TaxTMI 
TaxTMI 
2026 (8) TMI 1401
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....its Master Circular dated 31st July 2023 ("Master Circular"). By the impugned communications, the Petitioner has, inter alia, been called upon to participate in the arbitral proceedings initiated by Respondent No. 2 and to comply with the requirements relating to payment of arbitral fees. 2. The Master Circular seeks to streamline the existing dispute-resolution mechanism in the Indian securities market under the aegis of Stock Exchanges and Depositories, collectively referred to as Market Infrastructure Institutions ("MIIs"), by establishing a common Online Dispute Resolution Portal ("ODR Portal") which provides for resolution of disputes through online conciliation and online arbitration. 3. Respondent No. 1, Metropolitan Stock Exchange of India Limited ("MSE"), is an MII participating in the framework established under the Master Circular. Respondent No. 2 is the complainant ("Complainant") who has raised the dispute against the Petitioner. Respondent No. 3, Jupitice Justice Technology Private Limited ("ODR Institution"), is an ODR Institution empanelled by MSE and is engaged in facilitating and administering online alternative dispute resolution under the ODR framework. ....
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.... been returned to the original shareholders. (g) By Circular dated 3rd June 2011, SEBI introduced, with effect from 20th May 2011, an electronic investor grievance-redressal mechanism known as the SEBI Complaints Redress System ("SCORES Portal"). (h) More than two decades after the Bonus Issue, the Complainant commenced correspondence with the Petitioner in 2014 seeking details of the Bonus Shares and the corporate benefits allegedly accruing thereon. The Petitioner is stated to have responded and also requested the original shareholders to return the Bonus Shares. No response is stated to have been received from the original shareholders. (i) The Complainant thereafter asserted entitlement to the Bonus Shares and the corporate benefits accruing thereon. In 2015, he is stated to have produced a Power of Attorney allegedly executed by Mr. Baid in his favour, though the Petitioner disputes having been furnished a copy thereof. (j) The Petitioner, in response, provided the Complainant with details of the original shareholders and requested him to pursue the matter with them. (k) In 2016, one Mr. V. Narayanan, claiming to be the legal heir o....
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....xchange, but stating that the complaint had been allotted to it through the ODR Portal on a round-robin basis in accordance with the Master Circular. (s) On 28th October 2024, the Petitioner addressed communications to SEBI setting out the history of the complaints lodged by the Complainant before various stock exchanges and requesting SEBI to examine the matter. It is stated that SEBI thereafter discussed the issue telephonically with the Petitioner's Compliance Officer and informed the Petitioner that SEBI was not empowered to grant an entity-specific exemption or adjudicate the objections raised by the Petitioner, which could be urged before the appropriate arbitral forum. (t) Thereafter, by an email dated 26th November 2024, MSE, through Respondent No. 3, informed the Petitioner that the Complainant had initiated arbitration and called upon the Petitioner to comply with the applicable requirements, including payment of the arbitration fees. (u) The Petitioner, by communication dated 13th January 2025, called upon Respondent Nos. 1 and 3 to cease further proceedings. (v) The Petitioner has thereafter approached this Court by the present Writ P....
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....ording to the Petitioner, the complaints have repeatedly been rejected on grounds including limitation and maintainability. The present complaint is therefore contended to be a further attempt to reopen an issue which has already been considered. 12. Mr. Setalvad submits that the complaint and the consequential arbitral proceedings are barred by principles analogous to res judicata and constitute an abuse of process. He argues that the Complainant ought not to be permitted to repeatedly invoke the ODR mechanism in respect of the same cause of action. 13. He further submits that although the Complainant describes himself as a share broker, he has instituted the complaints in his own name asserting rights over the Base Shares and Bonus Shares. He submits that there is no valid document evidencing transfer of the Base Shares by the registered shareholder, Mr. Baid, in favour of the Complainant. According to him, the Complainant therefore lacks locus to assert a personal claim against the Petitioner in respect of the shares or the corporate benefits allegedly accruing thereon. 14. It is lastly submitted that the Petitioner is being compelled to deposit the requisite amount and....
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....ed action is demonstrably without authority, contrary to the governing regulatory framework, or otherwise suffers from a jurisdictional defect of such patent character as would warrant intervention at the threshold. The Court is not, at this stage, called upon to determine the merits of the dispute viz. substantive entitlement of the Complainant to the Bonus Shares or the corporate benefits claimed by him. Nor is it appropriate for this Court, in these proceedings, to adjudicate disputed questions concerning limitation, locus, maintainability, res judicata or the effect of the previous complaints, unless the material on record establishes a clear and patent bar to the proceedings themselves. 20. It would therefore be appropriate first to examine the architecture of the ODR mechanism under the Master Circular and, in particular, the provisions governing initiation, allocation, conciliation and arbitration. 21. The Master Circular establishes a structured mechanism for resolution of disputes arising between investors or clients and listed companies and specified intermediaries or regulated entities in the securities market. The mechanism contemplates escalation of an unresolved....
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....r's securities are not listed on MSE cannot, standing alone, be treated as conclusively establishing the absence of authority of every participant in the ODR mechanism. The question is whether, on a proper application of paragraph 16 and the facts relevant to the allocation, the reference to MSE was impermissible. 25. We are also required to consider the consequence of the subsequent transition from conciliation to arbitration. Paragraph 20(b) of the Master Circular provides that, where the dispute remains unresolved after conciliation, the investor/client may pursue online arbitration, subject to payment of the applicable fees. The provision further states that the Market Participant against whom arbitration is pursued shall participate in the arbitration process and prescribes the consequential obligations regarding deposit of the admissible claim value and payment of arbitration fees. The language employed in paragraph 20(b) is undoubtedly mandatory. Once a dispute has validly entered the ODR framework and the conciliation process has concluded without resolution, the Market Participant cannot, merely by expressing its disagreement with the claim, elect not to participate in ....
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....inant has approached several authorities on the same subject cannot, however, be brushed aside. Repeated invocation of a statutory or regulatory dispute-resolution mechanism cannot be permitted to become a means of indefinitely reopening concluded proceedings. But whether that principle applies on the facts of the present case, and what consequence should follow from the earlier proceedings, are matters which can appropriately be placed before the arbitral forum. 30. We also find no merit, at this stage, in the submission that the mere age of the underlying transaction renders the present arbitral proceedings non-est. The Master Circular itself contains a specific provision concerning limitation. Whether the Complainant's claim satisfies that requirement is therefore a matter which can be tested by applying paragraph 14 to the facts of the claim. The fact that the underlying transaction dates back to 1989 does not, by itself, permit this Court to dispense with the adjudicatory process contemplated by the Master Circular. 31. The submission regarding locus stands on substantially the same footing. The Petitioner contends that the Complainant is not the registered shareholder a....