Authority: High Court of Judicature at Bombay

Order Date: 21 August 2026

Case Overview

  • Petitioner: ITC Limited, a company under the Companies Act 2013, with registered office in Kolkata and local office in Mumbai.
  • Respondents: (1) Metropolitan Stock Exchange of India Limited (MSE); (2) Mr. Ashok Mootha (complainant); (3) Jupitice Justice Technology Private Ltd (ODR Institution); (4) Securities and Exchange Board of India (SEBI).
  • The writ petition under Article 226 challenged SEBI’s communications dated 24 Oct 2024 and 26 Nov 2024 issued under the Online Dispute Resolution (ODR) mechanism introduced by SEBI’s Master Circular dated 31 July 2023.
  • The underlying dispute traces back to 1989 when Mr. Prakash Chand Baid purchased 85 shares of ITC, received 85 bonus shares on 21 Sept 1989, and later transferred the base shares to Mr. N. Ramaswamy. Subsequent attempts by the complainant (a stock broker) to claim the bonus shares led to multiple complaints filed on SEBI’s SCORES portal (2014‑2021) and later on the ODR portal (2023‑2024).
  • The complainant’s fourteenth ODR complaint was allotted to MSE on 25 Aug 2024; a Conciliation Officer’s report dated 16 Oct 2024 recorded the claim as time‑barred, ending conciliation without settlement.
  • On 26 Nov 2024 MSE, through the ODR Institution, informed ITC that arbitration had been initiated and demanded payment of arbitration fees.
  • ITC argued that MSE lacks jurisdiction because its securities are not listed on MSE, that the claim is barred by limitation, that the complainant lacks locus, and that repeated ODR filings constitute an abuse of process.
  • The respondents contended that the petition sought a blanket prohibition on the round‑robin allocation mechanism, which would undermine SEBI’s uniform dispute‑resolution framework.

Court’s Reasoning

  • The Court examined the architecture of the ODR mechanism, focusing on Paragraph 14 (limitation), Paragraph 16 (allocation), and Paragraph 20(b) (mandatory participation in arbitration) of the Master Circular.
  • It held that a limitation objection, while substantive, does not render the initiation of arbitration a nullity; such objections are to be decided by the arbitral forum.
  • The round‑robin allocation under Paragraph 16 must be read together with the qualification in 16(a) that complaints be referred to the ODR Institution empanelled by the relevant Stock Exchange. The Court found that the mere fact that ITC’s securities are not listed on MSE is not, by itself, a patent jurisdictional defect.
  • The Court emphasized that participation in arbitration is mandatory once a dispute has validly entered the ODR framework, but this does not waive the petitioner’s right to raise jurisdictional, limitation, locus, maintainability, res judicata, abuse of process, or arbitrability objections before the arbitral forum.
  • The Court declined to adjudicate the merits of the share entitlement claim, the applicability of limitation, or the existence of res judicata, reserving those issues for the arbitral proceedings.

Final Outcome

  • The impugned communications dated 24 Oct 2024 and 26 Nov 2024 are not void; ITC must comply with the requirement to pay the applicable arbitration fees within 14 days of the order.
  • Compliance is ordered “without prejudice” to ITC’s right to raise all substantive objections in the arbitration.
  • The writ petition is dismissed; no order as to costs.

Topics: Online Dispute Resolution, Capital Markets Regulation