Case Note & Summary
This matter arises from a petition under Section 34 of the Arbitration and Conciliation Act, 1996, filed before the High Court of Judicature at Bombay, challenging an arbitral award dated 29 April 2024. The petitioners, trading members who had opened trading and Demat accounts with Anugrah Stock and Broking Private Limited (Anugrah), a stock broker and depository participant of the respondent Central Depository Services (India) Ltd (CDSL), sought restoration of securities or, alternatively, the market value thereof amounting to Rs.34,72,75,447/-. The dispute originated when the National Stock Exchange (NSE) withdrew Anugrah's membership on 3 August 2020 due to regulatory non-compliance, leading to the squaring off of open positions and the subsequent illegal sale of client securities by Edelweiss Custodial Services Ltd, the clearing member. Petitioners had earlier approached the Bombay High Court under Section 9 of the Arbitration Act, obtaining interim relief against Anugrah. NCL initiated proceedings against Edelweiss, holding that securities were illegally sold and directing restoration. Edelweiss appealed to the Securities Appellate Tribunal (SAT), where Petitioner No.1 intervened. SAT dismissed the appeal on 15 December 2023, and Edelweiss's further appeal is pending before the Supreme Court. In parallel, petitioners invoked arbitration against CDSL seeking indemnification for losses, alleging negligence by the depository. The three-member Arbitral Tribunal, however, dismissed the claim on the ground of forum shopping, holding that by supporting the NCL order before SAT, petitioners had elected their remedy and could not simultaneously pursue arbitration. Aggrieved, petitioners filed the present petition contending that the tribunal misconstrued the doctrine of forum shopping, as the regulatory proceedings against a clearing member and the contractual indemnity claim against the depository are distinct, and that an indemnity holder is entitled to proceed against both the wrongdoer and the indemnifier. They relied on judgments including Brilltech Engineering v. Shapoorji Pallonji and Gajanan Moreshwar Parelkar v. Moreshwar Madan Mantri. The High Court heard submissions, reserving judgment on 9 December 2025 and pronouncing on 23 December 2025, but the full text of the judgment is not available in the provided excerpt, and the final outcome is not mentioned.
Issue of Consideration
Whether the Arbitral Tribunal erroneously rejected the Petitioners' claim on the ground of forum shopping due to their participation in NCL proceedings against Edelweiss; Whether the Petitioners are entitled to pursue arbitration against CDSL for indemnification simultaneously with regulatory proceedings
Law Points
- forum shopping
- distinct proceedings
- indemnity holder rights
- Section 34 of Arbitration and Conciliation Act
- 1996
- regulatory proceedings
- concurrent remedies
Case Details
2025 LawText (BOM) (12) 91
Commercial Arbitration Petition No. 293 of 2024
Mr. Karl Tamboly, Mr. Reehan Ajmerwalla, Mr. Ravinchandra Hegde, Ms. Parinaz Bharucha, Mr. Kandarp Trivedi, Ms. Janani Sivaraman i/b M/s. RHP Partners for Petitioners; Mr. Rohan Kadam, Ms. Varuna Bhanrale, Ms. Shourya Bari, Kaazvin Kapadia, Ms. Ananya Sinha i/b M/s. Trilegal for Respondent
Nimish Chandulal Shah and Ors.
Central Depository Services (India) Ltd.
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award that rejected a claim for restoration of securities or market value on the ground of forum shopping.
Remedy Sought
Setting aside of the Arbitral Award dated 29 April 2024 and remand for decision on merits.
Filing Reason
The Arbitral Tribunal dismissed the claim without adjudicating on merits, holding that the petitioners had indulged in forum shopping by participating in regulatory proceedings before NCL/SAT.
Previous Decisions
Arbitral Award dated 29 April 2024 by a three-member Arbitral Tribunal constituted by CDSL, rejecting the petitioners’ claim.
Issues
Whether the Arbitral Tribunal erred in dismissing the claim on the ground of forum shopping.
Whether the Petitioners are entitled to pursue remedies simultaneously against Edelweiss and CDSL under indemnity principles.
Whether the undertaking to return any recovery from Edelweiss precludes arbitration against CDSL.
Submissions/Arguments
Petitioners argued that the Arbitral Tribunal misconstrued forum shopping; NCL proceedings against Edelweiss are distinct regulatory proceedings, while arbitration is for contractual indemnification. Participation as intervener in SAT does not amount to election of remedy. An indemnity holder can pursue both the principal wrongdoer and the indemnifier. They provided an undertaking to refund any amount recovered from Edelweiss. Reliance placed on Brilltech Engineering v. Shapoorji Pallonji, Gajanan Moreshwar Parelkar v. Moreshwar Madan Mantri, and Raigad Concrete Industries v. ICICI Bank.
Judgment Excerpts
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.
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.
That the Arbitral Tribunal has perversely accused the Petitioners of forum shopping and has thereby not adjudicated the claim of the Petitioners on merits.
In law there is nothing which prevents an arrangement whereby the indemnifier pays the amount due under the contract of indemnity subject to the condition or on an understanding between the indemnity holder and the indemnifier that the indemnity holder will continue to pursue its remedies against the debtor and in the event of it recovering the amounts from the debtor it would refund the same to the indemnity holder.
Procedural History
Petitioners opened trading and Demat accounts with Anugrah, a stock broker and depository participant of CDSL. On 3 August 2020, NSE withdrew Anugrah's membership due to non-compliance. On 10 August 2020, Anugrah informed petitioners that open positions were squared off. Petitioners sought reversal of securities and filed complaints with CDSL. On 4 September 2020, NSE withdrew Anugrah's trading rights in cash segment. Petitioners filed Section 9 petition in Bombay High Court; court restrained Anugrah from disposing assets and appointed a court receiver. NCL initiated proceedings against Edelweiss; on 20 October 2020, NCL held that Edelweiss illegally sold securities and directed restoration. Edelweiss appealed to SAT; Petitioner No.1 intervened. SAT dismissed Edelweiss's appeal on 15 December 2023; Edelweiss appealed to Supreme Court, pending. On 18 July 2023, petitioners sent notice to CDSL invoking indemnity; on 24 August 2023, they invoked arbitration. Arbitral tribunal passed award on 29 April 2024 rejecting claim as forum shopping. Petitioners filed the present Section 34 petition in Bombay High Court. The High Court heard arguments and reserved judgment on 9 December 2025, pronouncing on 23 December 2025. The full judgment is not available in the provided text.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 34, 9
- Depositories Act, 1996:
