The Bombay High Court has delivered a landmark ruling allowing a Mumbai-based trader to retain ₹1.75 crore in profits earned following a technology glitch at Kotak Securities. The December 2025 interim order marks a rare legal precedent in cases involving brokerage system errors and trader profits.

The Technology Glitch Incident

The case originated in 2022 when Kotak Securities experienced a significant system malfunction that inadvertently credited approximately ₹40 crore of margin funds to trader Gajanan Rajguru's account. This technical error provided Rajguru with an unusually large margin balance, far exceeding his actual account limits.

Within roughly 20 minutes of discovering the inflated margin, Rajguru executed several Futures & Options (F&O) trades. His trading activity during this brief window generated substantial profits, as detailed below:

Legal Battle and Court Proceedings

Upon discovering the system error, Kotak Securities immediately reversed the ₹40 crore credit and initiated legal proceedings to recover the profits from Rajguru. The brokerage firm argued that since the margin funds were mistakenly provided due to their technical glitch, any resulting gains should rightfully belong to the broker rather than the trader.

The Bombay High Court examined the case under the legal doctrine of "unjust enrichment," which typically allows recovery of wrongful profits obtained without legitimate effort or rightful claim. However, the court's analysis led to a different conclusion regarding the nature of Rajguru's gains.

Court's Reasoning and Judgment

The Bombay High Court rejected Kotak Securities' claim for profit recovery, making several key observations in its December 2025 interim order. The judge determined that the profits resulted from Rajguru's own market actions and risk-taking decisions rather than automatic benefits from the erroneous margin credit.

Crucially, the court held that these gains do not qualify as "unjust enrichment" since they were earned through legitimate trading activities, albeit with mistakenly provided capital. The judge noted that Kotak Securities did not suffer a direct loss due to the glitch and emphasized that simply reclaiming the profits would effectively transfer the trader's legitimate market gains back to the broker.

Current Status and Future Proceedings

Kotak Securities has filed an appeal against the Bombay High Court's judgment, indicating the brokerage firm's intention to pursue the matter further through the legal system. The case is scheduled for the next hearing on February 4, 2026, where higher judicial authorities will review the interim order.

Meanwhile, the December 2025 interim order remains in effect, allowing Rajguru to retain the ₹1.75 crore in profits. This ruling establishes an important legal precedent for similar cases involving brokerage system errors and subsequent trading profits, potentially influencing how courts handle technology-related disputes in the financial services sector.

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.

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:

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.