Buried within the section on outstanding litigation is the account of how 5,000 equity shares of India's largest stock exchange were allegedly credited by mistake to the demat account of an individual who neither paid for them nor placed a purchase request. NSE is now pursuing both civil and criminal proceedings to recover the shares and the proceeds from those already sold.
The DRHP also discloses that a separate petition pending before the Bombay High Court seeks multiple directions, including a stay on NSE's proposed IPO and additional disclosures relating to the Exchange's ownership structure and beneficial shareholders.
How the Erroneous Transfer Occurred
According to the DRHP, on 28 December 2023, 5,000 NSE equity shares were erroneously transferred and credited to the demat account of one Kashmiri Lal Rana. NSE states that no consideration was paid for the shares and that no second purchase request had been made.
The shares were held through Nuvama Wealth Finance Ltd which acted as the depository participant and is now a co-plaintiff with NSE in the civil proceedings.
By the time the error was discovered, however, Mr Rana had already sold 3,685 of the 5,000 shares. According to disclosures in the criminal complaint, the sale generated proceeds of approximately ₹1.327 crore. The remaining 1,315 shares continued to be held in his account.
Bonus Shares Add Another Layer
The dispute became significantly more complicated after NSE's bonus issue on 4 November 2024 in the ratio of 4:1.
As a result, the 1,315 shares still held in Mr Rana's account became entitled to 5,260 additional bonus shares. Anticipating legal proceedings, NSE placed these bonus shares in a specially created NSE Bonus Suspense Escrow Demat Account, preventing any transfer or sale pending resolution of the dispute.
Given the sharp rise in NSE's valuation in the run-up to its proposed IPO, both the original shares and the bonus entitlement have become substantially more valuable.
The Civil Suit
On 1 May 2025, NSE and Nuvama Wealth Finance jointly filed a civil suit before the Delhi High Court against Kashmiri Lal Rana and National Securities Depository Ltd (NSDL).
The inclusion of NSDL is noteworthy because the dispute centres on an erroneous transfer within the depository system, though the DRHP does not elaborate on the precise cause of the error.
The plaintiffs have sought:
• A declaration that the transfer of 5,000 shares to Mr Rana was void ab initio.
• Recovery of approximately ₹1.435 crore representing the value and proceeds of the shares sold.
• A mandatory injunction directing the return of the remaining 1,315 shares and the associated 5,260 bonus shares to Nuvama.
By an interim order dated 19 May 2025, the Delhi High Court restrained Mr Rana from selling or transferring the remaining 1,315 shares and directed NSDL not to permit any transfer of the 5,260 bonus shares during the pendency of the proceedings.
Rana filed his written statement on 30 July 2025, disputing the claims. NSE and Nuvama subsequently filed a replication on 16 October 2025, relying on what they describe as admissions made by Mr Rana and seeking a decree in their favour.
The matter remains pending before the Delhi High Court.
The Criminal Proceedings
Separately, NSE initiated criminal proceedings.
On 21 July 2025, the Exchange lodged a first information report (FIR) at the Bandra-Kurla Complex Police Station in Mumbai against Kashmiri Lal Rana, alleging offences under Sections 316(2) and 318(4) of the Bharatiya Nyaya Sanhita (BNS), relating to criminal breach of trust and cheating.
According to the FIR, NSE alleges that Mr Rana knowingly retained shares that had been mistakenly credited to his account and subsequently sold 3,685 of them, generating proceeds of about ₹1.327 crore.
The criminal case is also pending.
Together, the civil suit and the FIR represent a two-pronged legal strategy: recovery of the monetary value of the sold shares through civil proceedings and criminal accountability for the alleged retention and sale of erroneously transferred securities.
Unanswered Questions
The DRHP does not explain how the transfer error occurred in the first place.
It remains unclear whether the incident resulted from a system failure, a manual processing error or another cause. For an exchange that regularly emphasises the robustness and reliability of its technology infrastructure, the absence of a detailed explanation raises questions that prospective investors may wish to examine more closely.
The case also highlights broader concerns regarding oversight mechanisms within the depository ecosystem, which may explain why NSDL has been named as a defendant in the civil proceedings.
Bombay High Court Petition Seeks IPO-related Disclosures
Apart from the share-transfer dispute, NSE's DRHP also discloses a separate petition pending before the Bombay High Court.
According to the filing, the petitioner has sought directions requiring SEBI to decide a representation currently under consideration. The petition also seeks details regarding NSE's promoter group, shareholders, ultimate beneficial owners and related know-your-customer (KYC) records.
The reliefs sought reportedly include:
• A writ of mandamus directing SEBI to decide the pending representation.
• Directions requiring NSE to disclose information relating to its promoter group and beneficial ownership.
• An interim stay on the IPO process until the petition is finally adjudicated.
NSE stated in the DRHP that the matter remains pending before the court and that it considers the allegations and claims to be unfounded. The Exchange said it is pursuing appropriate legal remedies.
According to media reports, the petitioner has raised questions regarding the beneficial ownership of certain investors in NSE and has sought regulatory scrutiny of foreign shareholding in the exchange.
Reports indicate that the Bombay High Court first heard the matter on 17 June 2026 and has scheduled the next hearing for 24 June 2026.
The Mauritius Question: A Shadow over the IPO
Even as the Mr Rana matter works its way through the courts, a separate and potentially more consequential legal challenge has emerged directly targeting NSE's IPO process.
A petitioner, Parinay Sharma, first wrote to SEBI on 8 April 2026, raising concerns about the beneficial ownership of certain Mauritius-based investors in NSE. When SEBI did not act on that representation, Mr Sharma filed a writ petition on 2 May 2026 — less than seven weeks before NSE filed its DRHP — before the Bombay High Court under Article 226 of the Constitution, naming both SEBI and NSE as respondents.
The allegations are pointed. Mr Sharma has alleged that certain investors have routed their NSE holdings through Mauritius-based entities rather than investing directly, to conceal their true beneficial ownership from regulatory scrutiny. He has also alleged that the beneficial owners of the foreign entities that hold NSE's shares were not disclosed.
In the petition, Mr Sharma argues that SEBI failed to take any action on his April 2026 representation. He has sought three reliefs: a writ of mandamus directing SEBI to decide his pending representation; a direction against NSE to disclose its promoter group and shareholders along with the ultimate beneficiaries, backed by KYC documents; and — most significantly for the IPO timeline — a stay on NSE's initial public offering process until the petition is finally disposed of.
NSE has disclosed the matter in its DRHP, noting that it is currently pending before the Bombay High Court. According to sources cited in media reports, the matter may be heard as early as next week.
With NSE pursuing what could become India's largest-ever IPO, both the unusual share-transfer dispute and the ownership-related petition are likely to attract close scrutiny from regulators, investors and market participants in the weeks ahead.
