Bombay HC: Depositories Liable for DP Frauds, Major Investor Relief

• Bombay High Court ruled depositories are liable for frauds committed by their Depository Participants (DPs), offering significant relief to investors.
• The court affirmed that DPs act as agents of depositories, triggering statutory liability under Section 16 of the Depositories Act.
• The ruling stems from investor Daksha Narendra Bhavsar's case, where BRH Wealth Kreators (a CDSL DP) misused her POA to misappropriate shares.
• CDSL was directed to compensate the investor Rs 86.02 lakh plus 9% interest for the misappropriated shares.
• This judgment provides a clear accountability pathway for investors, even if exchange Investor Protection Funds (IPFs) do not cover losses.

Why It Matters: Depositories are now directly accountable for DP frauds, strengthening investor protection.