From ₹3,175 to ₹175 Crore in 20 Minutes: The Gajanan Rajguru–Kotak Securities Case That Shook India’s Stock Market

By, Rajan Subedi

An extraordinary incident in India’s stock market in 2022 has become a landmark case for retail traders, highlighting accountability in broker systems and reinforcing investor rights. The case—now backed by a court ruling—is not a rumor but a verified legal outcome involving retail trader Gajanan Rajguru and brokerage firm Kotak Securities.

At the center of the case was a glaring technical error. Rajguru’s trading account had an actual available balance of just ₹3,175, with no margin, collateral, or additional funds. However, due to a technical glitch in Kotak Securities’ system, a trading limit of nearly ₹40 crore was mistakenly enabled on his account—without any request or action from the trader.

Compounding the error, the brokerage treated this accidental limit as valid collateral and allowed Rajguru to trade in the Futures and Options (F&O) segment. This action directly violated regulations of India’s market regulator, SEBI, which prohibit allowing retail traders to take derivative positions without sufficient margin.

As trading began, the market initially moved against Rajguru’s position. Within a short time, the account reflected a paper loss of up to ₹92 crore, with a visible loss of around ₹54 lakh. Had the trade ended at that point, Kotak Securities would have been entitled to recover the loss from the trader—despite the trade being enabled due to the broker’s own system fault.

The situation took a dramatic turn when the market reversed direction. Within a 20-minute window, the same positions swung sharply into profit. The total profit touched an astonishing ₹175 crore. Recognizing the volatility, Rajguru made a quick decision to close all positions and book the profit.

The dispute erupted when Kotak Securities refused to credit the profit, arguing that the trades were executed using a limit provided by mistake. Rajguru challenged this stance, pointing out the double standard: the broker was willing to hold him liable for losses but unwilling to honor profits generated through the same system.

The matter eventually reached the court. Rajguru’s argument was straightforward—if losses would have been enforceable, profits must also be honored. The court agreed, ruling that a broker’s system failure cannot be transferred onto the trader. Since the trades were legally executed on the broker’s platform, the outcome—profit or loss—must stand.

In its judgment, the court ordered Kotak Securities to pay the full ₹175 crore profit to Rajguru. The ruling has since been described as historic, setting a strong precedent that brokers are responsible for their technological and operational lapses.

The case carries important lessons for traders beyond India, including those in Nepal. While margin-free trading triggered by system errors is inherently risky, the judgment shows that traders are not automatically at fault if the broker enables such trades. With proper documentation and legal recourse, even retail traders can prevail against large financial institutions.

Most importantly, the ruling reinforces a simple principle: a trade cannot be valid only when it results in a loss and invalid when it yields a profit.