Bombay High Court Rules Profit from Excess Margin Due to Technical Glitch Not Unjust Enrichment

The Bombay High Court held that profits earned by Kotak Securities due to excess margin credited on account of a technical glitch could not be termed as unjust enrichment. The Court noted that unjust enrichment requires a conscious and wrongful gain at the expense of another, which was absent in this case as the excess margin arose purely due to a system error. The Bench observed that automated trading systems may occasionally produce unintended outcomes, but unless there is deliberate misuse or dishonest intent, such gains cannot automatically attract restitutionary liability. The judgment clarified that while contractual or regulatory remedies may exist for addressing technological errors, equitable doctrines like unjust enrichment must be applied cautiously. This ruling provides important guidance for financial institutions, brokers, and regulators in dealing with disputes arising from technological failures in the securities market.