Trader's ₹1.75 Cr Windfall From Kotak Securities Glitch Upheld by Court

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Overview

A small-town trader, Gajanan Rajguru, successfully leveraged a technical glitch at Kotak Securities, earning ₹1.75 crore in under two hours. Despite the brokerage's challenge, an arbitral award in Rajguru's favor was upheld, establishing that a bailee is responsible for delivering all assets, including offspring, akin to the trader's claim on funds generated from the credited margin.

Trader Wins ₹1.75 Crore in Court After Exploiting Brokerage Glitch

A legal battle concluded with a small-town trader, Gajanan Rajguru, securing an INR 1.75 crore arbitral award against brokerage giant Kotak Securities. Rajguru capitalized on a technical malfunction that erroneously credited excess margin money to his trading account, amassing the significant profit in less than two hours.

Contract Law Invoked in Dispute

Kotak Securities contested the award, but Rajguru's victory was solidified by invoking provisions similar to Section 163 of the Contract Act. This legal principle dictates that a bailee, akin to Kotak Securities in this scenario, is responsible for returning not only the original property but also any increase or offspring, such as the profits derived from the erroneous credit.

Court Sides With Trader on Funds

The courts ultimately ruled in favor of Rajguru, upholding the arbitral award. This decision suggests that brokers must bear responsibility for technical anomalies that lead to customer gains, reinforcing the principle that funds incorrectly credited must be accounted for, much like a cow and its calf delivered to the owner.

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