Demat Share Fraud: Bombay High Court Delivers Justice to Woman

After the death of her husband, a woman who was already in deep emotional distress suffered a major financial loss due to negligence within the stock market system. She fought for justice after shares from her demat account were transferred without her consent and subsequently seized and sold by banks. Ultimately, the Bombay High Court ruled in her favour, clearly stating that depositories are accountable for the mistakes and negligence of their depository participants (DPs). The court directed that shares worth Rs. 86 lakh be paid to her along with 9 percent interest.

In this case, Mumbai-based Daksha Narendra Bhavsaar’s demat account shares were unlawfully transferred by BRH Wealth Creators to its own accounts without authorisation. The firm then pledged those shares to obtain bank loans and failed to repay them, leading the bank to sell the shares. It later emerged that similar fraudulent practices had affected thousands of investors.

After discovering that her shares had gone missing, Daksha first approached the National Stock Exchange (NSE) and later the Securities Appellate Tribunal. Although CDSL challenged the tribunal’s order in the Bombay High Court, the court rejected its arguments and upheld the decision. The ruling reaffirmed that depositories are liable for losses caused by the negligence of their DPs. Market experts believe this landmark judgment will provide crucial guidance and relief to investors who have suffered due to the misconduct of stockbrokers and depository institutions.