Nimish Chandulal Shah and Ors. v. Central Depository Services (India) Ltd.

13) Mr. Tamboly would submit that in identical circumstances, the Arbitral Tribunal in case of another client of Anugrah- Mrs. Karuna Gupta has held exactly to the contrary. That in arbitral proceedings initiated by Mrs. Karuna Gupta, the Arbitral Tribunal has rejected the objection of forum shopping/doctrine of election raised by CDSL and has not only agitated the dispute on merits, but has granted the relief of restoration of securities/payment of value of securities to the investors. That two out of the three members of the Arbitral Tribunal in the case of Petitioners and Mrs. Karuna Gupta are the same. That in Mrs. Karuna Gupta arbitration proceedings, the Arbitral Tribunal has held that outcome of Edelweiss proceedings has no connection with the liability of CDSL as a depository towards the client of depository participant. Similar type of undertaking submitted by Mrs. Karuna Gupta of paying back monies to CDSL upon receipt thereof by Edelweiss has been accepted by the Arbitral Tribunal in that case. That recording of diametrically opposite findings by the Arbitral Tribunal in two identical cases would constitute patent illegality.

14) Mr. Tamboly would conclude by submitting that the impugned Award is perverse as no prudent man would come to the conclusion arrived at by the Arbitral Tribunal. That the same is contrary to the public policy of India as Petitioners have been prevented from exercising their rights arising out of statutory indemnity under Section 16 of the Depositories Act, 1966. That diametrically opposite views are expressed by majority constituents of Arbitral Tribunal in two cases. That the Award is patently illegal as it seeks to preclude Petitioners from exercising their statutory rights. Mr. Tamboly would accordingly pray for setting aside the impugned Award in order to enable the Petitioners to prosecute their claims on merits before the Tribunal.

15) The Petition is opposed by Mr. Kadam, the learned counsel appearing for the Respondent-CDSL submitting that the view adopted by the Arbitral Tribunal is a rational and plausible one and cannot be interfered with under narrow grounds available under Section 34 of the Arbitration Act. That the case involves unauthorised transfer of securities kept as collaterals by Anugrah to Edelweiss. That Anugrah had defaulted in maintaining requisite margin monies with Edelweiss and to recover the deficit in margin monies, Anugrah let Edelweiss to sell the shares of various investors including Petitioners. That Edelweiss carried out necessary verification as to whether the shares were owned by Anugrah or whether the sold shares were kept as collaterals in receipt of margin money obligations arising out of particular clients. Thus, the case involves unauthorised sale of shares of clients of Anugrah by the Clearing Member (Edelweiss), though those clients did not owe anything to Anugrah or Edelweiss. That CDSL did not have any role to play in this transaction and Anugrah has not acted in its capacity as Depository Participant for the purpose of invoking statutory indemnity under Section 16 of the Depositories Act.

16) Mr. Kadam would further submit that Petitioners rightly conceived the unauthorised transactions by Anugrah and Edelweiss and pursued their remedies against Edelweiss. That the reliefs claimed in the Intervention Application filed before SAT and the relief claimed in Statement of Claim before the Arbitral Tribunal are similar, if not identical. That therefore Petitioners cannot be permitted to prosecute multiple remedies in respect of the same cause of act and for seeking same prayers.

17) Mr. Kadam would further submit that in the Statement of Claim filed by the Petitioners, they had suppressed filing of intervention application by Petitioner No.1 before SAT. That therefore Tribunal’s finding of subterfuge is clearly justified. Notably, Petitioners disclosed filing of Intervention Application only after Respondents raised an objection. The factor of non-filing of intervention application by Petitioner Nos.[2] and 3 is immaterial as they have joined together with Petitioner No.1 in filing a common claim. Therefore, Petitioners cannot take refuge in the fact that Petitioners Nos.[2] and 3 did not filed any Intervention Application. That interest of Petitioner Nos.[2] and 3 were being represented by Petitioner No.1 before SAT.

18) Mr. Kadam would further submit that initiation of arbitral proceedings against the CDSL amounts to abuse of legal process depicting a classic instance of forum shopping. Despite having obtained relief from one forum against Edelweiss, Petitioners have filed another proceedings before another forum against another party seeking the same relief. Once the Petitioners have elected to adopt the position that Edelweiss was responsible for the injury suffered by them due to illegal sale of their securities, they are estopped from holding any other party responsible for the same injury. He would submit that Petitioner’s contention of absence of functional similarity between SAT’s appeal and arbitration proceedings, is an artificial distinction. Since the relief claimed in both the proceedings is identical, functional similarity between the two proceedings is inevitable.

