The stock market is never just about charts and numbers. It is about trust, judgment, courage and sometimes, sheer luck. The Bombay High Court‘s F&O verdicts, delivered in two separate but closely watched cases, have once again exposed the thin line between responsibility and opportunity in India’s derivative market. One ruling left investors disappointed, while the other allowed a trader to walk away with a massive profit.
Bombay High Court’s F&O Verdict: Sharekhan Case Leaves Investors Without Relief
The first case involved Sharekhan Limited, one of India’s well-known stockbrokers. Two investors, both medical professionals, alleged that futures and options (F&O) trades were executed in their accounts without proper authorisation by an authorised person they trusted.
They argued that Sharekhan failed to comply with a SEBI circular dated March 22, 2018, which requires brokers to maintain proof of client instructions, such as call recordings or written confirmations.
Initially, the Investors Grievance Redressal Committee (IGRC) found partial fault on both sides. While it noted investor negligence for not monitoring accounts, it also held Sharekhan responsible for procedural lapses. As a result, the broker was directed to reverse brokerage charges and bear 50% of the trading losses.
This approach was upheld by a sole arbitrator and later by the appellate arbitral tribunal.
However, the matter reached the Bombay High Court, where Justice Sandeep V. Marne, in a judgment delivered on December 24, 2025, set aside all previous awards.
The Court held that SEBI’s circular is regulatory and procedural, not a basis for shifting commercial losses and lack of recorded authorisation does not automatically make trades unauthorised. The Court also held that receipt of contract notes, awareness of trades, and silence over time are crucial factors.
The Court strongly criticised the “50-50 loss sharing” approach, calling it legally unsustainable and arbitrary. Relying on earlier rulings such as Ulhas Dandekar vs Sushil Financial Services, it reiterated that investors who permit trading cannot later disown losses while retaining gains.
For many retail investors, this verdict felt harsh, but it reinforced the principle that speculative trading carries personal responsibility.
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Bombay High Court’s F&O Verdict: Kotak Securities Glitch Turns Into ₹1.75 Crore Gain
The second case told a dramatically different story.
Rajguru, an F&O trader who had opened an online trading account with Kotak Securities in October 2021, had just ₹3,175 in his account on July 26, 2022. Due to a technical glitch in Kotak’s risk management system, his account suddenly reflected nearly ₹40 crore as available margin.
Within just 20 minutes, Rajguru executed F&O trades worth approximately ₹94.81 crore. The trades initially resulted in a loss of ₹54 lakh but later turned profitable, ending with a net gain of ₹1.75 crore.
Kotak Securities later reversed the profit, claiming unjust enrichment, arguing that the margin was erroneously provided. The dispute went through the NSE grievance process and arbitration, where Rajguru initially lost. However, the NSE Appellate Tribunal ruled in his favour and ordered Kotak to return the money with interest.
Kotak challenged this before the Bombay High Court.
In an interim judgment dated December 3, 2025, the High Court sided with the trader. It held that the margin glitch merely provided an opportunity, not guaranteed profit and the profit resulted from Rajguru’s trading skill and risk-taking.
The Court also held that Kotak suffered no actual financial loss and if losses had occurred, Rajguru would have been liable to repay them. The Court rejected Kotak’s argument of unjust enrichment and noted that the broker had issued contract notes, collected fees, and failed to activate timely risk controls.
The interim protection allowing Rajguru to retain the profit continues, with Kotak’s appeal listed for hearing on February 4, 2026.
One Court, Two Outcomes: The Larger Message
Taken together, the Bombay High Court’s F&O verdicts send a powerful and consistent message:
- Market opportunities do not come with legal insurance
- Procedural lapses alone cannot erase trading risks
- Skill, awareness, and accountability define who bears profit or loss
The rulings are neither anti-investor nor blindly pro-trader. They reflect how the courts view responsibility in a high-risk, high-reward market.
Conclusion
The Bombay High Court has made it clear: trust in markets must be paired with vigilance.
Whether it ends in loss or profit, the consequences of F&O trading ultimately belong to the person who takes the risk.
Disclaimer:
This article is published for informational and news purposes only. It does not constitute financial, legal, or investment advice. Readers should consult qualified professionals before making investment decisions.
Dr. Bidyut Barun Sarmah, with 22+ years of experience in print, electronic, and digital media, holds an MA and PhD in Mass Communication and Journalism. He has worked with AIR, Doordarshan, and the Publication Division under the Ministry of Information and Broadcasting. A published author and researcher, Dr. Sarmah writes extensively in both Assamese and English. He was also awarded a prestigious fellowship by the Ministry of Culture, Government of India, for his study on journalistic literature—an achievement that highlights his depth of scholarship and contribution to media studies. At Nest of News, he leads the editorial team and contributes across diverse topics.