The National Stock Exchange (NSE) has revealed in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI) for its proposed initial public offering (IPO) that it lodged a police complaint over the alleged wrongful retention and sale of shares mistakenly credited to an individual's demat account. The disclosure, part of the mandatory litigation disclosures in the draft papers, centres on 5,000 NSE equity shares that were erroneously transferred to the account of an individual identified as Kashmiri Lal Rana in December 2023.

What the DRHP Discloses

According to the draft prospectus, the 5,000 NSE shares were credited to Rana's demat account without any purchase request or consideration being paid. By the time the error was detected, 3,685 of those shares had allegedly been sold for approximately ₹1.33 crore. NSE alleged that Rana knowingly retained the shares despite being aware they did not belong to him.

NSE filed a First Information Report (FIR) at the Bandra-Kurla Complex Police Station in Mumbai in July 2025, through its authorised representative. The complaint was registered against Rana under provisions of the Bharatiya Nyaya Sanhita (BNS) relating to alleged criminal breach of trust and cheating.

Civil Suit at Delhi High Court

Separately, NSE and Nuvama Wealth Finance Ltd filed a civil suit before the Delhi High Court in May 2025 seeking recovery of the shares and the sale proceeds linked to the same incident. The plaintiffs have sought recovery of approximately ₹1.44 crore representing the sale proceeds, along with the return of the remaining 1,315 shares and 5,260 bonus shares that had accrued on them.

The Delhi High Court, through an interim order passed in May 2025, restrained the transfer or sale of the remaining shares and bonus shares for the duration of the case. 'The matter is currently pending,' NSE noted in its DRHP.

Context: NSE's Long-Awaited IPO

The disclosure comes as NSE moves closer to a public listing that has been anticipated for years. The DRHP filed with SEBI is a critical step in that process, and mandatory litigation disclosures such as this one are standard practice under Indian securities law. Notably, the share-crediting error occurred in December 2023, nearly two years before the FIR was lodged, raising questions about the timeline of internal detection and escalation.

This comes amid heightened regulatory scrutiny of market infrastructure institutions in India. NSE itself has previously been subject to SEBI enforcement actions on unrelated matters, making transparency in its IPO disclosures particularly significant for prospective investors.

What Happens Next

Both the criminal complaint and the civil suit remain active. The Delhi High Court's interim order ensures the remaining shares and bonus shares cannot be transferred pending the outcome. Investors evaluating the NSE IPO will need to assess this and other disclosed litigations as part of their due diligence.