Bombay HC Lets Trader Pocket ₹1.75 Cr Profit From Kotak Securities Glitch

BANKINGFINANCE
Whalesbook Logo
AuthorVihaan Mehta|Published at:
Bombay HC Lets Trader Pocket ₹1.75 Cr Profit From Kotak Securities Glitch
Overview

The Bombay High Court has ruled in favor of a trader, allowing him to keep ₹1.75 crore profit generated from a Kotak Securities technology error. The glitch in 2022 mistakenly credited ₹40 crore margin to the trader's account, enabling him to execute F&O trades yielding substantial gains. Kotak Securities' appeal is pending, with the next hearing scheduled for February 4, 2026.

Court Greenlights Trader's Profit Amid System Error

The Bombay High Court has issued a significant ruling, permitting a Mumbai-based trader to retain ₹1.75 crore in profits derived from a substantial technology malfunction at Kotak Securities. The case, originating in 2022, involved a system glitch that erroneously credited approximately ₹40 crore in margin funds to trader Gajanan Rajguru's account.

Trader Capitalizes on Erroneous Margin

Within a rapid 20-minute window, Rajguru leveraged the inflated margin balance to execute a series of Futures & Options (F&O) trades. These trades successfully generated profits of roughly ₹2.38 crore, which offset an earlier ₹54 lakh loss, resulting in a net gain of ₹1.75 crore. The broker subsequently sought to reclaim these profits, asserting the funds were mistakenly provided.

Court Cites Trader's Own Market Actions

However, the High Court rejected Kotak Securities' claim in a December 2025 interim order. The judges emphasized that the profits stemmed from the trader's own market analysis, strategy, and risk-taking, rather than a direct, effortless gain from the erroneous credit. This distinction was crucial in dismissing the notion of 'unjust enrichment.'

No Broker Loss, No Profit Recoupment

The court further noted that Kotak Securities did not incur a financial loss due to the glitch. Reclaiming the trader's market-generated profits would, in effect, transfer legitimate gains back to the broker. Kotak Securities has since filed an appeal, with further proceedings slated for February 4, 2026, while the interim order stands.

Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.