Fraud Findings Cannot Rest On Conjectures: Delhi HC Partly Sets Aside Order Against BRH Wealth Kreators

The Delhi High Court has partly set aside findings of a District Judge that had held brokerage firm BRH Wealth Kreators Ltd. guilty of defrauding an investor in connection with alleged unauthorised trades in his demat account.

It held that findings of fraud cannot be returned without documentary evidence and cannot be based on intuition, conjectures or surmises.

However, a Division Bench of Justice V. Kameswar Rao and Justice Manmeet Pritam Singh Arora upheld the District Judge's order only to the extent that it gave effect to the Investor Grievance Redressal Panel's (IGRP) order. The Bench modified the relief granted by the IGRP and directed the brokerage firm to pay ₹20 lakh to investor Sudhir Kumar Aggarwal in full and final settlement of the dispute.

It observed, “We find merit in the submission of the Appellant to the effect that the said findings are not based on any documentary evidence and are instead based on conjectures and surmises. The findings of the fraud had to be on the basis of the documentary evidence available on record and could not be based on the intuition of the Court. The said findings of the fraud are directly contrary to the findings returned by the Appellate Arbitral Tribunal on the basis of the documents. We, therefore, set aside the order of the learned District Judge to the extent it finds the Appellant guilty of practicing fraud on the Respondent herein"

The dispute arose from a demat and trading account opened by Aggarwal with BRH Wealth Kreators in February 2007.

According to the brokerage firm, Aggarwal carried out transactions in the cash and futures and options segments. It claimed that contract notes, account statements, and transaction alerts were regularly sent to him through email and SMS.

BRH Wealth Kreators contended that Aggarwal became aware in 2014 that there was no balance left in his trading account. It stated that the last trade in the account was executed on November 7, 2014.

However, on February 18, 2019, Aggarwal filed a complaint before SEBI. He alleged unauthorised trades and non-receipt of payments in relation to transactions carried out in his demat account.

The complaint was referred to the Investor Grievance Redressal Panel (IGRP). On April 3, 2019, the IGRP admitted Aggarwal's claim for ₹9.42 lakh. It found that the brokerage firm was unable to justify the trades and had failed to produce any SMS or email sent to him during the relevant period regarding those trades.

The brokerage firm challenged the IGRP order before a sole arbitrator constituted under the NSE bye-laws. By an award dated August 6, 2019, the arbitrator held that the claim was barred by limitation. The IGRP order was consequently set aside.

The NSE Appellate Arbitral Tribunal upheld that decision on November 4, 2019. It held that the claim was barred by limitation. It also held that it did not find any case in Aggarwal's favour on merits.

Aggarwal subsequently approached the District Judge under Section 34 of the Arbitration and Conciliation Act.

On December 24, 2024, the District Judge set aside the arbitral awards, thereby reviving the IGRP order. The District Judge also held that the brokerage firm had defrauded the investor.

BRH Wealth Kreators then filed the present appeal under Section 37 of the Arbitration Act read with Section 13 of the Commercial Courts Act.

Before the High Court, the brokerage firm argued that the District Judge had exceeded the limited scope of interference in arbitral matters. It contended that the court had re-appreciated evidence and recorded findings of fraud without pleadings or evidence.

Aggarwal, on the other hand, maintained that the trades were unauthorised. He also contended that he became aware of the alleged fraud only in 2019.

During the hearing on May 11, 2026, BRH Wealth Kreators offered to pay ₹20 lakh as a lump-sum settlement. The amount comprised ₹10.42 lakh towards principal and ₹9.58 lakh towards interest.

The High Court termed the offer “just and reasonable”. It directed the brokerage firm to make the payment within four weeks.

The Court held that the District Judge's findings of fraud were “based on conjectures and surmises”. It said those findings were contrary to the findings returned by the Appellate Arbitral Tribunal on the basis of documentary evidence.

It further clarified that no court, legal authority or enforcement agency could rely on the impugned judgment to attribute fraud to the brokerage firm.

The High Court also warned that if BRH Wealth Kreators failed to honour its undertaking to pay ₹20 lakh, it would amount to “playing a fraud on the Court”. In that event, the brokerage firm and its officers would be personally liable for the consequences.

For Appellant (BRH Wealth Kreators Ltd.): Advocates Amit George, Nitin Saluja, Shivani Luthra Lohiya, Sushrut Sharma, Karan Singh and Dushyant Kaul.

For Respondent (Sudhir Kumar Aggarwal): Advocate Latika Chaudhry with respondent in person.