₹40 Crore Margin Glitch: Retail Trader vs Kotak Securities | Who Won?

On 26 July 2022, for most people, it was just another normal trading day. For one Indian retail trader, it became a day that would challenge how brokers, exchanges, and even courts look at responsibility in the stock market. This video is the story of what happened when a technical glitch inside Kotak Securities’ Risk Management System (RMS) temporarily showed a retail trader something almost unimaginable - a usable trading margin of nearly ₹40 crore, despite the trader having an actual balance of just ₹3,175.69. At first glance, it looked unreal. Like a dashboard error. A visual bug. Something that would vanish on refresh. But it didn’t. The margin stayed. Orders were accepted. Trades were executed. Contract notes were generated. Brokerage, STT, exchange charges - everything behaved exactly as it would on any other trading day. The trader at the centre of this case, Mr. Gajanan Rajguru, had opened his demat account with Kotak Securities in October 2021. On that July morning in 2022, after rechecking multiple times, he made a decision that no rulebook ever prepares a retail trader for - he decided to trade using the margin that the broker’s own system was allowing him to use. What followed over the next 20 minutes was not a fairy tale. It wasn’t risk-free. Some positions moved against him. At one point, his intraday drawdown touched nearly ₹58 lakh. The risk was real, the exposure was massive, and if the market had moved the other way, the losses could have easily run into crores. But the market turned. Positions were managed. Trades were squared off. And when the dust settled, the ledger showed something extraordinary - a net profit of approximately ₹1.75 crore, officially credited to the trader’s account. For a brief moment, this was just another extreme but valid trading outcome. Then Kotak Securities realised something had gone wrong. Once the broker identified the RMS glitch, the situation flipped overnight. The ₹40 crore margin vanished. The trader’s usable balance was reset to a few thousand rupees. And the profit - the ₹1.75 crore that had already been credited through the settlement system was unilaterally debited by the broker. Kotak Securities’ position was simple: this profit was the result of a system error and therefore amounted to “unjust enrichment.” According to the broker, since the margin should never have been available, the profit did not belong to the trader. That single action raised a question that most retail traders have quietly wondered about but never seen tested this openly: If the market had moved against the trader and resulted in a multi-crore loss, would the broker have called it a “system error” and reversed the loss as well? Or would the loss still be treated as the trader’s responsibility? This dispute didn’t stay at the broker level. It moved through exchange arbitration, then appellate arbitration, and eventually reached the Bombay High Court. Along the way, some arguments were accepted, some were questioned, and some were quietly exposed as morally one-sided. In court, Kotak Securities relied on concepts like unjust enrichment and even invoked sections of the Indian Contract Act, arguing that the margin was effectively their “property” and any profit generated using it must also belong to them. The court, however, began asking uncomfortable but fundamental questions about causality, about risk, and about whether a system failure that merely enabled trading could automatically claim ownership over a result that was shaped by market movement and human decision-making. This case is not just about ₹1.75 crore. It is about where accountability begins and ends in a technology-driven market. And most importantly, it asks a question every retail trader should think about: When brokers expect traders to accept every system failure on their end during losses, can they selectively reject outcomes they don’t like when the same systems produce profits? Watch the full video to understand what really happened, what the court actually said, and why this single glitch may change how broker accountability is viewed in Indian markets. Have you been scammed? File your complaint at - https://aseemjuneja.in/ Buy Fraud Free book: https://www.amazon.in/FRAUD-FREE-Outsmart-Scammers-Money/dp/9370032088 https://www.flipkart.com/fraud-free-outsmart-scammers-keep-your-money-safe/p/itmf52d631bf03b3 Install Stock Pathshala for LIVE classes and Webinars now: https://play.google.com/store/apps/details?id=com.codeclinic.stockpathshala&hl=en_IN Join Our Whatsapp Group: https://www.whatsapp.com/channel/0029Va5uiyqGufIvVfGbnG1m 0:00 - Introduction 0:32 - Trader story: Making crores in 20 minutes 2:55 - High court facts and statements 4:48 - Glitch explained and SEBI case filing 7:25 - Fraudfree assistance & how we help 8:03 - Exchange and high court inside story 9:39 - Kotak Securities argument in court 12:44 - High court observations and key details