Karnataka High Court
Icici Securities Limited vs Priti Bhargava on 28 August, 2025
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NC: 2025:KHC:33275-DB
COMAP No. 440 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF AUGUST, 2025
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C M JOSHI
COMMERCIAL APPEAL NO. 440 OF 2025
BETWEEN:
ICICI SECURITIES LIMITED,
A COMPANY INCORPORATED UNDER THE
COMPANIES ACT, 1956, WITH ITS REGISTERED
OFFICE AT: ICICI VENTURE HOUSE,
APPASAHEB MARATHE MARG,
PRABHADEVI, MUMBAI 400 025,
REP. BY ITS ZONAL HEAD (EQUITY
RELATIONSHIP GROUP) OF BANGALORE
MOHAMED BILAL SHAH, HAVING EMAIL
ADDRESS: [email protected]
...APPELLANT
(BY SRI IYER BALAJI HARISH, ADVOCATE)
Digitally signed AND:
by NANDINI R
Location:
HIGH COURT 1. PRITI BHARGAVA,
OF W/O DEEPAK BHARGAVA,
KARNATAKA ADULT, INDIAN CITIZEN,
HAVING PAN ANFPB8572N,
R/AT C-404, RAINBOW WATERFRONT,
UTTARAHALLI MAIN ROAD, BANGALORE-560 061,
HAVING EMAIL ADDRESSES:
[email protected];
BHARGAVADEEPAK2501 @GMAIL.COM.
2. NATIONAL STOCK EXCHANGE OF INDIA LIMITED,
A COMPANY INCORPORATED UNDER THE COMPANIES
ACT, 1956, HAVING ITS REGISTERED OFFICE AT
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NC: 2025:KHC:33275-DB
COMAP No. 440 of 2025
HC-KAR
G BLOCK, BANDRA-KURLA COMPLEX, BANDRA (E),
MUMBAI-400 051.
HAVING EMAIL ADDRESS: SECRETARIALDEPT
@NSE.COM.IN.
...RESPONDENTS
(BY SRI RAGHURAM CADAMBI, ADVOCATE FOR C/R-1)
THIS COMAP / COMMERCIAL APPEAL IS FILED UNDER
SECTION 13(1A) OF THE COMMERCIAL COURTS ACT, PRAYING (1)
SET ASIDE THE IMPUGNED ORDER DATED 13.06.2025 PASSED BY
THE LXXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, AT
BANGALORE IN COMAP NO.20/2025 PRODUCED AT ANNEXURE - A
ETC.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C M JOSHI
ORAL JUDGMENT
(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
1. Issue notice. Sri.Iyer Balaji Harish, learned counsel accepts notice for respondent No.1.
2. With the consent of the learned counsel, the appeal is taken up for final hearing.
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NC: 2025:KHC:33275-DB COMAP No. 440 of 2025 HC-KAR
3. The appellant has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [A&C Act] impugning an order dated 13.06.2025 passed by the learned LXXXV Additional City Civil and Session Judge, Bengaluru [Commercial Court] in Com.A.P.No.20/2025. The appellant had preferred the said application under Section 34 of the A&C Act for setting aside an arbitral award dated 07.11.2024 [hereinafter referred to as 'the Impugned Award'] passed by the Arbitral Tribunal comprising of a Sole Arbitrator.
4. Respondent No.1 [hereinafter referred to as 'the claimant'] had raised a dispute with the appellant with regard to the premature squaring off of trading positions in the Future and Options [F&O] segment. The appellant is a member of the National Stock Exchange of India Limited [NSE]. The claimant was a client of the appellant at the material time and used to regularly trade in securities through the appellant since 11.04.2018. She had been trading in the F&O segment with effect from 23.12.2019. The trading instructions were sent online through an App provided by the appellant.
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NC: 2025:KHC:33275-DB COMAP No. 440 of 2025 HC-KAR
5. There is no dispute that the claimant was required to maintain adequate margins with regard to the trading positions in the F&O segment. The dispute arises in respect of a trading position held as on 04.06.2024. It is the appellant's case that on that day there was high volatility in the prices of securities listed on the stock exchange on account of the Lok-Sabha Elections. The claimant had deposited a margin of ₹35,70,150/- as commensurate with the prices as at 12.07 pm on 04.06.2024. However, 20 minutes later at about 12.27 pm, the total margin requirement had increased to ₹53,13,814/- due to price fluctuation. Therefore, the margins deposited by the claimant fell short of the required margins.
6. The appellant had in accordance with its policy for mitigating risks, squared off the trading position of the claimant prematurely on account of the margin shortfall of ₹17,43,663/-. According to the claimant, the premature closure of positions, without informing the claimant had resulted in a loss. And, the appellant was liable to compensate the claimant for the same. The appellant disputes that the short fall in the margin was not communicated to the claimant. According to the appellant, the fact that margin had fallen short was -5- NC: 2025:KHC:33275-DB COMAP No. 440 of 2025 HC-KAR reflected by the colour coding on the app used by the claimant for online trading.
