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Arbitration, Mediation and Conciliation · Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges

Investor Grievance Redressal Mechanism of Stock Exchanges

Updated 11 October 2026 · Fact-checked

The mechanism is a layered route for investor complaints against listed companies and exchange members. The investor first complains to the company or broker, then to the stock exchange's investor service cell or to SEBI through SCORES. If unresolved, the exchange offers conciliation, arbitration and compensation from its Investor Protection Fund.

Understand Investor Grievance Redressal Mechanism of Stock Exchanges

An investor who trades or invests through the market can have a dispute with a broker, a listed company, a depository participant or another intermediary. Going to court for every small claim is slow and costly. So SEBI regulations and stock exchange rules set up a graded complaint system that tries to settle the matter early and cheaply.

The first layer is the investor service cell (investor grievance cell) at each stock exchange. It receives complaints against listed companies and against the exchange's trading members. It takes up the complaint with the other side, asks for a reply, follows up and tracks it until it is closed.

The second layer is SCORES (SEBI Complaints Redress System), SEBI's web-based platform. An investor lodges a complaint online. It is sent to the entity concerned, which must file an Action Taken Report. The investor can see the status and the complaint can be escalated. Exact timelines, escalation steps and any linked online dispute resolution portal are fixed by SEBI circulars, so check the current circular in your study material instead of relying on a remembered number.

The third layer is formal dispute resolution. If a complaint is not resolved, exchange rules provide for conciliation or mediation and then arbitration between the investor and the member. This is where the Arbitration and Conciliation Act, 1996 comes in. The arbitration agreement must be in writing, as section 7 requires, and the exchange bye-laws and rules form the agreed framework. Court help is limited to the matters the Act allows, such as interim measures under section 9.

The fourth layer is financial protection. Each exchange maintains an Investor Protection Fund (IPF). It is used to compensate investors where a member defaults, within limits set by SEBI and the exchange rules. It is also used for investor education and protection activities. Note that the fund is not a substitute for the complaint process. It pays only in the situations the rules allow.

For the exam, think of the topic as a ladder: complaint, exchange cell or SCORES, conciliation or arbitration, then compensation. Always link each rung to who acts, what they do and what the investor gets.

Key rules to remember

Escalation ladder
Complaint to entity → exchange investor service cell / SCORES → conciliation or mediation → arbitration → IPF compensation where eligible
Use this order as the skeleton of any descriptive answer. Do not present it as a fixed legal sequence unless the question gives that rule.
Arbitration agreement in writing
Section 7(3): an arbitration agreement shall be in writing
Under section 7(4) it can be in a signed document, an exchange of electronic communications giving a record, or an exchange of statements of claim and defence where one alleges it and the other does not deny it.
Interim relief from court
Section 9: a party may apply to a court before, during or after the award but before enforcement under section 36
If the tribunal is already constituted, section 9(3) says the court does not entertain the application unless section 17 remedy is not efficacious.
Interim relief from tribunal
Section 17(1): a party may apply to the tribunal during the arbitral proceedings
Under section 17(2) the tribunal's order is deemed an order of the Court and enforceable under the Code of Civil Procedure, 1908.
Conciliator's limits
Section 80: unless parties agree otherwise, the conciliator cannot act as arbitrator or counsel, or be a witness, in proceedings on the same dispute
Relevant when the exchange process begins with conciliation and moves to arbitration.

How to solve Investor Grievance Redressal Mechanism of Stock Exchanges questions

Use this method for any question on how an investor complaint is handled by exchanges and SEBI.

  1. 1Identify the parties: the investor and the other side (listed company, trading member, depository participant or other intermediary).
  2. 2State the first step: the investor complains to the entity, then to the exchange's investor service cell or lodges the complaint on SCORES.
  3. 3Explain what the cell or SCORES does: forwards the complaint, seeks a reply or Action Taken Report, follows up and tracks status.
  4. 4If unresolved, move to conciliation or mediation and then arbitration under the exchange rules, and tie it to the Arbitration and Conciliation Act, 1996 (written agreement under section 7, interim relief under sections 9 and 17).
  5. 5Mention financial relief: the Investor Protection Fund, only where the rules allow compensation, such as a member default.
  6. 6Apply the facts: name the stage the investor has reached and what the next step is.
  7. 7Conclude clearly with the remedy available and a note that detailed timelines and limits come from current SEBI circulars and exchange rules.

Quickest way: Four-rung ladder

When to use it: When you have limited time and the question is descriptive or asks for the steps open to an investor.

  1. Write the four rungs as headings: complaint, cell or SCORES, conciliation and arbitration, IPF.
  2. Add one line under each: who acts and what happens.
  3. Add one legal anchor, such as section 7 for the written arbitration agreement or section 9 for court interim relief.
  4. Close with a one-line conclusion on the investor's best next step.

Common mistakes in Investor Grievance Redressal Mechanism of Stock Exchanges

  • Treating SCORES and the exchange investor service cell as the same thing.

    Both receive and follow up complaints, so they look alike.

