In a landmark verdict that has sent ripples through India's financial sector, the Bombay High Court has allowed a Mumbai-based trader to retain a profit of Rs 1.75 crore, which he earned after a brokerage firm mistakenly credited his account with nearly Rs 40 crore due to a technical error.
The Glitch That Created a Windfall
The extraordinary case revolves around trader Gajanan Rajguru and a significant system failure at Kotak Securities in 2022. According to court documents, a technical glitch in the broker's platform erroneously credited Rajguru's trading account with margin money worth approximately Rs 40 crore. This was money he was not entitled to and had not deposited.
Spotting the unexpected credit, Rajguru acted swiftly. Within about 20 minutes, he utilized the erroneously provided margin to execute a series of trades in the stock market. His initial foray resulted in a substantial loss of Rs 54 lakh. However, undeterred, he continued trading and eventually managed to turn the situation around, clocking profits of Rs 2.38 crore. After accounting for the initial loss, his net gain stood at a staggering Rs 1.75 crore.
Legal Battle Over Trading Profits
When Kotak Securities identified its costly error, it promptly reversed the Rs 40 crore margin credit from Rajguru's account. However, the brokerage went a step further, demanding that the trader also return the Rs 1.75 crore in profits he had generated using their funds. The firm's argument was straightforward: since the margin money was provided by mistake, any fruits borne from its use rightfully belonged to them.
This demand set the stage for a protracted legal dispute. Kotak Securities contended that allowing Rajguru to keep the profits would constitute "unjust enrichment"—a legal principle preventing someone from profiting at another's expense without justification.
Court's Verdict: Skill Over Serendipity
The Bombay High Court, in a ruling delivered in December 2025, delivered a decisive verdict in favour of the trader. The court rejected the broker's claim and permitted Rajguru to retain his hard-won profits. The judges made a crucial distinction that formed the bedrock of their decision.
The court held that profits accrued from accidentally provided margin money, due to a broker's own technical failure, cannot be automatically classified as unjust enrichment. It emphasized that the margin credit itself did not guarantee profits. The bench observed that Rajguru had undertaken genuine market risk and applied his own trading acumen and skill to navigate the volatile markets. He was liable for the losses, which he initially incurred, and thus entitled to the subsequent gains.
Furthermore, the court noted a critical point: Kotak Securities did not suffer any direct financial loss from the erroneous credit, as the principal amount was fully recovered. The judges stated that the brokerage was attempting to "unjustly appropriate" the trader's legitimate profits on a "specious ground."
This ruling underscores the principle that in the market, opportunity must be coupled with execution. However, the saga may not be over. Reports indicate that Kotak Securities has appealed against the High Court's ruling. The next hearing in this high-stakes financial drama is reportedly scheduled for February 4.
The case of Gajanan Rajguru versus Kotak Securities is now a closely watched precedent, highlighting the complex intersection of technical errors, financial markets, and the legal interpretation of profit and loss in the digital trading age.