7. It is common ground that the Circular dated 07.09.2016 issued by the Securities and Exchange Board of India [SEBI] regarding the obligation to maintain margins is applicable. And, the claimant was required to make good the shortfall in the margins as soon as the margin calls are made. The relevant extract of the said circular, as set out in paragraph 14 of the impugned judgment, is reproduced below:
"14. xxx ii. The members are required to collect upfront initial margins from their clients. The members will have time till 'T+2' working days to collect margins (except initialmargins) from their clients. (The clients must ensure that the initial margins are paid in advance of trade and other margins are paid as soon as margin calls are made by Exchanges/Members. The period of T+2 days has been allowed to members to collect margin from clients taking into account the practical difficulties often faced by them only for the purpose of levy of penalty and it should not be construed that clients have been allowed 2 days to pay margin due from them.) iii. The members shall report to the Exchange on T + 5 day the actual short-collection/non-collection of all margins from clients."
8. The Arbitral Tribunal found that the appellant had failed to establish that it had made margin calls to the claimant before the position was squared off. Undisputedly, the appellant had failed to -6- NC: 2025:KHC:33275-DB COMAP No. 440 of 2025 HC-KAR issue a margin call before squaring off the trading positions, the claimant would be justified in making a claim for the loss suffered by her. However, notwithstanding the finding that the appellant had not provided any proof to show that it had given a margin call, the Arbitral Tribunal has also held that the claimant was required to be vigilant with regard to her trades to avoid margin shortfalls. The relevant extract of the impugned award is set out below:
"2. "The members are required to collect upfront initial margins from their clients. The members will have time till + 2 working days to collect margins (except initial margins) from their clients. (The clients must ensure that the initial margins are paid in advance of trade and other margins are paid as soon as margins are made by Exchanges/Members. The T+2 days has been allowed to members to collect margin from clients taking into account the practical difficulties often faced by them only for the purpose of levy of penalty and it should be construed that clients have been allowed two days to pay margin due from them)
3. Similarly, para 3 (xiii) of the said Circular also prescribes as follows:
"The Exchange shall direct their members to monitor trades of every client. Suitable mechanism may be put in place to intimate the clients as and when the margins are used up to an appropriate level as considered fit"
4. So, as seen from the above, margin calls have to be given to the clients by the Respondent as and when required to avoid squaring off their position. In the present case the Respondent has not provided any proof to show that they have given margin calls to the Applicant before her position was squared off.
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5. Similarly the Applicant cannot put the entire blame on the Respondent for the squaring off her position, as online trading platform avoids unauthorized trading but also require the Applicant to keep vigilant on her trade to avoid margin shortfalls and replenish margins and M2M loses through her online banking system available as there is no human interference of squaring off the position, as it was done by the system itself. But in this case the Applicant has failed to follow her position and replenish the margin shortfalls before squaring off her position by the system. So, it is evident that the Applicant also is responsible for the loss sustained by her.
6. In view of the above findings, I am of the considered view and decision that both the Applicant and the Respondent are responsible for the loss sustained by the Applicant and as such they have to share the loss equally since the Applicant fails to follow her position vigilantly, and the Respondent failed to give margin calls to the Applicant before the squaring off the position of the Applicant by the system."
9. On the basis of the aforesaid finding, the Arbitral Tribunal has awarded a sum of ₹10,00,000/- along with interests.
10. As noted above, the principal dispute centers around whether the margin calls were communicated or not. The Arbitral Tribunal has faulted the appellant in not communicating the shortfall in margins to the claimant. Thus, the claimant's claim for loss on account of premature closure of trading provisions was justified. Therefore, award of such loss cannot be interfered with.
11. The Arbitral Tribunal has also attributed certain negligence on the part of the claimant and had therefore, reduced the claim for -8- NC: 2025:KHC:33275-DB COMAP No. 440 of 2025 HC-KAR loss to ₹10,00,000/-. The claimant has not challenged the impugned award. Thus, it is not necessary for us to examine whether reduction in the quantum of damages incurred by the claimant, is sustainable. In view of the findings that the appellant had not expressly communicated the margin calls, we are unable to accept the award suffers from any patent illegality.
12. In the aforesaid view, the impugned award cannot be interfered with on the grounds as set out in Section 34 of the A&C Act. The appeal is accordingly dismissed.
Sd/-
(VIBHU BAKHRU) CHIEF JUSTICE Sd/-
(C M JOSHI) JUDGE NR/-
List No.: 1 Sl No.: 17