MUMBAI, Dec. 2 -- The Bombay High Court on Monday upheld an order directing Central Depository Services (India) Ltd (CDSL) to compensate a Mumbai investor whose shares worth Rs.86 lakh were illegally siphoned off and fraudulently pledged by stockbroking firm BRH Wealth Kreators. Justice Sandeep Marne dismissed CDSL's challenge, ruling that the depository is legally responsible for negligent acts committed by its registered agents, known as Depository Participants (DPs). The case concerns investor Daksha Bhavsar, who opened a demat account with BRH in 2018. Acting on a power of attorney signed by Bhavsar and her late husband, BRH transferred her shares from her demat account to its own clearing/trading member accounts, even though there were no trades to justify the movement of shares. BRH then pledged those shares as collateral to take a loan from HDFC Bank. After BRH defaulted, the bank invoked the pledge and sold the shares in the open market. Subsequent investigations revealed that BRH had similarly shifted the securities of as many as 9,493 investors to its proprietary accounts. Bhavsar first approached the National Stock Exchange (NSE), but her claim was rejected because no trades had been carried out through the exchange. She later approached the Securities Appellate Tribunal, which ordered CDSL to pay her the value of the lost shares, saying the wrongful transfer and pledge occurred while BRH was functioning as the depository's DP. CDSL challenged this decision in the high court, arguing that BRH acted solely as a stockbroker and that NSE, not CDSL, should be liable. It also submitted that the pledge was created from BRH's own demat account (after transfer of shares) and, therefore, no client pledge request was required. However, Justice Marne rejected this argument, holding that the transfer of shares itself, effected without any underlying trades, was something BRH could only do in its role as a DP. The court emphasised that negligent acts of a DP trigger statutory indemnity under Section 16 of the Depositories Act, regardless of whether the depository was aware of the misconduct. BRH's misconduct was "a composite act of stark fraud," beginning with the unauthorised transfer of shares and culminating in pledging them for a loan, the court said....