BSE Byelaws – Non-Arbitrability of Fraud in Share Certificates Transfer
Judgment dated 9.6.2026 of the High Court of Bombay (OS) in Commercial Arbitration Petition (L) No.32954 of 2024 of ABB India Limited Vs. Sunil Hariram Jaisingh and others
- Whether a dispute of the instant nature can at all form the subject matter of the ODR mechanism is a wider question that has arisen in the matter.
However, it is not necessary to pronounce upon a wider question of this nature when in the facts of this case, it would suffice to hold that the fraud in issuance of share certificates lies at the heart of the proceedings, making the dispute non-arbitrable. Suffice it to say that the BSE’s bye-laws in Chapter XIII – Clause D reads thus: “All claims, differences or disputes arising between an Issuer or its Registrar to an Issue and Share Transfer Agent and a Constituent pertaining to transfer or transmission of securities, demat or remit of securities, issue of duplicate securities, transposition of holders of securities, entitlements like corporate benefits, dividend, bonus shares, rights entitlements, credit of securities in public issue, interest/coupon payments on securities and delay in processing or wrongful rejection of the investor’s requests and/or such other matters as specified by SEBI, shall be submitted to arbitration in accordance with BSE Limited Bye-laws” [Emphasis Supplied] 54. The bye-laws of a stock exchange constitute subordinate law and are tabled in Parliament, having the force of statutory provisions. While such disputes of the nature set out in the aforesaid clause are made subject to arbitration, the law on arbitrability of disputes cannot be given a go-by. Indeed, every grievance raised by a shareholder cannot be said to be brought within the ambit of arbitration – for example, a grievance about accounting fraud by a listed company, made by a shareholder cannot be arbitrable. A shareholder who contends that a decision by the board of a listed company was taken negligently and that has resulted in losses for which damages are claimed, could arguably not be the intended beneficiary of the Master Circular. Likewise, a grievance about oppression and mismanagement cannot be made amenable to arbitration.
