Summary: A technical glitch led to a trading frenzy, resulting in a legal battle over profits. The Bombay High Court ruled in favor of the trader, Gajanan Rajguru, allowing him to keep the profits made from trades executed due to an error in Kotak Securities' system.
On July 26, 2022, a technical glitch in Kotak Securities' system gave Gajanan Rajguru, a trader, more trading power than he should have had. With only Rs.3175.69/- as his actual margin, he was able to make trades worth Rs.94.81 crores in futures and options. Within 20 minutes, he made a profit of Rs.1.75 crores before the error was fixed.
Kotak Securities filed a request to challenge a decision made by the Appellate Tribunal. This tribunal had reversed earlier decisions by the Grievance Redressal Committee (GRC) and a lower arbitration panel, both of which had supported Kotak.
On December 3, 2025, Judge Sandeep V. Marne of the Bombay High Court decided in favor of Rajguru. The court found that Kotak's system error was responsible for the opportunity that Rajguru took advantage of, and so he was allowed to keep the profits.
"The Appellate Arbitral Tribunal has rightly held that Petitioner has acted unreasonably and arbitrarily in the present case."
Kotak argued that the profits made by Rajguru should belong to them, referring to certain sections of the Indian Contract Act, 1872. However, the court noted that these sections were about goods, not money, and thus didn't apply here.
Rajguru's defense highlighted that he used his skills and took risks, and if the trades had resulted in losses, he would have had to deal with them. The court agreed, stating that Kotak should not benefit from its own mistake.
The court dismissed Kotak's challenge but allowed a five-week delay on the withdrawal of the money by Rajguru. This decision emphasizes how important it is for companies to have reliable systems and the risks they face when technical errors happen.
In summary, the court ruled that Gajanan Rajguru could keep the profits he made due to the technical glitch in Kotak Securities' system. This case highlights the importance of having strong systems in place to avoid such situations.