19) That the Arbitral Tribunal has rightly relied upon judgment of the Apex Court in UOI vs. Cipla Limited (supra). Mr. Kadam would further submit that Petitioner’s reliance on arbitral award in the case of Mrs. Karuna Gupta is utterly misplaced as arbitration between the contracting parties is a confidential proceeding and an award passed in such arbitration is neither binding in other proceedings nor can be relied upon for any other purpose in relation to other proceedings. He would rely upon judgment of the Calcutta High Court in The Board of Trustees of the Port of Kolkata Versus. Louis Dreyfus Armatures SAS and Others[6]. He relies upon provisions of Section 34(2) of the Arbitration Act in support of his contention that an application for setting aside the arbitral award must be confined to the records produced and submissions made before the Arbitral Tribunal. That an award cannot be nullified on the basis of something which was never a part of arbitral proceedings. That Award passed in the case of Mrs. Karuna Gupta is produced for the first time before this Court, that too by way of rejoinder.

20) Mr. Kadam would further submit that the factual context underlying Mrs. Karuna Gupta Award is materially different from the present dispute as Mrs. Karuna Gupta had not filed any intervention application before SAT and this aspect has been specifically considered by the Arbitral Tribunal while making the Award in the present case. In any case, Respondent-CDSL has challenged Mrs. Karuna Gupta Award under Section 34 of the Arbitration Act in Commercial Arbitration Petition No. 343 of 2024, which is pending and that therefore there cannot be any collateral use of the said Award in the present proceedings. It is also entirely immaterial that two of the arbitrators who decided the impugned Award and Mrs.Karuna Gupta Award are common as the Arbitral Tribunal draws its identity from its collective whole and presence of two common arbitrators does not imply that they cannot arrive at different conclusions in two different arbitrations. Mr. Kadam would further submit that judgment of this Court in CDSL Versus. Daksha Narendra Bhavsar And Another[7] does not apply as the fact situation in that case was entirely different where the stock broker had unauthorizedly transferred securities 6 (2014) SCC Online Cal 17695 7 Com.ARBP 311 of 2024 decided on 1 December 2025 from her dormant Demat Account to stock brokers’ own Demat Account in absence of any underlying activity. The issue of forum shopping was not involved in that case.

21) Mr. Kadam would conclude by submitting that for successful challenge to the arbitral award on the ground of patent illegality, the Petitioner needs to establish that the impugned Award is without reasons or is so perverse and irrational that no reasonable person would arrive at conclusions rendered by the Tribunal or that the view adopted by the Arbitral Tribunal is not even a plausible view. He relies upon judgment of the Apex Court in OPG Power Generation Private Limited Versus. Enexio Power Cooling Solution India Private Limited and Another.[8] and Ssangyong Engineering and Construction Company Limited Versus. National Highways Authority of India.[9] He would rely upon judgment of this Court in Ivory Properties and Hotels Private Limited Versus. Vasantben Ramnikal Bhuta through Legal Heirs.10 in support of his contention that mere erroneous application of law cannot render the arbitral award patently illegal. He would submit that none of the tests to establish patent illegality have been satisfied or even pleaded in the Petition. He would pray for dismissal of the Petition.

REASONS AND ANALYSIS

22) The case involves refusal of adjudication of claim of Petitioners by three-member Arbitral Tribunal by accusing Petitioners of forum shopping. Petitioners’ claim before the Arbitral Tribunal was for restoration by Respondent-CDSL of the subject securities sold by Edelweiss for satisfaction of dues owed to it by Anugrah towards margin money requirements. Alternatively, Petitioners prayed for award of claim in the sum of Rs.34,72,75,447/- being the market value of subject securities as on 28 August 2023 along with interest. The Arbitral Tribunal has held that Petitioners sought identical reliefs before the SAT by intervening in proceedings between Edelweiss and NCL and have secured the same. The Arbitral Tribunal has accordingly refused to adjudicate Petitioner’s claim against CDSL which essentially arises out of statutory duty of CDSL to indemnify them in respect of acts arising out of negligent act of Depository Participant (Anugrah) under Section 16 of the Depositories Act. Thus, there is no adjudication of CDSL’s liability to indemnify Petitioners on account of any acts of Anugrah (DP). The Arbitral Tribunal has refused to undertake such adjudication. Therefore, the short issue that arises for consideration in the present arbitration proceeding is whether the Award refusing to adjudicate Petitioners’ indemnification claim against CDSL is liable to be invalidated on any of the grounds enumerated under Section 34 of the Arbitration Act.

