In an unusual case that has sparked debate across Dalal Street, the Bombay High Court has ruled that a Mumbai-based derivatives trader can retain a profit of Rs 1.75 crore earned within just 20 minutes, even though the trades were placed using margin money mistakenly credited by his broker due to a technical error.
The court held that profits earned through skill and market risk cannot automatically be labelled as “unjust enrichment,” even if the initial trading margin was provided in error.
What exactly happened?
According to court records, the trader received an erroneous margin credit of around Rs 40 crore after a technical glitch at Kotak Securities. Spotting the available margin, the trader used it to take positions in the futures and options (F&O) segment.
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The trades did not immediately turn profitable. In fact, the trader first incurred a loss of about Rs 54 lakh. However, subsequent positions worked in his favour, generating gross profits of Rs 2.38 crore, resulting in a net gain of Rs 1.75 crore within a short span of roughly 20 minutes.
Broker moved court, citing unjust enrichment
Kotak Securities later approached the court, arguing that any profit made using mistakenly credited funds legally belonged to the broker. The firm maintained that the margin was never meant to be at the trader’s disposal and that retaining the profit would amount to unjust enrichment.
High Court’s key observation
The Bombay High Court, however, took a different view. While passing its interim order, the court observed that the profits were not automatic and did not arise merely because money was credited.
“The trader earned the profit by applying his own skill, judgment and risk assessment after noticing that margin was available,” the court noted, adding that the gains were a direct result of trading decisions, not the glitch itself.
The court also pointed out that Kotak Securities did not suffer any financial loss due to the erroneous credit, weakening the broker’s claim over the profits.
Interim relief upheld till February hearing
The original order was passed on December 3, 2025, and later placed before the High Court on December 24 for interim consideration. While the HC has agreed to hear Kotak Securities’ appeal, it has adjourned the matter to February 4, 2026.
Until then, the court has made it clear that the interim relief will continue.
“Post the matter on 4th February 2026. Till then, the interim order granted by the learned Single Judge… shall continue,” the bench stated.
This means the trader can retain the Rs 1.75 crore profit for now, pending a final decision.
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Why this case matters
The ruling is being closely watched by brokers, traders and compliance teams across the market. It raises important questions around system errors, liability, and the fine line between technical faults and legitimate trading outcomes.
If upheld in final hearings, the case could set a significant precedent for how Indian courts view profits arising from broker-side glitches—especially in high-risk segments like F&O trading.
