The Supreme Court on Friday issued notice on a special leave petition filed by Central Depository Services (India) Ltd. (CDSL) challenging a Bombay High Court judgment holding it liable to compensate an investor whose shares were fraudulently transferred and pledged by its depository participant. The Court also stayed the operation of the Division Bench judgment dated July 2, 2026.

The matter was heard by a Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran.

The dispute arises from the alleged fraud committed by BRH Wealth Kreators Ltd., which acted as both the respondent investor’s stockbroker and a depository participant of CDSL. According to the investor, respondent, a 72-year-old widow, BRH transferred shares from her dormant demat account without her authorisation and pledged them with HDFC Bank to secure its own borrowings. After BRH defaulted, the bank invoked the pledge and sold the shares in the open market, resulting in the loss of her entire investment.

An arbitral tribunal constituted under the CDSL Bye-laws held that CDSL was liable under Section 16 of the Depositories Act, 1996 for the negligence of its depository participant and directed it to pay the investor ?86,02,768 along with interest at 9% per annum. The award was subsequently upheld by a Single Judge of the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996, and later affirmed by a Division Bench under Section 37.

Appearing for CDSL, Solicitor General Tushar Mehta submitted that the case raised issues of considerable significance for the functioning of the country’s securities market and the depository system. At the outset of the hearing, the Solicitor General handed over a demand draft covering the arbitral award amount together with post-award interest to counsel appearing for the respondent investor.

Taking note of the submissions, the Supreme Court issued notice on the petition and stayed the operation of the impugned Division Bench judgment. The Court also granted liberty to CDSL to recover the amount from BRH Wealth Kreators Ltd., the depository participant alleged to have committed the fraud.