23) As observed above while narrating the facts, the case involves sale of subject securities of Petitioners by Edelweiss for satisfaction of Edelweiss’ dues payable by Anugrah, possibly arising out of margin monies requirements. It appears that Petitioners were effecting trades in F&O Segment, which requires maintenance of prescribed margin money. The margin money can be kept by a client with the broker in the form of monetary funds, securities, fixed deposit receipts, etc. In the present case, it appears that for satisfying margin money requirements, Petitioners had kept securities with Anugrah as collateral. Edelweiss is a professional Clearing Member registered with NCL which provides clearing and settlement services to brokers/trading members. Edelweiss was not a member of Stock Exchange nor carried out any trading activities on the Exchange either for itself or on behalf of any client. The trading activities carried out by broker’s (Anugrah) clients are cleared and settled by Edelweiss. For providing such clearing and settlement services, Edelweiss collected collaterals from Anugrah towards Anugrah’s margin money requirements for settlement of trades on an aggregate basis. Most of such collaterals were in the form of shares. Between 15 January 2020 to 2 June 2020, Anugrah failed to pay its dues to Edelweiss on multiple occasions. To recover these dues, Edelweiss sold collateral shares furnished by Anugrah to the extent of Rs.462.32 cores and applied the proceeds to meet Anugrah’s clearing obligation towards NCL.

24) On 19 September 2020, NCL issued show cause notice to Edelweiss alleging that it had failed to carry due diligence and to ascertain whether there was any debit balance for the clients towards liquidation of their securities. After receipt of reply from Edelweiss, the Member and Core Settlement Guarantee Funds Committee of NCL (NCL Committee) passed order dated 20 October 2020 holding that Edelweiss had failed to perform adequate due diligence while handling client securities and failed to ensure that client’s security was utilised only for meeting particular client’s obligation. By order dated 20 October 2020, the Committee of NCL directed Edelweiss to reinstate the securities by procuring the same from the market. After passing of the order, it appears that NSE sent two emails on 13 November 2020 and 30 October 2020 providing the list of securities for being reinstated by Edelweiss.

25) Edelweiss filed Appeal No. 441 of 2020 challenging the order passed by NCL. In Appeal filed by Edelweiss, only Petitioner No.1 filed Intervention Application which was allowed and he was permitted to intervene in the Appeal filed by Edelweiss before SAT. In his Intervention Application, Petitioner No.1 raised following prayers:-

25. In view of the aforesaid tacts and circumstances, it is respectfully submitted that the Hon'bie Tribunal may be pleased to: a. Allow the present Application and permit the Applicant to intervene and he impleaded in the captioned Appeal: b. Direct the Appellant in captioned Appeal to return back the Subject Shares and Subject Monies belonging to the Applicant: c. Direct the parties to the captioned Appeal to provide the Applicant with all the pleadings in the matter and the Applicant be allowed to make submissions and assist this Hon'ble Tribunal: d. Dispense the filing of the copy of impugned order since the same is not yet made available to the Applicant by the National Clearing Itd (Respondent No. 1) e. Pass such Orders as this Hon'ble tribunal may deem fit and proper to secure the interest of the Applicant, being directly affected by the outcome of the Appeal.

26) By order dated 15 December 2023, SAT dismissed the Appeal preferred by Edelweiss and confirmed the order passed by NCL. Edelweiss has filed an Appeal before the Apex Court against SAT’s order dated 15 December 2023, which is pending.

WHETHER INTERVENTION BY PETITIONER NO. 1 IN NCL PROCEEDINGS BARS REMEDY OF ARBITRATION AGAINST CDSL?

27) Respondent-CDSL contends that Petitioners have elected the remedy of claiming restoration of securities against Edelweiss and that therefore Petitioners cannot have another bite at the cherry by seeking to fasten the liability in respect of the same transaction against CDSL through the arbitral proceedings.

