The refusal to adjudicate the claim due to alleged forum shopping without determining the merits of the case is irrational and dismisses Petitioners’ independent right for relief based on statutory indemnity.

JUDGMENT:

SANDEEP V. MARNE, J.

1) By this Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), Petitioners have challenged the Award dated 29 April 2024 passed by the three-member Arbitral Tribunal constituted by the Central Depository Services India Ltd (CDSL). By the impugned Award, the Arbitral Tribunal has rejected the claim of the Petitioner for restoration of their securities or in the alternative for award of sum of Rs.34,72,75,447/-, being the market value of securities.

FACTS

2) Petitioners are the trading members, who had opened their respective trading and Demat Accounts with Anugrah Stock and Broking Private Limited (Anugrah), who was both a Stock Broker on NSE India Ltd (NSE), as well as a Depository Participant (DP) of the Respondent. Respondent-CDSL is a Depository registered under the provisions of the Depositories Act, 1996 (Depositories Act). While opening their respective trading and Demat Account with Anugrah, Petitioners had executed various account opening documents including Power of Attorney. For undertaking trades in Future & Options Segment (F & O) of NSE, the trading members are required to maintain margin money. Towards their obligation of maintaining the margin monies, Petitioner had transferred funds and securities in their respective trading / Demat Accounts with Anugrah.

3) Edelweiss Custodial Services Ltd. (Edelweiss) was the Clearing Member of Anugrah, who was responsible for settling and clearing the trades undertaken by the Petitioners. On 3 August 2020, NSE withdrew the membership of Anugrah and its trading rights on account of non-compliance with the regulatory provisions of NSE. Accordingly, Anugrah was restrained from taking fresh positions in F&O, currency derivatives and commodities derivatives segment. On 10 August 2020, Anugrah addressed email to the Petitioners informing them that all their open positions were squared off and Anugrah provided contract notes in that regard. On the same day, Anugrah also provided margin statement to the Petitioners, indicating that Petitioner No.1 had credit balance of Rs.3,27,16,258/- and Petitioner No.2 had trading ledger credit balance of Rs.1 crore. On 13 August 2020, Anugrah also provided holdings statement to the Petitioners which indicated holding of securities value of following amounts :-

(i) Petitioner No.1-Rs.13,72,86,691.15/-

(ii) Petitioner No.2-Rs.3,61,12,050/-

(iii) Petitioner No.3-Rs.16,42,400/-.

4) After learning about suspension of activities of Anugrah, Petitioners sent instructions slips for immediate reversal of the securities kept as collaterals with Anugrah. On 18 August 2020, Petitioner No.1 sought cancellation of POA. Petitioner No.1 also lodged complaints on grievance portal of CDSL’s official website. On 4 September 2020, NSE withdrew trading rights of Anugrah in cash segment as well.

5) Petitioners, along with the other aggrieved investors, filed Arbitration Petitions under Section 9 of the Arbitration Act in this Court for securing recovery of funds and securities lying with Anugrah as collaterals. This Court restrained Anugrah from disposing off its movable, immovable and financial assets and appointed Court Receiver in respect thereof. On 28 September 2020, Petitioners addressed notice to SEBI, NSE and CDSL seeking details of steps taken for protecting and securing the interests of clients of Anugrah. On 16 October 2020, Petitioner No.1 along with other clients of Anugrah, filed Writ Petition in this Court seeking directions against SEBI, NSE, CDSL and Anugrah, whic