Don’t backtrack, keep escalating: Trader on winning compensation claim against Zerodha

"I did not have to spend money but I had to spend a lot of time on this," said Vijay Gupta, in an interview with Moneycontrol. (Photo by Sora Shimazak/Pexels)

Nearly every trader has experienced losses because of technical glitches on their broking platform. It was no surprise, therefore, that a recent Twitter Space hosted by trader Bandi Shreyas to discuss another trader winning a compensation claim against a leading brokerage had an audience of more than 19,000 people.

Vijay Gupta, who was awarded Rs 8,225 compensation from Zerodha by the BSE's Grievance Redressal Committee (GRC), spoke with Moneycontrol on why he kept at it, when others would have given up.

Also read: In a far reaching case, a trader wins compensation claim against Zerodha

What made you think of continuing with this case, since many traders would have thought it too much of a hassle for a little over Rs 8,000?

It was a small amount and there was an option to ignore it. But I thought that if I cannot recover this small amount, what if I lose Rs 80,000 or Rs 80 lakh tomorrow, how will I be able to recover it? It wasn’t about Rs 8,225. It was about what is right and what is wrong. It was like someone came and snatched this money from me.

How was the experience of taking on this company?

To be very frank, I had no idea that I was going to win against a big company. I was just trying to see how far I can go and trying to find out how such cases (of trying to get brokerages to be accountable) end. I had a very simple formula for this: to keep escalating to the next higher level. That finally ended with the BSE GRC asking the brokerage to pay the compensation.

How much money and time did you have to spend?

I did not spend any money. I researched everything on Google, and came across the Delhi High Court judgment (from 2010) when Reliance Securities had to compensate Vivek Sharma for a very similar situation. I found the text of the judgment on Google and that judgment gave me a lot of confidence. There too it was an issue of a technical glitch causing a loss to the trader, just as it was in my case. I thought, the high court has made a very favourable decision—by pointing out that the broker has to provide a fool-proof system—and my resolve strengthened.

I invested a lot of time on this, chasing it for 45 days, nearly. But you must put in the effort because nobody else will come to your rescue. I treated it like a household chore that needs to be done.

What lessons did you get from this experience and what mistakes did you make?

The number one lesson was that you have to keep fighting when something like this happens, and it starts with the first step. No one else can take that for you. Usually, whenever something like this happens, people think that we can’t take on such a big company and that we are too small for that. I would say you shouldn’t backtrack like that. Remember, this isn’t a street fight, everything is well organised, there are regulatory authorities, there are traders and other people who will help and every information is available online. But you have to take the first step. Then, as you keep at it, you will get ideas of how to go about it along the way.

Also read: Zerodha's FY23 profit and revenue up nearly 39% to Rs 2,907 cr and Rs 6,875 cr

The second lesson is that traders can maybe have a main brokerage account and a second one, with less capital. This is so that if there is a technical glitch in the main brokerage and you are not able to exit a position, you can take the opposing trade from the second brokerage. But there is a problem to this approach. Sometimes a brokerage will show that your order (of the opposing trade to exit the position) is being processed, so if you take another opposing trade in the second brokerage and both go through, then you will have to bear those losses and you can’t even take that complaint to anyone (though you were forced to duplicate that opposing trade because of the tech problem in the primary broker). So the trader is stuck, there is no perfect solution.