28) It must be observed that the intervention application in SAT’s Appeal filed by Edelweiss was filed only by Petitioner No.1 and no such application was filed by Petitioners Nos.[2] and 3. I am not impressed by the submission canvassed on behalf of Respondent that Petitioners No.1 was representing interests of Petitioner Nos.[2] and 3 in the said intervention application. Thus, so far as Petitioner Nos.[2] and 3 are concerned, it cannot be contended that they had elected the remedy against Edelweiss and that therefore they cannot raise any claim against CDSL. This vital aspect is ignored by the Arbitral Tribunal who has proceeded ahead under a misconception that even Petitioners Nos.[2] and 3 were intervenors in SAT’s Appeal.

29) However, even if the aspect of Petitioner Nos.[2] and 3 not being parties to intervention application filed before SAT is to be momentarily ignored, in my view, mere intervention of the Petitioner in SAT’s Appeal would not bar his remedy to seek relief against Respondent-CDSL. This is because Petitioner No.1 did not initiate the proceedings before NCL. Those were regulatory proceedings initiated by NCL by issuance of a show cause notice. In proceedings before it, the NCL Committee of NCL has examined the role played by Edelweiss in the entire transaction as Clearing Member and has issued directions for restoration of securities sold by Edelweiss. Before NCL Committee, Petitioner No.1 was not a party. When the matter traveled to SAT by way of Appeal filed by Edelweiss, Petitioner No.1 was advised to intervene in the said appeal. Thus, intervention by Petitioner No.1 was at appellate stage of regulatory proceedings initiated by NCL. Though Petitioner prayed for return of his securities in the intervention application, that prayer was incapable of being granted and has not been granted by SAT, which has merely dismissed the appeal preferred by Edelweiss.

30) In its appeal, Edelweiss was challenging the correctness of order passed by the Committee of NSE which had directed restoration of the securities sold by Edelweiss. NCL committee did not adjudicate individual claims of clients of Anugrah. NCL committee inquired into regulatory failure on the part of Edelweiss and directed reversal of transactions effected by Edelweiss. The issue for consideration is whether mere intervention in regulatory proceedings of NCL at appellate stage by Petitioner No.1 would foreclose his independent right to seek remedy against CDSL? The answer, to my mind, appears to be in the negative. Participation in the regulatory proceedings would not result in destruction of remedy of a person in respect of his own individual claim, which is capable of being agitated in independent proceedings. To illustrate, if Plaintiff agrees to purchase a flat in the proposed building, and the developer constructs the building in contravention of the sanctioned plan. The Municipal Corporation issues notice for demolition of the constructed building, and the developer challenges the notice issued by the Municipal Corporation in the Court. In such proceedings, Plaintiff intervenes and supports the action of the Municipal Corporation (possibly to ensure that the building is constructed in accordance with the sanctioned plan). Whether his intervention in adjudication of such regulatory proceedings initiated by the developer would destroy Plaintiff’s right to institute independent suit for specific performance of contract to have the flat constructed and delivered as agreed under the agreement? The answer is obviously in the negative. Mere participation by the flat purchaser in dispute between the developer and municipal corporation relating to irregularities in construction would not ipso facto destroy the right or remedy of the flat purchasers to file Suit for specific performance of his own agreement and to insist that he must be delivered the flat with exact specifications as agreed in the agreement of sale. It is possible that the inquiry in the two proceedings may overlap and could be similar to some extent. In action initiated by the developer against the Municipal Corporation, the Court would determine whether construction is in accordance with the sanctioned plan. Similarly, in the flat purchaser’s suit for specific performance, the inquiry would also be whether the construction is in accordance with the sanctioned plans or not. Therefore, mere similarity of inquiry in the two proceedings would not mean that intervention by the flat purchaser in dispute between the developer and Municipal Corporation would result in destruction of his remedy to claim damages from the developer for constructing the flat contrary to the sanctioned plans or to have flat delivered as per specification. This is exactly what has happened in the present case. Petitioner No.1 has participated in the regulatory proceedings before SAT to support the order of NCL. SAT in those appeal proceedings was not expected to grant nor has granted restoration of the subject securities in the name of Petitioner No.1. In regulatory proceedings initiated by a regulator, the intervenor cannot claim relief as a matter of right whereas in his own substantive proceedings, he can claim relief as a matter of right. In my view, therefore mere participation by Petitioner No.1 in the regulatory proceedings initiated by NCL would not destruct his own substantive remedy to seek return of securities. As observed above, Petitioner Nos.[2] and 3 had not even intervened in the proceedings before SAT. TRIBUNAL’S FINDING OF FORUM SHOPPING

