Admissible claim value

Under SEBI's online dispute resolution system, a dispute first goes to conciliation. If conciliation fails, the conciliator does not simply walk away. They put a number on it: the admissible claim value, the amount the conciliator determines is payable to the investor/client.

That number has teeth. A stock broker that wants to fight on in arbitration must first deposit 100% of it with the market infrastructure institution. And while the arbitration runs, the investor can ask for part of that deposit, up to Rs 5 lakh, to be released to them.

Rules (Chapter 7, sections 7.3.6 and 7.3.8)

1. Conciliation runs 21 calendar days (extendable by up to 10 with consent). If it does not resolve the dispute, the conciliator ascertains the admissible claim value and notifies the disputing parties, the ODR Institution and the MII.
2. The investor may start online arbitration on or after the end of conciliation, administered by the same ODR Institution.
3. The market participant must deposit 100% of the admissible claim value with the relevant MII:
   • if it wants to pursue arbitration, before initiating it (section 7.3.6). Chapter 7.3.8 adds that a broker initiating arbitration must inform the ODR Institution within 10 days of conciliation ending and deposit the full value within a further 5 days;
   • if the investor initiates arbitration, the broker must deposit 100% and pay applicable fees within 10 days of the investor starting it (section 7.3.8).
4. A market participant that fails to deposit may not initiate arbitration and may face consequences decided by the stock exchange.
5. Release to investor: on the investor's application, the MII may release from the deposit an amount not exceeding Rs 5,00,000 (or as specified), after taking an undertaking/indemnity/security for its return if the arbitration goes against the investor.

The same 100% deposit idea applies later: to challenge an arbitral award, the market participant must deposit 100% of the amount payable under the award.

Claim amounts are illustrative; the 100% deposit and Rs 5 lakh cap are the workbook's.

Case 1. Divya claims Rs 4,00,000 from her broker. Conciliation fails and the conciliator fixes the admissible claim value at Rs 2,60,000.

• The broker wants to arbitrate. It informs the ODR Institution within 10 days of conciliation ending and deposits 100% × Rs 2,60,000 = Rs 2,60,000 with the exchange within the next 5 days.
• Divya applies for release. The cap is Rs 5,00,000, and the deposit is only Rs 2,60,000, so the MII may release up to the full Rs 2,60,000 after she gives an undertaking to return it if she loses.

Case 2. Karan's admissible claim value is Rs 7,00,000. Karan starts arbitration himself.

• The broker must deposit Rs 7,00,000 within 10 days of Karan starting it.
• Karan applies for release. The MII may release at most Rs 5,00,000; the remaining Rs 2,00,000 stays with the MII until the award.
• As the claim is under Rs 30 lakh, a sole arbitrator hears it.

Chapter 7, section 7.3.6 (Conciliation) defines the admissible claim value, the 100% deposit and the Rs 5 lakh release; section 7.3.8 (Arbitration) adds the 10-day and 5-day deposit timelines. It ties together conciliation, arbitration and investor protection, so it is a natural target for scenario questions: how much must the broker deposit, and how much can the investor receive before the award.

• Determined by the conciliator, after conciliation fails, not by the arbitrator or the MII.
• Deposit is 100% of the admissible claim value, not a percentage of the original claim.
• Deposited with the MII, not with the ODR Institution or SEBI.
• Release to the investor is capped at Rs 5,00,000 and needs an undertaking/indemnity/security.
• Broker-initiated arbitration: inform within 10 days, deposit within a further 5 days. Investor-initiated: broker deposits within 10 days.
• No deposit, no broker arbitration.
• Challenging an award needs a 100% deposit of the award amount, a separate requirement.