Summary: In a recent Bombay High Court decision, Judge Sandeep V. Marne ruled in favor of Gajanan Ramdas Rajguru, allowing him to keep profits earned from a stock trading glitch. The court found that Kotak Securities Limited, responsible for the error, could not claim the profits made by Rajguru.
On July 26, 2022, a technical glitch at Kotak Securities Limited resulted in Gajanan Rajguru receiving more money for trading than he should have. With only ₹3175.69 in his account, the error allowed him to trade approximately ₹94.81 crores in futures and options. Within 20 minutes, the glitch was fixed, but not before Rajguru made a profit of ₹1.75 crores.
Rajguru's profits were initially added to his account but later taken back by Kotak Securities, saying the trades were made with incorrect amounts. Rajguru filed a complaint with the National Stock Exchange (NSE) on September 15, 2022, but both the Grievance Redressal Committee and a lower decision-making group rejected his claim.
Rajguru appealed to the NSE Appellate Forum, which ruled in his favor on October 25, 2023. The group ordered Kotak Securities to pay Rajguru the sum of ₹1,75,01,672.92, with interest at 12% per year from July 26, 2022.
Unhappy with the decision, Kotak Securities filed a petition under a section of the Arbitration and Conciliation Act. They argued that Rajguru's profits were unfair and should be returned, referencing parts of the Indian Contract Act.
"The higher decision-making group has correctly held that Kotak Securities acted unreasonably and unfairly in this case," stated Judge Marne.
Judge Marne dismissed Kotak Securities' challenge on December 3, 2025. He concluded that the profits resulted from Rajguru's skills and risks, not just the incorrect margin. He emphasized that Kotak Securities' own system failure was to blame and that they could not unfairly claim profits made by Rajguru.
The court allowed Rajguru to take out the entire amount deposited, along with the interest it earned, but paused the withdrawal for five weeks upon Kotak's request.
This case highlights the complexities of trading errors and the responsibilities of financial institutions to manage their systems effectively.