31) The Arbitral Tribunal has egregiously erred in accusing Petitioners of forum shopping, which findings are perverse to say the least. It is incomprehensible as to how mere support to the order passed by NCL by Petitioner No.1 before SAT would constitute forum shopping. Forum Shopping is a concept where a litigant approaches one Court for relief, but does not secure the desired relief and then approaches another court for the same relief. Forum shopping can also get attracted in a case where litigant deliberately creates cause of action in jurisdiction of Court for the purpose of invoking jurisdiction of that Court, when the real cause of action has arisen in the territorial jurisdiction of some other Court. In such case, forum shopping is indulged under a hope of securing favorable order from the desired Court. The concept of ‘forum shopping’ has been dealt with by the Apex Court in UOI vs. Cipla Limited (supra) in which it is held in paras-146 to 155 as under: Forum shopping

146. The learned Solicitor General submitted that Cipla was guilty of forum shopping inasmuch as it had filed petitions in the Bombay High Court, the Karnataka High Court and also an affidavit in the Delhi High Court as a member of the Bulk Drug Manufacturers Association and had eventually approached the Allahabad High Court for relief resulting in the impugned judgment and order dated 3-3-2004 1. It was submitted that since Cipla had approached several constitutional courts for relief, the proceedings initiated in the Allahabad High Court clearly amount to forum shopping.

147. We are not at all in agreement with the learned Solicitor General. Forum shopping takes several hues and shades and Cipla's petitions do not fall under any category of forum shopping.

148. A classic example of forum shopping is when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief. This occurred in Rajiv Bhatia v. Govt. (NCT of Delhi) 28. The respondent mother of a young child had filed a petition for a writ of habeas corpus in the Rajasthan High Court and apparently did not get the required relief from that Court. She then filed a petition in the Delhi High Court also for a writ of habeas corpus and obtained the necessary relief. Notwithstanding this, this Court did not interfere with the order passed by the Delhi High Court for the reason that this Court ascertained the views of the child and found that she did not want to even talk to her adoptive parents and therefore the custody of the child granted by the Delhi High Court to the respondent mother was not interfered with. The decision of this Court is on its own facts, even though it is a classic case of forum shopping.

149. In Arathi Bandi v. Bandi Jagadrakshaka Rao 29 this Court noted that jurisdiction in a court is not attracted by the operation or creation of fortuitous circumstances. In that case, circumstances were created by one of the parties to the dispute to confer jurisdiction on a particular High Court. This was frowned upon by this Court by observing that to allow the assumption of jurisdiction in created circumstances would only result in encouraging forum shopping.

150. Another case of creating circumstances for the purposes of forum shopping was World Tanker Carrier Corpn. v. SNP Shipping Services (P) Ltd. 30 wherein it was observed that the respondent/plaintiff had made a deliberate attempt to bring the cause of action, namely, a collision between two vessels on the high seas within the jurisdiction of the Bombay High Court. Bringing one of the vessels to Bombay in order to confer jurisdiction on the Bombay High Court had the character of forum shopping rather than anything else.

151. Another form of forum shopping is taking advantage of a view held by a particular High Court in contrast to a different view held by another High Court. In Ambica Industries v. CCE 31 the assessee was from Lucknow. It challenged an order passed by the Customs, Excise and Service Tax Appellate Tribunal ("CESTAT") located in Delhi before the Delhi High Court. Cestat had jurisdiction over the State of Uttar Pradesh, NCT of Delhi and the State of Maharashtra. The Delhi High Court did not entertain the proceedings initiated by the assessee for want of territorial jurisdiction. Dismissing the assessee's appeal this Court gave the example of an assessee affected by an assessment order in Bombay invoking the jurisdiction of the Delhi High Court to take advantage of the law laid down by the Delhi High Court or an assessee affected by an order of assessment made at Bombay invoking the jurisdiction of the Allahabad High Court to take advantage of the law laid down by it and consequently evade the law laid down by the Bombay High Court. It was said that this could not be allowed and circumstances such as this would lead to some sort of judicial anarchy.

