The Bombay High Court has refused to let Kotak Securities reclaim profits earned by a trader after a system glitch, ruling that gains made from mistakenly credited margin do not amount to unjust enrichment.
The case dates back to 2022, when trader Gajanan Rajguru was mistakenly credited margin worth nearly Rs 40 crore by his broker, Kotak Securities, due to a system glitch. Acting within about 20 minutes of the erroneous credit, Rajguru executed trades that eventually resulted in a net profit of Rs 1.75 crore, according to an Economic Times report.
While Kotak Securities later reversed the incorrect margin credit, it also sought to recover the profit earned by the trader, arguing that the gains were generated using funds that did not belong to him.
High Court’s ruling
In an order passed in December 2025, the Bombay High Court ruled in favour of the trader, stating that the profit could not be classified as “unjust enrichment”.
The court observed that the mere availability of excess margin due to a technical fault does not automatically lead to profits. It noted that Rajguru had initially suffered a loss of Rs 54 lakh before making gains of Rs 2.38 crore, which ultimately resulted in a net profit of Rs 1.75 crore.
Importantly, the court pointed out that Kotak Securities did not incur any financial loss because of the erroneous margin credit. The profits, it said, were earned through the trader’s own decisions, skill and risk-taking, and could not be claimed by the broker simply because the trades were executed using margin mistakenly provided by it.
Rejecting Kotak’s argument, the court said the firm was effectively attempting to appropriate the trader’s gains without any legal basis.
Kotak Securities has challenged the ruling, and the matter is scheduled for further hearing on February 4, 2026. The trader was represented by advocates Nitesh V Bhutekar and Aaditya Mahamiya.