    Fix: Say SCORES is SEBI's online complaint platform, while the investor service cell is the exchange's own unit for complaints against listed companies and members.

  • Quoting exact timelines and rupee limits from memory.

    Students memorise numbers from old circulars.

    Fix: Give the process and say the timelines and limits are as set by the current SEBI circular and exchange rules. A wrong number costs marks.

  • Saying the Investor Protection Fund pays every investor loss.

    The word protection suggests full cover.

    Fix: State that compensation is available only in the cases and up to the limits the rules allow, such as a member's default.

  • Ignoring the Arbitration and Conciliation Act, 1996 in an exchange arbitration answer.

    Students treat exchange arbitration as purely a SEBI matter.

    Fix: Link it to the Act: written agreement under section 7, interim measures under sections 9 and 17, and the role of the conciliator under section 80.

  • Letting a conciliator act as arbitrator in the same dispute without noting the rule.

    Students forget section 80.

    Fix: State that, unless the parties agree otherwise, the conciliator cannot act as arbitrator or counsel, or be a witness, for that dispute.

Worked examples

Example 1

Rahul Mehta, an investor, has not received dividend from a listed company, Sundaram Tech Ltd, despite repeated written requests. Advise him on the redressal route available.

Show the solution
  1. Provision: complaints against listed companies can be taken to the stock exchange's investor service cell or lodged on SEBI's SCORES platform.
  2. Analysis: Rahul has already written to the company without result, so he should now file the complaint on SCORES or with the exchange cell, attaching his earlier letters.
  3. The entity concerned is required to respond with an Action Taken Report, and the complaint's status can be tracked online.
  4. If the issue stays unresolved, further escalation and the exchange's dispute resolution options are available under the current SEBI circulars and exchange rules.
  5. Conclusion: his next step is a SCORES or exchange cell complaint, not court, and he can escalate if the reply is unsatisfactory.

Answer: Rahul should lodge a complaint on SCORES or with the exchange investor service cell, attach his earlier correspondence, track the Action Taken Report, and escalate under the current SEBI and exchange procedure if unresolved.

Example 2

Meera Iyer has a dispute with her stock broker over an unexecuted trade. The exchange's conciliation fails. She wants interim protection of the disputed securities before the arbitral tribunal is formed. Can she approach a court, and can the conciliator act as arbitrator?

Show the solution
  1. Provision on interim relief: section 9 allows a party to apply to a court before or during arbitral proceedings for interim measures, including preservation of property that is the subject matter of the dispute.
  2. Analysis: the tribunal is not yet constituted, so section 9(3) does not bar her application. If the court grants an order before arbitration begins, section 9(2) requires arbitral proceedings to start within ninety days of the order or such further time as the court allows.
  3. Provision on conciliator: under section 80, unless the parties agree otherwise, a conciliator shall not act as an arbitrator or as a representative or counsel of a party in arbitral or judicial proceedings on the same dispute, and cannot be presented as a witness.
  4. Analysis: the same person who conciliated this dispute therefore cannot be the arbitrator unless both parties agree otherwise.
  5. Conclusion: Meera may apply to the court under section 9, and the conciliator cannot act as arbitrator without the parties' agreement.

Answer: Yes, Meera can seek interim measures from the court under section 9 and must begin arbitration within ninety days of the order or the extended time allowed. The conciliator cannot act as arbitrator unless both parties agree otherwise (section 80).

Exam tips

  • Write answers as provision, analysis, conclusion. Use the ladder of complaint, cell or SCORES, conciliation and arbitration, and IPF as the frame.
  • Do not quote timelines or fund limits unless the question supplies them. Refer to current SEBI circulars and exchange rules instead.
  • When a fact pattern mentions an arbitration agreement, check section 7 writing requirements first.
  • For interim relief questions, check whether the tribunal has been constituted. This decides between section 9 and section 17.
  • Since the elective is open book, mark the relevant sections of the Act and the SEBI circulars so you can cite them quickly.

Practice questions from Arbitration under Investors' Grievances Redressal Mechanism of Stock Exchanges

Investor Grievance Redressal Mechanism of Stock Exchanges in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Investor Grievance Redressal Mechanism of Stock Exchanges: frequently asked questions

What is SCORES in SEBI?

SCORES is SEBI's web-based complaint redress system. An investor files a complaint online, it goes to the entity concerned, and that entity responds with an Action Taken Report. The investor can track the status online.

What does the investor service cell of a stock exchange do?

It receives investor complaints against listed companies and trading members. It forwards them to the other side, seeks a reply, follows up and tracks the complaint until it is closed. If not resolved, the exchange's conciliation and arbitration options apply.

What is the Investor Protection Fund?

It is a fund maintained by each stock exchange to compensate investors in cases such as a member's default, and to support investor education and protection. Compensation is paid only as the rules and limits allow.

Can an investor go to court directly for interim relief in an exchange arbitration?

Yes, under section 9 a party may apply to a court for interim measures before or during arbitral proceedings. Once the tribunal is constituted, the court entertains the application only if the section 17 remedy is not efficacious.