[Cites 5, Cited by 0]
Bombay High Court
Motilal Oswal Financial Services vs Rupesh Kumar on 25 March, 2026
2026:BHC-OS:7257
CARBP(L)-24328-2025 (1).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 24328 OF 2025
M/S Motilal Oswal Financial Services Limited ]
A company incorporated Under the ]
Companies Act, 1956, Having its registered ]
office at Motilal Oswal Tower Rahimtullah ]
Sayani Marg, Opposite Parel S.T. Depot, ]
Prabhadevi, Mumbai - 400 025. ]
Through Authorized Representative, Mr. ]
Dwibendu Mohanty ] ...Petitioner
Versus
1) Rupesh Kumar ]
Age: Unknown, Adult, Inhabitant of Mumbai ]
Having a residential address at 1801, Tower ]
7, Runwal Greens, Mulund (W) Mumbai 400 ]
078 ] ...Respondent
Mr. Chirag Shah a/w Mr. Mayank Mishra, Mr. Harsh Pathak i/b
Durgaprasad Sabnis, for the Petitioner.
Mr. Prasanth Raju, for the Respondent.
CORAM : SHARMILA U. DESHMUKH
RESERVED ON : February 6th,2026
PRONOUNCED ON : March 25th, 2026
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JUDGMENT:
1. By this Petition filed under Section 34 of the Arbitration and
Conciliation Act, 1996 ( for short "Arbitration Act"), the challenge is to
the Award dated 6th May, 2025 passed by the Learned Sole Arbitrator
awarding sum of Rs 9,72,222/ alongwith interest.
CARBP(L)-24328-2025 (1).doc
2. The Petitioner is a registered stock broker with National Stock
Exchange of India Limited and Bombay Stock Exchange Limited (BSE).
The Respondent is a registered client of the Petitioner having entered
into formal broker client agreement as per the applicable regulations.
The dispute in the present case arose out of the discrepancy between
the trading terminal display, trade confirmations and final contract note
issued by the Petitioner. The final contract note reflected loss of Rs
11.25 lakhs which according to the Respondent constitutes unathorised
trades that were neither displayed on the trading terminal nor
mentioned in the trade confirmation.
3. On 12th July, 2024, the Respondent executed 9 online transactions
at BSE platform. During the trading session on 12 th July, 2024, a
connectivity/server issue occurred at BSE's F& O segment. It is the
Petitioner's case that due to the connectivity issue, the Respondent was
not receiving real time trade data from BSE along with trade placement
issue with one of the Trade ID for offline trades. There was continuous
correspondence via email with the BSE help desk and the technical issue
persisted till end of trading session and the Petitioner's system sent
trade confirmation on the basis of BSE's insufficient data. Later BSE
supplied the complete transaction details and accordingly contract note
was issued.
4. The Respondent's case is that the connectivity issue with BSE
CARBP(L)-24328-2025 (1).doc
occurred during 10.53 a.m. to 11.25 a.m. and after 11.25 a.m. all order
channels of BSE started functioning normally and all pending orders
with exchange were immediately matched. At the end of trading day,
the trade terminal and the trade confirmation sent by the Petitioner
were matching and there was discrepancy in the contract note sent later
in the evening.
5. Till September, 2024, no dispute was raised by the Respondent
and the Respondent continued to transact and trade from his trading
account held with the Petitioner. On 20 th September, 2024, a complaint
was filed by the Respondent with the Conciliation Forum which came to
be rejected. The Respondent invoked arbitration through the online
dispute resolution mechanism, and the Learned Arbitrator passed the
impugned Award on 6th May, 2025 directing the Petitioner to pay sum of
Rs. 9,72,222/- along with interest. Hence, the present petition has been
filed.
6. Learned counsel for the Petitioner submits that after period of
two months, the grievance was raised by the Respondent. He submits
that there were nine trades conducted by the Respondent and the
dispute is only about two trades, He submits that the confirmation
about these two trades came later, due to the technical glitch at the
BSE. He submits that there was no official announcement by the BSE
confirming the time period during which connectivity issues lasted and
CARBP(L)-24328-2025 (1).doc
the Learned Arbitrator relies upon social media accounts to hold that
connectivity issues lasted only for a period from 10:53 a.m. to 11.25 a.m.
He would further point out the e-mails sent by the Petitioner to the BSE
help desk stating that they were unable to download the complete
trades due to issue on the Exchange's end and calling upon them to
immediately resolve the issue. He would further submit that the
Learned Arbitrator has granted compensation for preventable losses
based on surmises.
7. He would submit that the Respondent while opening the account
expressly accepted under the risk disclosure document that brokers
would not be liable for system related failures of Exchange. He would
further submit that Securities and Exchange Board of India (SEBI)
master circular dated 17th May, 2023 and 22nd November, 2022 clarify
that liability for such technical malfunction rests with the Exchange. He
submits that the impugned Award fails to consider the evidence and
regulatory framework, and is therefore, perverse and opposed to the
public policy of India.