152. Yet another form of forum shopping was noticed in Jagmohan Bahl v. State (NCT of Delhi) 32 wherein it was held that successive bail applications filed by a litigant ought to be heard by the same learned Judge, otherwise an unscrupulous litigant would go on filing bail applications before different Judges until a favourable order is obtained. Unless this practice was nipped in the bud, it would encourage unscrupulous litigants and encourage them to entertain the idea that they can indulge in forum shopping, which has no sanction in law and certainly no sanctity.

153. Another category of forum shopping is approaching different courts for the same relief by making a minor change in the prayer clause of the petition. In Udyami Evam Khadi Gramodyog Welfare Sanstha v. State of U.P. 33 it was noticed by this Court that four writ applications were filed by a litigant and although the prayers were apparently different, the core issue in each petition centred round the recovery of the amount advanced by the bank. Similarly, substituting some petitioners for others with a view to confer jurisdiction on a particular court would also amount to forum shopping by that group of petitioners.

154. Finally and more recently, in Supreme Court Advocates-on- Record Assn. v. Union of India (Recusal Matter) 34 Khehar, J. noticed yet another form of forum shopping where a litigant makes allegations of a perceived conflict of interest against a Judge requiring the Judge to recuse from the proceedings so that the matter could be transferred to another Judge.

155. The decisions referred to clearly lay down the principle that the Court is required to adopt a functional test vis-à-vis the litigation and the litigant. What has to be seen is whether there is any functional similarity in the proceedings between one court and another or whether there is some sort of subterfuge on the part of a litigant. It is this functional test that will determine whether a litigant is indulging in forum shopping or not.

32) The Arbitral Tribunal, I must say, has not even bothered to consider the ratio of the judgment in Cipla Limited and has blindly presumed that the same applies against the Petitioners. As a matter of fact, the judgment in Cipla Limited, far from damaging the case of the Petitioner, actually supports their case. The Arbitral Tribunal plucked out the two words ‘functional similarity’ and ‘subterfuge’ appearing in para-155 of the judgment without even bothering to discuss the real ratio in para-146 to 154 of the judgment. This is not how the judgment of the Court is to be read and applied to a given case. It is well settled that a Judgment is an authority for what it decides and not what could be logically deduced therefrom.

33) Thus, even if the observations of the Apex in para-155 of the judgment in Cipla Limited about functional test are to be applied to the present case by ignoring the examples in paras-146 to 154, in my view, Petitioners still cannot be accused of forum shopping. Firstly, there is absolutely no functional similarity between the impugned arbitration proceedings and the appeal pending before the Supreme Court. The proceedings pending before the Apex Court stem out of regulatory proceedings initiated by NCL which would not result in grant of any direct relief to the Petitioners. While concentrating on seeking of identical reliefs in the two proceedings, the Arbitral Tribunal has conveniently ignored the fact that no relief is granted to Petitioner No.1 by SAT in the Appeal preferred by Edelweiss, which is dismissed by order dated 15 December 2023.

34) Describing Petitioner’s conduct as subterfuge by the Arbitral Tribunal is clearly irrational. The finding is such that no fairminded person would ever record. Use of such strong words for describing the efforts of Petitioners in getting back their stolen shares is something which ought to have been avoided by the Arbitral Tribunal. Merely because the word ‘subterfuge’ appears in para-155 of the judgment in Cipla Limited there was no reason or occasion for the Arbitral Tribunal to describe the conduct on the part of the Petitioners as a subterfuge. The Tribunal ought to have appreciated that Petitioners are made to run from pillar to post and have still not been granted the relief of reinstatement of their securities by any forum. An investor, whose shares are stolen from his/her demat account, is bound to adopt all the available remedies and merely because he filed claim before the Arbitral Tribunal of CDSL, there was no warrant for the Arbitral Tribunal to brand the act of filing of claim before it as a subterfuge.

35) Thus, mere approach made by Petitioner No. 1 to different Fora for redressal of his claims cannot be a ground to hold that the case involves forum shopping. In this regard, reliance by the Petitioner on judgment of Delhi High Court in Brilltech Engineering Pvt. Ltd. (supra) is apposite in which it is held in paras-30 to 34 as under:

30. The respondent has further claimed that different amounts have been claimed by the petitioner in different proceedings. The claim before the MSME forum was of Rs. 20.87 lakhs while under Section 8 of IBC it was Rs. 99 lakhs. In the present case, the claim has been made for Rs. 2.50 crores. It is quite evident from the fluctuating amounts that nothing is due and it is only forum shopping which is being indulged into by the petitioner.

