Mumbai, August 15, 2026: The Bombay High Court has quashed an FIR against former Axis Mutual Fund chief dealer Viresh Joshi in an alleged front-running case, holding that such a prosecution under the Securities and Exchange Board of India (SEBI) Act can be initiated only on a complaint by SEBI.
While quashing the FIR registered by the Sion police station, later transferred to the EOW, the HC urged SEBI to take “prompt, swift and effective steps” if the allegations warranted action, given their potential impact on investors and market integrity.
Court Examines Front-Running Allegations
Justice RR Bhonsale, on August 13, said the FIR registered at Sion police station and later transferred to the Economic Offences Wing (EOW) primarily concerned allegations of front-running, an offence governed by the special provisions of the SEBI Act. The court held that the special law would prevail over the general criminal law.
The FIR alleged that Joshi, while working as chief dealer with Axis Mutual Fund, had access to confidential information about large orders placed by the fund. He allegedly shared this information with co-accused persons, who traded ahead of the fund's orders and later squared off their positions to make profits.
The prosecution alleged that the activities caused losses to investors, while the Enforcement Directorate (ED) claimed that the proceeds were subsequently routed through different entities and accounts.
The ED told the court that there was sufficient material to proceed against Joshi and that the EOW was competent to investigate offences such as cheating and criminal breach of trust.
SEBI Complaint Required For Prosecution
The court, however, found that the FIR in its present form was essentially about front-running. It noted that Section 26 of the SEBI Act clearly provides that no court can take cognisance of an offence under the Act except on a complaint made by the SEBI Board.
“SEBI is an expert body,” the court said, noting that it was created to protect investors and regulate the securities market. It added that starting proceedings contrary to the special law would amount to “circumvention of the Special Act”.
The court also said that if an investor approaches the police alleging a SEBI offence, the complaint should be forwarded to SEBI. “The provisions of Special Law will take precedence,” it observed.
Other Offences Left Open
While quashing the FIR, the court clarified that it had not ruled out other independent offences under general criminal law. It also left open the right of Axis Mutual Fund to pursue its separate complaint against Joshi.
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The court said the allegations were serious and that there was a “strong prima facie case” of front-running, but held that the proper legal route had to be followed. It urged SEBI to take “prompt, swift and effective steps” if the allegations warranted action, given their potential impact on investors and market integrity.
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