Mumbai: The Bombay High Court on Friday quashed the police FIR against Viresh Gangaram Joshi, former chief dealer at Axis Mutual Fund, in a case linked to an alleged front-running racket. The case alleged that Joshi and his associates used confidential information about the mutual fund’s upcoming trades for personal gains, causing alleged losses of ₹2.52 lakh crore to around 6.6 crore investors. However, the court did not hold that the allegations were false or declare Joshi cleared of wrongdoing. The FIR was quashed primarily because of the procedure prescribed under the Securities and Exchange Board of India Act, 1992.
A single-judge bench of Justice Ranjitsinha Raja Bhosale held that the allegations in the FIR primarily related to front-running, an offence covered by the SEBI Act. Under Section 26 of the law, a court can take cognisance of an offence under the Act only on a complaint filed by SEBI or an officer authorised by it. Therefore, proceeding directly on the basis of a police FIR was not the legally prescribed route for prosecuting an alleged SEBI Act offence.
SEBI Complaint Required Instead of Police FIR
Joshi had approached the High Court seeking quashing of the FIR. His lawyers argued that the SEBI Act is a special legislation governing securities-market offences and provides a specific procedure for prosecution. According to the defence, the complainant should have approached SEBI instead of initiating proceedings through a police FIR.
The FIR was registered following a complaint alleging that Joshi, then 52, and four associates had formed three companies and used confidential, non-public information obtained during his tenure as Axis Mutual Fund’s chief dealer. The allegations stated that the information was used to trade ahead of major fund transactions and profit from the resulting price movements.
The state government and Enforcement Directorate opposed Joshi’s plea. The ED told the court that it was separately investigating the money-laundering aspect of the case and argued that the material available also indicated possible offences under the Indian Penal Code. Despite these arguments, the High Court found the specific legal bar under the SEBI Act decisive in quashing the FIR.
Court Highlights Seriousness of Allegations
The High Court made it clear that quashing the FIR did not mean the allegations against Joshi had been disproved or that he had been declared innocent. The court said SEBI remains free to independently examine the allegations and take appropriate action if it finds that an offence under the securities law has been committed.
The court also permitted Axis Mutual Fund to approach SEBI and file an appropriate complaint. It stressed the seriousness of the allegations and their potential financial impact on investors and the securities market. The court expressed confidence that SEBI would take prompt and effective steps to protect investors and maintain the integrity of the financial system.
SEBI Had Already Imposed a Seven-Year Market Ban
The High Court order comes amid separate regulatory and money-laundering proceedings against Joshi. SEBI’s investigation alleged that Joshi shared confidential information about Axis Mutual Fund’s impending trades with associates. Those associates allegedly traded before the fund’s orders entered the market and attempted to profit from the resulting price movement.
In July 2026, SEBI passed a final order barring Joshi from the securities market for seven years. It also imposed a ₹3 crore penalty and ordered disgorgement of the alleged unlawful gains. Action was also taken against other entities and individuals connected with the matter.
ED Investigation Alleges Mule Accounts and Overseas Links
The Enforcement Directorate arrested Joshi on August 2, 2025, following searches at multiple locations. The agency alleged that the suspected front-running operation generated substantial illicit profits and involved mule bank accounts and a Dubai-based trading terminal.
Axis Mutual Fund had earlier clarified that the ED investigation related to alleged actions by a former employee and had no connection with the fund house’s current operations.
The High Court’s order has halted the police FIR-based proceedings on the specific legal ground under the SEBI Act, but it does not bring the broader allegations to an end. SEBI can still examine the matter through the procedure prescribed under securities law and take action if violations are established.
The case now moves into a regulatory phase in which SEBI’s findings could determine whether the alleged front-running activities violated securities laws, who benefited from the confidential information and what further action should follow. The matter also highlights the importance of following the specialised legal framework governing offences in India’s securities markets.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
