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2026 Supreme(Online)(Del) 13882
IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, Manmeet Pritam Singh Arora, JJ
M/S BRH WEALTH KREATORS LTD. – Appellant
Versus
SUDHIR KUMAR AGGARWAL – Respondent
FAO (COMM) 55/2025
For the Appellants/Petitioners: Amit George, Nitin Saluja, Shivani Luthra Lohiya, Sushrut Sharma, Karan Singh, Dushyant Kaul
For the Respondents: Latika Chaudhry
Findings of fraud in a Section 34 petition under the Arbitration and Conciliation Act must be based on documentary evidence and not on conjectures or surmises, particularly when such findings contradict the reasoned conclusions of an arbitral tribunal.
Headnote:The appeal was filed under Section 37 of the Arbitration and Conciliation Act, 1996, and Section 13 of the Commercial Courts Act, 2015, challenging a District Court order that set aside arbitral awards and revived an Investor Grievance Redressal Panel (IGRP) order for a refund of Rs. 9,42,000. The dispute arose from allegations of unauthorized trades in a demat account. The District Court had further recorded findings of fraud against the trading member, despite the arbitral tribunals having previously dismissed the claims on the grounds of limitation. The primary issues concerned the scope of interference under Section 34 of the Arbitration and Conciliation Act and whether findings of fraud could be recorded without foundational evidence. The court reasoned that findings of fraud must be based on documentary evidence and not on conjectures or surmises, especially when such findings are contrary to the reasoned conclusions of an Appellate Arbitral Tribunal. With the aforesaid modification and directions, the present appeal is allowed.
| Table of Content |
|---|
| 1. procedural history of the dispute from igrp to high court. (Para 1 , 2 , 6 , 9 , 10) |
| 2. parties' contentions and the proposal for a monetary settlement. (Para 3 , 4 , 11 , 12) |
| 3. determination of the principal amount and reasonableness of the settlement offer. (Para 7 , 8 , 13 , 14 , 15 , 16 , 17) |
| 4. final directions for payment and the legal effect of the settlement on previous awards. (Para 18 , 19 , 21 , 22) |
| 5. requirement of documentary evidence to establish fraud in legal proceedings. (Para 20) |
JUDGMENT
MANMEET PRITAM SINGH ARORA, J.
1. The present appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996, [‘Act of 1996’], read with Section 13 of the Commercial Courts Act, 2015, assailing the judgment dated 24.12.2024 [‘impugned judgment’] passed by the learned District Judge (Commercial-04), South-West District, Dwarka Courts, in OMP (COMM) No. 12/2020, whereby the Respondent’s petition under Section 34 of the Act of 1996 was allowed, and the arbitral award dated 06.08.2019 passed by the Sole Arbitrator under the bye-laws, Rules and Regulations of National Stock Exchange [‘NSE’] and the order dated 04.11.2019 of Appellate Arbitral Tribunal1Comprising of three members with a retired High Court Judge as the Presiding Arbitrator upholding the said arbitral award was set aside.
2. The relevant facts for adjudicating the present appeal, as set out in the memorandum of appeal, are as follows:
2.1. Respondent had opened a demat/trading account with the Appellant in February 2007 and executed the account opening form, client registration documents, risk disclosure documents and authorisation letters.
2.2. It is stated that the Respondent carried out transactions in the cash and F&O segments, and that contract notes, SMS alerts and account statements were duly communicated to him through e-mail.
2.3. It is stated that the Respondent, on his own showing, became aware in 2014 that there was no balance in his trading account. The last trade was executed on 07.11.2014.
2.4. Thereafter, on 18.02.2019, Respondent filed a complaint before the Securities and Exchange Board of India [‘SEBI’] alleging unauthorised trades/non-receipt of payments in relation to transactions in his demat account. It is the stand of the Appellant that the allegations made in the complaint are false and frivolous.
2.5. The said complaint was referred by SEBI to the Investor Grievance Redressal Panel [‘IGRP’], which, vide order dated 03.04.2019, admitted the Respondent’s claim for the principal amount of Rs. 9,42,000/- paid in 2007 on the ground that the Appellant herein was unable to justify the trades done in the Respondent’s account. It held that the Appellant was unable to produce any SMS or e-mail sent to the Respondent during the relevant period of 2007-2008 in respect of the trades conducted. It was observed that the Appellant had permitted its own representative to trade on behalf of the Respondent. In view of these findings, the IGRP admitted the Respondent’s claim to the extent of Rs. 9,42,000/-.
2.6. The Appellant challenged the said order dated 03.04.2019 of the IGRP before the Sole Arbitrator as per the bye-laws, Rules and Regulations of NSE. The said challenge was accepted and vide award dated 06.08.2019, the Sole Arbitrator held that the Respondent’s claim was barred by limitation and hence, the claim of Rs. 9,42,000/- was inadmissible in law. Consequently, the order dated 03.04.2019 of the IGRP was set at naught.
2.7. The Respondent challenged the said award dated 06.08.2019 before the Appellate Arbitral Tribunal of NSE, which, vide award dated 04.11.2019, upheld the award passed by the Sole Arbitrator. The Tribunal held that the claim of the Respondent was barred by limitation and observed that the Respondent also had no claim on the merits.
2.8. The Respondent filed an application under Section 33 of the Act of 1996 seeking review of the arbitral award dated 06.08.2019, which was also dismissed
