Bombay HC Set Aside Arbitral Award of Rs.2 crores against Stock Broker for ignoring Investor’s admissions.

The respondent no.1 opened a trading account with the petitioner – stock broker of National Stock Exchange, through its sub-broker Akshay Standard Insurance Services Pvt Ltd.

Respondent no.1 gave cheque of Rs.2 crores in favour of the petitioiner and same was credited on 10.10.2009. 

Jignesh – husband of her dearest friend – was handling the entire process and trading.  He had given his own mobile number in the forms for transactions in hr name.

On 11.4.2012, respondent no.1 filed police complaint that ignesh had defrauded her by giving her the impression that profits had been made through her trades, although there had been losses.

In the arbitration initiated by Akshay for debit balance, the investor filed counter claim for refund of entire amount from the petitioner on the premise that all the trades had been unauthorized.

The first Award was passed in favour of the respondent no.1 for Rs.2 crores.  This was confirmed by the Appellate Arbitral Tribunal. 

It was held that the absence of authorization of the investor would mean that every trade was unauthorized.

The Arbitral Tribunal ought to have considered whether Jignesh was a person who had been authorised but betrayed the trust reposed by the authorisation, or whether Jignesh had never been authorised to trade. By simply shutting out this vital element of consideration, the Arbitral Tribunal’s findings are undermined and vitiated.

Viveka is not some ordinary “housewife” – a phrase akin to phrases such as “senior citizen” and “pensioner”, used by advocates often to conjure imagery of the vulnerable. She is herself a well-educated person, an entrepreneur who ran a business herself with Jignesh’s wife, and the spouse of a British Page 14 of 31 April 2, 2026 Ashwini Vallakati ::: Uploaded on – 02/04/2026 ::: Downloaded on – 06/04/2026 16:48:00 ::: 901-F-J -ARBP-1057-2014+.doc diplomat intending to invest in a property in London. That she is also evidently minor royalty with resources to be advised even about things she need not herself know, is writ large on the face of the record. The disputes with Jignesh have been well brought out and reported in the media – not something that would be seen in the case of an ordinary housewife who loses Rs. 2 crores on the stock market. 19. Viveka has access to excellent well-heeled law firms that moved the EOW to present an abject picture of a beleaguered housewife who has been left vagrant owing to her lifetime savings being lost, and indeed a premium law firm to represent her in these proceedings too. The short point is that the term “housewife” and loss of “lifetime savings” may conjure imagery of vulnerability, but that is not consistent with the nuance necessary for appreciation of the factual matrix in hand. Viveka was aware that Jignesh worked in a multinational bank and had restrictions on trading on his own. They appear to have pooled their resources to make investments and have had a falling out. This analysis is made not to indicate that a well-educated person who is socially and financially powerful is fair game for being cheated in the securities market.

Confusing regulatory non compliance as a corollary for not having to adjudicate core facts is the error that the two Arbitral Tribunals concurrently fell into, necessitating the quashing and setting aside of the two awards.

Judgment 2.4.2026 of the High Court of Bombay in Arbitration Petition No.1057 of 2014 of Kantilal Chhaganlal Securities Pvt Ltd   Vs.   Viveka Kumari and another with connected matters