8. Per contra, learned counsel for the Respondent would submit that
it is the Petitioner's own internal failure that persisted long after the
glitch at BSE was resolved. He submits that the technical glitch occurred
at BSE on 12th July, 2024 between 10:53 a.m. to 11:25 a.m. in respect of
which the Respondent has not claimed any losses. He submits that post
CARBP(L)-24328-2025 (1).doc
resolution of technical glitch, the Respondent continued trading till
close of the market and the Petitioner's own trading terminal disclosed
a net loss of Rs.1.53 lakhs which was confirmed by the Petitioner's
official trade confirmation. He submits that, however, the contract note
issued later that evening reflected grossly inflated loss of Rs. 11.25
lakhs showing discrepancy of Rs. 9.72 lakhs which trades were never
reflected on the live trading terminal. He submits that after the
Petitioner's employees repeatedly assured a refund but failed to refund
for months, arbitration was initiated.
9. He submits that the SEBI master circular for stock brokers dated
17th May, 2023 provides that the order/trade confirmation should also
be sent to investors through email in addition to the other mode of
display of such confirmations on the real time basis on the brokers
website. He submits that the aforesaid obligation is mandatory and
requires real time or near real time display and confirmation of trades.
He submits that the Petitioner failed to provide real time trade
confirmation and visibility of executed trades even after the
connectivity issue was resolved which constitutes a breach of SEBI
master circular.
10. He would submit that the discrepancy of Rs. 9.72 lakhs arose from
unconfirmed and invisible trades that surfaced only in the end of the
day contract notes and as there was failure to provide real time trade
CARBP(L)-24328-2025 (1).doc
confirmation and visibility for some of the executed trades after 11:25
a.m., the Respondent was deprived of the right to take corrective action
and continued to trade on the belief that his losses were limited. He
submits that the SEBI (Stock Brokers) Regulations, 1992 mandates that
the broker shall act with due care and the master circular issued by SEBI
operationalizes these duties in the context of internet-based trading. He
submits that reliance placed on the internet-based trading clauses or
risk disclosures documents is wholly misconceived, as contractual terms
cannot override statutory obligation.
11. He submits that the Learned Arbitrator has found that the
Respondent has failed to produce any time stamped audit trails, system
logs or test certificates evidencing compliance with BSE circular V
1.6.10 and that the Respondent's reliance on ETI API manual version
1.5.7 was misplaced and outdated in as much as the governing circular
mandates implementation of error code 104 and a robust trade re-
conciliation mechanism. He submits that the Learned Arbitrator has
rightly rejected the plea of industry wide continuation of issue by taking
into consideration independent confirmations from other brokers that
normal trade flow had resumed after 11:25 a.m. He submits that the
issue had arisen post resolution of the technical glitch, and therefore,
failure was not on account of BSE.
12. He submits that the trades that surfaced for the first time only in
CARBP(L)-24328-2025 (1).doc
contract notes are unconfirmed trades. He submits that the findings of
the Learned Arbitrator are not perverse as the BSE official response on
Smart ODR dated 3rd October, 2024 confirmed that the exchange glitch
was only limited to morning hours which is also supported by the
independent social media post from other brokers. He submits that
there is no evidence produced by the Petitioner to support its claim of a
day long glitch.
13. Rival contentions now fall for determination:
14. The Respondent claims unauthorised trade in his account due to
discrepancy in the trade terminal display, trade confirmation as against
the contract note issued. The Petitioner claims non receipt of real time
trade data details and inability to download complete trade details due
to technical glitch at the Exchange resulting in actual transaction details
being supplied by BSE later resulting in discrepancy.
15. The Learned Arbitrator has formulated the correct proposition on
the issue of technical failure and regulatory breach. The impugned
Award takes into consideration the evidence showing non receipt of
trade confirmations post 11.25 a.m. on 12 th July, 2024. The trade log
submitted the Respondent was not accepted in the absence of
validation by the BSE. The Learned Arbitrator recorded a finding of non
compliance with BSE Circular V 1.6.10 which mandates implementation
of Error Code 104 and robust trade reconciliation mechanism and that
CARBP(L)-24328-2025 (1).doc
the Petitioner's reliance on ETI API Manual Version 1.5.7 is outdated. On
the basis of BSE's response dated 3 rd October, 2024 on SMARTODR
Portal, it rejected the Petitioner's plea of day long glitch noting that the
connectivity issue lasted only from 10.53 am to 11.25 am and issues post
that were due to brokers internal systems. The Learned Arbitrator has
also considered the additional defences raised by way of submitting
internal emails indicating dependency on external APRI vendor XTS for
implementation of Error 104 and rejected the communications as it did
not include timestamped implementation proof, or logs confirming
timely integration before 12th July, 2024.
16. The findings of the Learned Arbitrator are supported by the
material produced by the Respondent herein in form of trading
terminal screenshot and screen recording showing Respondent's
account with net loss of Rs. 1.53 lakhs at the market close on 12 th July,
2024, trade confirmation e-mail at 3:57 p.m. confirming the net loss of
Rs. 1.53 lakhs and the contract note showing loss of Rs. 11.25 lakhs,
BSE's official response via ODR mechanism confirming that the
connectivity issue was limited only to morning hours and other social
media post confirming that glitch was only for the period from 10:53
a.m. to 11:25 a.m.
