NewsStocksBombay High Court Allows F&O Trader to Retain ₹1.75 Crore Profit from Accidental Margin CreditBombay High Court Allows F&O Trader to Retain ₹1.75 Crore Profit from Accidental Margin Credit
Bombay High Court ruled that a Mumbai F&O trader can retain ₹1.75 crore profit earned using ₹40 crore accidentally credited by Kotak Securities due to technical glitch. The court rejected 'unjust enrichment' claims, stating profits were earned through trader's own skills and risk assessment. The interim judgment remains valid until February 4, 2026 hearing.
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The Bombay High Court has delivered a landmark ruling allowing a Mumbai-based F&O trader to retain profits of ₹1.75 crore earned through accidentally credited margin money from a broker's technical glitch. The case highlights complex legal questions around trading profits derived from system errors and the concept of unjust enrichment in financial markets.
Case Background and Technical Glitch
The incident began when Kotak Securities experienced a technical glitch that resulted in accidentally crediting ₹40 crore as trade margin money to the trader's account. Upon discovering the additional margin availability, the trader utilized the funds for F&O trading activities over a 20-minute period. The trader's trading performance during this period resulted in significant profits, leading to a legal dispute over ownership of the gains.
| Case Details: | Information |
|---|---|
| Accidentally Credited Amount: | ₹40 crore |
| Trading Duration: | 20 minutes |
| Initial Loss: | ₹54 lakh |
| Total Profit Made: | ₹2.38 crore |
| Net Profit: | ₹1.75 crore |
Court Proceedings and Timeline
The original order was passed on December 3, 2025, and subsequently referred to the High Court on December 24 for an interim judgment. The Bombay High Court accepted Kotak Securities' appeal but adjourned the next hearing to February 4, 2026. The court stated that the interim order shall continue until the scheduled hearing date, allowing the trader to retain the profits during this period.
Legal Arguments and Court's Reasoning
Kotak Securities argued that any profit derived from the erroneously credited margin of ₹40 crore rightfully belongs to them. However, the court observed that the trader earned profits utilizing his own skills and risk assessment capabilities after discovering the available margin money. The Bombay High Court emphasized that the credited money did not automatically generate profits and required the trader's active decision-making and market expertise.
The court's analysis revealed important distinctions in the trading outcome:
| Trading Performance: | Amount |
|---|---|
| Initial Loss Incurred: | ₹54 lakh |
| Subsequent Profit: | ₹2.38 crore |
| Final Net Position: | ₹1.75 crore profit |
Key Legal Principles Established
The Bombay High Court rejected the 'unjust enrichment' argument, establishing that profits made by a stock trader using mistakenly provided trade margin money due to technical glitches cannot automatically be considered unjust enrichment. The court underscored that Kotak Securities had not suffered any actual loss due to the accidentally credited trade money and therefore should not unjustly claim profits earned through the trader's own skills and risk-taking abilities.
The ruling sets a precedent for similar cases involving technical glitches in trading platforms and clarifies the legal framework around profits derived from system errors. The court's decision emphasizes the importance of individual trading skills and risk assessment in determining profit ownership, even when the underlying capital was erroneously provided.
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