31. It can be seen from the various proceedings which have been initiated by the petitioner that different amounts had become due and payable at different times and also interest component which was being claimed, was a variable. The petitioner has given explanation for claiming the amounts before various forums depending upon when it had approached that particular forum. Merely because the petitioner has approached different forums for redressal of its claims, cannot be said to be a ground to hold that this is a case of forum shopping. Each of the provision invoked by the petitioner has its own individual scope and it cannot be said that resort to one has the effect of ousting the other forums or that it is a case of forum shopping.

32. The doctrine of election was discussed in A. P. State Financial Corporation v. Gar Re-Rolling Mills, (1994) 2 SCC 647 wherein it was explained that when two remedies are available for the same relief, the party has an option to elect either of them but that doctrine would not apply where the ambit and scope of the two remedies is essentially different. In National Insurance Company Ltd. v. Mastan, (2006) 2 SCC 641, the Apex Court explained that the doctrine of election is a branch of rule of estoppel in as much as a person may be precluded by his actions or conduct or silence when it has duty to speak, from asserting a right which he otherwise would have had. This test was endorsed by the Hon'ble Supreme Court in the case of Ireo Grace Realtech Private Limited v. Abhishek Khanna, (2021) 3 SCC 241.

33. In Union of India v. Cipla Limited, (2017) 5 SCC 262, the Supreme Court explained that a classic example of Forum Shopping is when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief. Examples were given of cases pertaining to child custody, successive bail applications and of filing repeat applications with a slight change in the prayer clause of the petition. The functional test to determine Forum Shopping was explained as whether there is any functional similarity in the proceedings between one Court and another or whether there is some sort of subterfuge on the part of a litigant.

34. In the present case, the scope of enquiry in the proceedings before the NCLT and before the Arbitrator is absolutely distinct. Merely because the petitioner approached NCLT before seeking appointment of Arbitration, it cannot be said that he was indulging in Forum Shopping.

36) The Delhi High Court has thus considered the ratio of the judgment in Cipla Limited and has held that since the scope of inquiry in proceedings before NCLT and before the Tribunal was distinct, mere approach by the Petitioner therein to NCLT before seeking appointment of Arbitrator cannot be a ground for holding that he indulged in forum shopping. The judgment would apply to the present case since the fact situation appear to be similar.

FINDING OF FUNCTIONAL SIMILARITY

37) It is not possible to hold that there is functional similarity between the proceedings before NCL Committee and arbitral proceedings against CDSL. The scope of inquiry in the two proceedings is entirely different. In NCL proceedings, the scope of inquiry was about breach of Rules and Regulations by a Clearing Member whereas in the inquiry before the Arbitral Tribunal, the issue is about enforcement of statutory indemnity under Section 16 of the Depositories Act. What Petitioners pursued before the Arbitral Tribunal is the remedy of indemnification by CDSL in respect of the acts committed by Depository Participant (Anugraha). Whether Petitioners would succeed in establishing such right of indemnity or not is another thing. However, doors on the Petitioners cannot be closed by the Arbitral Tribunal under a specious plea that in an unrelated inquiry one of the Petitioners supported the order passed by the NCL. In my view, therefore there is no functional similarity in the proceedings between the NCL proceedings against Edelweiss and arbitral proceedings against CDSL.

DOCTRINE OF ELECTION

38) Mr. Kadam has fairly conceded that description of Petitioners’ act as forum shopping may not entirely be correct and what the Arbitral Tribunal has actually invoked is the doctrine of election. He has drawn my attention to para-15 of the arbitral award, in which it has held as under:-

15. Therefore, on a conjoint reading, the Arbitral Tribunal holds that since the Claimants had already elected their remedy by supporting the NCL Order before the Hon'ble SAT, the present proceedings tantamount to forum shopping and the arbitration application does not deserve consideration. (emphasis and underlining added)

39) However, the findings recorded in para-15 of the Award clearly indicate that though the Tribunal has referred to the remedy of supporting NCL order before SAT as ‘election’, the act of invocation of arbitration ultimately is concluded as the act of ‘forum shopping’. The Arbitral Tribunal has expressly held that since Petitioner has indulged in forum shopping ‘arbitration application does not deserve