17. In so far as the findings of the Learned Arbitrator on the duration
CARBP(L)-24328-2025 (1).doc
of connectivity issue is concerned, the finding is supported by the
material on record including the BSE's response on SMARTODR Portal.
The contention of Learned Counsel for Petitioner that the finding about
duration of connectivity issue was based only on social media accounts
cannot be accepted as the Learned Arbitrator has made specific
reference to BSE's response and has isolated the liability of
Respondent.
18. The statement of defence relies upon the emails addressed to
the BSE to demonstrate that no real time trade data details were
received by the Petitioner. The emails produced by the Petitioner speaks
of inability of Petitioner to download the complete trades claiming issue
on the Exchange end. On the other hand, the Respondent has produced
BSE's official response via ODR mechanism confirming limited duration
of connectivity issue as far as the Exchange is concerned. The dispute
thus involved two issues : as to the duration of connectivity glitch and as
to the inability of the Petitioner to download the complete trades. As
far as the first issue of connectivity is concerned, the Learned Arbitrator
has arrived at a finding of fact based on the evidence on record about
limited duration of connectivity issue, which is not demonstrated to
suffer from perversity particularly when the BSE's official response is
taken into consideration.
19. As to the inability of the Petitioner to download the complete
CARBP(L)-24328-2025 (1).doc
trades is concerned, the Learned Arbitrator has found non compliance
with the BSE's circular V 1.6.10 and outdated systems of the Petitioner.
The additional documents produced by the Petitioner has been
considered by the Learned Arbitrator to hold that these
communications did not include time stamped implementation proof
indicating non compliance on part of the Petitioner to implement Error
Code 104. The Learned Arbitrator has rightly isolated the Petitioner's
liability on account of failure to comply with BSE's circular.
20. The Petitioner relies on various clauses of the risk disclosure
document which broadly is an agreement preventing the client from
staking any claim against the Exchange or the Member on account of
any suspension, interruption, on availability or malfunctioning of the
Member's IBT System. Perusal of the Statement of Defence does not
indicate that the risk disclosure document was placed before the
Learned Arbitrator. In any event, considering the applicability of BSE
Circular, in event the Petitioner's system was compliant with the BSE
circular and despite thereof, the Petitioner would have been unable to
fetch real time trade details, the clauses of the risk disclosure document
would have come to the aid of the Petitioner. The Petitioner seeks to lay
blame on the connectivity issue with the BSE and as the connectivity
issue was of short duration, it was the Petitioner's system which led to
the inability of the Petitioner to download the complete trades.
CARBP(L)-24328-2025 (1).doc
Resultantly, the Learned Arbitrator has rightly held that the issues post
the connectivity issue being resolved, was due to the Petitioner's
internal systems. Despite the technical issue being resolved at 11.25 am,
the Petitioner failed to provide real time trade confirmation violating
the SEBI Circulars, the applicability whereof is not disputed by the
Petitioners.
21. The decision of Securities Appellate Tribunal in case of Mohan
Kumar Mittal vs SEBI And Ors1 relied upon by the Petitioner assists the
case of the Respondent by confirming that the glitch lasted for about 29
minutes on 12th July, 2024 and there were five gateways reporting loss
of packets from matching engines out of which four gateways recovered
automatically within 2 minutes and one gateway had to be manually
restarted at 11.22 am. In that case the client sought damages which was
contested as the same can be awarded only by civil court. The client's
case was that as per broker's version the glitch was for two hours, which
the Appellate Tribunal held needs to be proved. The facts of the said
case are different as damages was sought against the Exchange. The
issue in present case is post resolution of the glitch, the failure of the
broker to provide real time trade confirmations.
22. Insofar as the losses are concerned, it held that the Respondent
incurred preventable loss of Rs. 5.27 lakhs due to lack of confirmation
that could enabled exit at viable price and that duplicate sale order also
1 Appeal No. 436 of 2025 decided on 30th October, 2025.
CARBP(L)-24328-2025 (1).doc
unconfirmed blocked approximately 45% of available margin resulting
in Rs. 3.86 lakhs lost opportunity and directed payment of Rs. 9,72,222/-.
There are no submissions canvassed to assail the quantification.
23. The Learned Arbitrator has rightly negated the Petitioner's
contentions which seeks to lay the blame on the Exchange for failure to
timely upload the full and correct transaction logs. The reliance placed
only on the e-mails with the BSE are not sufficient to demonstrate that
the Petitioner's failure to provide real time confirmation and visibility of
the executed trade was by reason of day long technical glitch linked to
the connectivity issue with BSE. The view taken by the Learned
Arbitrator is plausible view based on the relevant material on record,
which does not deserve any interference under Section 34 of Arbitration
Act.
24. Resultantly, the Petition fails and stands dismissed.
(SHARMILA U. DESHMUKH, J.)
