities Contracts (Regulation) Act, 1956 and
not an exercise for the Courts to undertake by convoluted construction.

      The decisions cited by the appellant are inapposite and do not either
factually or in law touch on the issues which call for resolution in this case.   E
Vinay Bubna 's case deals with Byelaws of the Bombay Stock Exchange
which differ in form and substance with the Bye l11ws ofNSE which we are
called upon to interpret. Furthermore the question in that case was whether
the defaulting member or the Assignee had any claim over the sale proceeds
of the membership card, an item which clearly pertains to the rights of           F
membership which are forfeited on default. The other decisions of the High
Court of Bombay are equally inapposite and turn on the interpretation of
the provisions of the Provincial Insolvency Act, 1920 which are wholly
disparate from the provisions which are the subject matter of controversy
in this appeal.
                                                                                  G
     For the reasons aforesaid we affirm the decision of the High Court and
dismiss this appeal with costs.

S.K.S.                                                     Appeal dismissed.