Dealmoney Commodities P Ltd formerly Dealmoney Securities P Ltd v. Vijay Vithal Sawant
Arbitral Award Upheld Regarding Unauthorized Stock Trades Involving Senior Citizens; Appellate Modification of Relief Set Aside for Granting Unprayed Compensation Based on Equity Without Party Authorization.
Court: Bombay High Court
Citation: 2026:BHC-OS:4506
Decision Date: 17-02-2026
List of Laws
The Arbitration and Conciliation Act, 1996; SEBI Circular dated 22nd March 2018 (Unauthorized Trading); NSE Regulations; Fundamental Policy of Indian Law; Equity and Fairness in Commercial Arbitration
- Facts: The Respondents, senior citizens, were constituents of the Petitioner, a registered trading member. While they initially traded in the cash segment, their account was later activated for the Futures and Options (F&O) segment. Subsequently, numerous trades were executed in the F&O segment, resulting in the depletion of the Respondents' entire portfolio. The Respondents alleged that these trades were unauthorized and fraudulent, initiated by the Petitioner’s relationship manager who "coached" them to provide affirmative responses like "yes" or "ok" during confirmation calls. The Petitioner contended that the trades were authorized, citing SMS logs, electronic contract notes, and call recordings as evidence of the Respondents' awareness and consent.
- Procedural Posture: The Respondents initially approached the Grievance Redressal Committee (GRC), which granted partial relief. On appeal, a Sole Arbitrator allowed the Respondents' claims for compensation. The Petitioner then appealed to the Appellate Panel of Arbitrators of the National Stock Exchange, which upheld the finding of unauthorized trading but modified the compensation to the prevalent scrip rate as of the date of the award. The Petitioner challenged this Appellate Award before the High Court under Section 34 of the Arbitration and Conciliation Act, 1996.
- Issue: Whether the Arbitral Tribunal’s finding of unauthorized trading was patently illegal or perverse, and whether the Appellate Tribunal exceeded its jurisdiction by awarding relief not specifically prayed for by the Respondents.
- Holding: The High Court upheld the finding that the trades were unauthorized but set aside the modified compensation granted by the Appellate Tribunal. The Court restored the original portfolio value as awarded by the Sole Arbitrator.
- Reasoning: The Court reasoned that while SEBI circulars regarding pre-trade confirmation are directory, the absence of such evidence allows the Tribunal to examine the preponderance of probabilities. The evidence showed that the Petitioner’s employees initiated the trades, and the Respondents, being laypersons, were tutored to give scripted confirmations. Silence or lack of immediate objection does not amount to acquiescence in cases of "blatant theft" or unauthorized trades where the investor is incapable of understanding the messages. However, the Court held that the Appellate Tribunal committed a jurisdictional error by awarding relief based on "fairness and equity" (the prevalent scrip rate) which was not prayed for, as an arbitrator can only decide ex aequo et bono if expressly authorized by the parties under Section 28(2) of the Act.
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