The Bombay High Court has recently allowed a futures and options (F&O) trader to retain a ₹1.75 crore profit that he earned due to an accidental margin credit of ₹40 crore from his broker Kotak Securities, holding that the gains did not amount to unjust enrichment.
The ruling relates to an incident from 2022, when trader Gajanan Rajguru received an erroneous margin of ₹40 crore in his trading account due to a technical glitch at Kotak Securities. According to news reports, Rajguru utilised the margin to execute trades and earned a profit of ₹1.75 crore within a span of about 20 minutes.
Although Kotak Securities subsequently reversed the mistakenly credited margin, it sought to recover the profits earned by the trader, arguing that the gains were made using the broker’s funds.
In an order passed in December 2025, the Bombay High Court ruled in favour of the trader, observing that Kotak Securities had not suffered any financial loss due to the erroneous margin credit and therefore could not claim the profits earned by the trader.
The court held that the profits were generated through the trader’s own risk-taking and trading decisions, and allowing the broker to retain those gains would amount to unjust enrichment.
“It cannot be that the Respondent (trader) would only be liable to repay the amount of losses but cannot be permitted to retain the profits,” the court said. It further noted that there cannot be a win-win situation for the broker, where it recovers losses from the trader but also retains the entire profit earned by the trader on the ground that the trades were executed using the broker’s margin.
Kotak Securities has appealed against the ruling, and the next hearing in the matter has been scheduled for February 4, 2026. Until then, the High Court has directed that the interim order allowing the trader to retain the profits will remain in force.
Advocates Nitesh V. Bhutekar and Aaditya Mahamiya appeared on behalf of the trader in the case.
According to a report by The Economic Times, Kotak Securities had earlier attempted to settle the dispute by offering Rajguru ₹50 lakh out of the ₹1.75 crore profit, effectively seeking to retain ₹1.25 crore for itself. The trader, however, rejected the settlement offer.
The case has sparked discussion in market circles around broker liability, system glitches, and the rights of traders in situations involving erroneous margin credits.
