The Bombay High Court has ruled that a trader may retain ₹1.75 crore of gains realised after a technical glitch at a brokerage firm erroneously credited a large margin to the trader’s account. The December 2025 judgment, handed down in favour of Gajanan Rajaguru, emphasised that the profit did not amount to unjust enrichment and that the trader was entitled to keep the proceeds.
Bombay High Court trader profit ruling
The case stems from a 2022 incident in which Kotak Securities’ systems accidentally transferred roughly ₹40 crore as margin into Mr Rajaguru’s trading account. Within around 20 minutes, he used the enlarged margin to execute trades in the futures and options segment and realised profits of approximately ₹1.75 crore.
Upon discovering the error, Kotak Securities moved to reverse the ₹40 crore transfer and sought to recover the ₹1.75 crore profit as well. The broker argued that the excess margin was theirs and therefore any gains derived from it should be returned. The trader challenged that claim in court.
The bench, sitting in December 2025, rejected the broker’s claim on the profit. Judges observed that had the trades resulted in losses, the broker would have sought to recover those losses from the trader. It was, the court said, inequitable to insist that a trader absorb losses while denying them the right to retain gains that arose from their trading decisions and risk-taking capability.
Crucially, the court noted that Kotak Securities did not suffer any loss as a result of the accidental transfer; the firm successfully reclaimed the excess margin without incurring detriment. Given that outcome, the judiciary found no basis to treat the realised profit as unjust enrichment.
Kotak Securities reportedly offered a settlement to Mr Rajaguru — proposing to pay him ₹50 lakh from the total gains and retain the remaining ₹1.25 crore. The trader declined the proposal and continued with the legal challenge. Counsel for the trader included Nitesh V. Bhutekar and Aditya Mahamiya.
The broker has filed a special leave petition challenging the high court order; the matter is listed for further hearing on 4 February 2026. The high court has indicated that an interim order remains in force until that date.
Market participants and legal commentators say the ruling could have broader implications for brokerage operations and investor confidence in India’s derivatives market. Brokers may review and strengthen system controls and reconciliation procedures to prevent comparable errors, while traders may see the judgment as a reinforcement of the principle that market gains earned through trading activity and risk-taking are protected unless clear unjust enrichment is proved.
Regulators may also take an interest in the fallout, examining whether existing safeguards and notification protocols are adequate to limit systemic risk and ensure fair outcomes for clients and intermediaries alike. For now, the decision stands as a noteworthy affirmation of traders’ rights in disputes arising from technical failures at intermediaries.
Key Takeaways:
- Bombay High Court ruled that a trader may retain ₹1.75 crore profit after a technical error at Kotak Securities led to an accidental ₹40 crore margin credit.
- The judgment held that the gain did not amount to unjust enrichment and strengthens investor confidence in India’s F&O market.
- Bombay High Court trader profit ruling is likely to influence broker risk-management and dispute resolution practices.
- Kotak Securities has appealed; an interim order remains until the February 4, 2026 hearing.
