Bombay High Court Orders CDSL to Pay Rs 86.02 Lakh to Mumbai Investor
On July 2, the Bombay High Court in Mumbai upheld an arbitral award directing Central Depository Services (India) Limited (CDSL) to compensate an investor Rs 86.02 lakh for shares that were fraudulently siphoned by a stockbroking firm.
A division bench of Justices Bharati H. Dangre and Manjusha A. Deshpande rejected an appeal by CDSL. The appeal challenged a December 1, 2025 order passed by a single-judge bench of Justice Sandeep V. Marne, which had granted relief to the Mumbai-based investor, Daksha Narendra Bhavsar.
Bhavsar had opened a demat account with Kolkata-based Wealth Kreators Limited (later known as BRH Wealth Kreators), which was registered as a stockbroker and a depository participant with CDSL.
In 2018, Bhavsar and her late husband executed a Power of Attorney (POA). Using this POA, BRH transferred equity shares from her demat account to its own clearing member and trading member account, transferring the title of the shares to itself. The High Court noted that BRH used this same method to transfer the shares of 9,493 clients into its proprietary account.
BRH then pledged these transferred shares with HDFC Bank to secure a loan facility, a request that CDSL accepted. When BRH defaulted on the loan, HDFC Bank invoked the pledge and sold the securities.
Following a plea by Bhavsar, the Securities Appellate Tribunal (SAT) directed CDSL to pay her the value of the lost shares, noting that the fraudulent pledge occurred while BRH was operating as CDSL's depository participant. The SAT also permitted Bhavsar to initiate arbitration.
An Arbitral Tribunal subsequently ruled in Bhavsar's favour, awarding her Rs 86.02 lakh along with 9 per cent interest to be paid by CDSL.
CDSL challenged this award, but Justice Marne dismissed the challenge, observing that CDSL was attempting "mere footballing" of Bhavsar's genuine claim to the National Stock Exchange (NSE). Justice Marne ruled that as a depository participant, BRH acted as an agent of CDSL, with whom the shares were entrusted for safekeeping.
The division bench rejected CDSL's appeal against Justice Marne's ruling, holding that the single-judge bench did not err in its verdict.
