The Bombay High Court has set aside an appellate arbitral award upholding a Rs 15.93 lakh award against 5 Paisa Capital, finding that the tribunal failed to decide key issues in a dispute over trading losses and a technical glitch. The parties may initiate fresh arbitration proceedings.
Mumbai: Reproducing the parties’ submissions is not a substitute for deciding their dispute, the Bombay High Court has held while allowing 5 Paisa Capital Limited’s challenge to an award in favour of investor Ankit Agarwal.
Justice Aarti Sathe, in a judgment pronounced on October 30, 2026, found that the appellate arbitral tribunal had left material questions unanswered, including whether a technical glitch caused the investor’s losses and whether the broker was entitled to square off his positions under its risk policy.
The Court intervened under Section 34 of the Arbitration and Conciliation Act, 1996 because the missing findings went to the root of the dispute. It did not decide who ultimately must bear the trading losses.
A dispute over excess margins and trading losses
The dispute concerned trades during September 18 to October 4, 2018, when a software glitch was said to have reflected excess holdings and made additional trading margins available in the investor’s account.
5 Paisa invoked arbitration to recover Rs 6,53,166. Agarwal disputed the demand and alleged unauthorised trades and losses. The sole arbitrator rejected the broker’s claim and partly allowed the investor’s counterclaim, awarding Rs 14,30,509 and a further Rs 1,62,162 towards 1,260 bonus shares of Adani Gas Ltd.—a total of Rs 15,92,671.
The award dated June 6, 2019 was upheld by the appellate arbitral tribunal on October 17, 2019. The broker then challenged the awards before the High Court.
The rival arguments
The broker argued that the investor executed the trades using his own credentials, that the square-offs followed the agreed risk policy, and that the awards did not establish a connection between the glitch and the losses. It also disputed the basis for awarding compensation for the bonus shares.
Agarwal maintained that he depended on the broker’s trading platform, that positions were sold without proper notice, and that the losses flowed from the broker’s defaults. He argued that the awards had considered the evidence and that Section 34 did not permit the High Court to reassess it.
Missing findings, not merely brief reasons
In paragraph 19, Justice Sathe distinguished inadequate reasoning from the absence of findings on the dispute itself. The appellate award did not explain what led the tribunal to accept one contention and reject another, and the High Court could not supply those missing findings by independently deciding the merits.
Paragraph 20 identified eight unanswered questions. They included whether the glitch actually provided excess margin, whether the disputed trades and losses were attributable to it, what notification duties arose under the member-client agreement, and whether timely communication could have prevented or reduced the losses.
The tribunal also had to address whether both parties’ failure to report the problem justified placing the entire loss on the broker; the disputed explanation of an incorrect email address; and whether the risk policy authorised the square-offs and sale of shares.
The Court concluded that these were material issues requiring adjudication. Its intervention therefore rested on the absence of findings, rather than a preference for a different assessment of the evidence.
Fresh arbitration remains open
Relying on I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121, the Court explained that missing findings on contentious issues cannot be treated simply as gaps in reasoning to be filled by sending the award back. It held that the defect amounted to patent illegality under Section 34(2A).
In paragraph 26, the Court set aside the appellate award upholding the June 6, 2019 award. It directed release of any amount deposited in Court within one month of the judgment’s upload, allowed the petition without costs, and disposed of any surviving interim applications.
Both parties were left free to initiate fresh arbitration in accordance with law. The judgment thus removes the challenged award while leaving the underlying claims and responsibility for the losses to be adjudicated.
Case Title: 5 Paisa Capital Limited v. Ankit Agarwal
Case Number: Arbitration Petition No. 380 of 2020
Court: Bombay High Court, Ordinary Original Civil Jurisdiction
Bench: Justice Aarti Sathe
Citation: 2026:BHC-OS:23549
Reserved: October 1, 2026
Pronounced: October 30, 2026
Status: Section 34 petition allowed; appellate award set aside; liberty for fresh arbitration