MUMBAI: The Bombay High Court on Friday quashed a police FIR against Viresh Gangaram Joshi, the former chief dealer at Axis Mutual Fund, in a case alleging that he and his associates defrauded 6

Published on: Aug 16, 2026, 08:05:10 IST

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MUMBAI: The Bombay High Court on Friday quashed a police FIR against Viresh Gangaram Joshi, the former chief dealer at Axis Mutual Fund, in a case alleging that he and his associates defrauded 6.6 million investors of ₹2.52 lakh crore through a “front-running” racket involving the mutual fund’s trades.

The court did so not by holding that the allegations against Joshi were false or that he had been cleared of wrongdoing, but because of a legal bar under the Securities and Exchange Board of India (SEBI) Act, 1992.

A single-judge bench of justice Ranjitsinha Raja Bhosale held that the allegations in the FIR primarily concerned “front-running”, an offence covered by the SEBI Act. Under Section 26 of the Act, a court cannot take cognisance of an offence under the Act unless there is a complaint by SEBI or an officer authorised by it.

The court found that the police FIR was not the legally prescribed route for prosecuting an alleged SEBI Act offence. The matter had to be taken to SEBI first.

The FIR was registered on the basis of a complaint by Soni Parmar, an Antop Hill resident, who alleged that she had suffered financial losses because of fraudulent activities by Joshi. The case alleged that Joshi, then 52 and a Mulund resident, and four accomplices had formed three companies and used confidential, non-public information he obtained as Axis Mutual Fund’s chief dealer to make personal gains, causing losses to investors.

Joshi approached the high court seeking quashing of the FIR, arguing that Section 26 of the SEBI Act bars prosecution of offences under the Act except on a complaint by SEBI or its authorised officer. His counsel argued that Parmar should have approached SEBI and that, since the SEBI Act is a special law governing securities-market offences, its prescribed procedure had to be followed.

The state government and Enforcement Directorate (ED) opposed the plea. The ED has been investigating the money-laundering aspect of the case on the basis of the Sion police FIR. It argued that there was sufficient material to show that Joshi and others had also committed offences under the Indian Penal Code.

The high court, however, accepted Joshi’s argument on the specific legal issue concerning the SEBI Act. “I find that an express legal bar is engrafted in the SEBI Act. To institute or continue the present proceedings, which are contrary to the provisions of the SEBI Act and, more particularly, the express prohibition contained in Section 26 of the SEBI Act, would be incorrect,” Justice Bhosale said while quashing the FIR.

The court, however, made it clear that Friday’s order does not prevent SEBI from examining the allegations independently and taking action if it finds that Joshi committed a criminal offence under the SEBI Act.

The court also allowed Axis Mutual Fund, whose complaint to the police had been merged with the Sion police FIR, to approach SEBI and lodge an appropriate complaint against its former chief dealer.

The court stressed the seriousness of the allegations and their potential impact on the securities market and the wider financial system. “Considering the seriousness of the allegations, gravity of the offence and its adverse financial impact it would have not only on security markets but the entire financial system,” the court said it trusted SEBI would take “prompt, swift and effective steps” to protect investors and maintain the integrity of the securities market.

The high court’s order comes against the backdrop of parallel regulatory and money-laundering proceedings against Joshi. SEBI’s investigation had alleged that Joshi passed confidential information about Axis Mutual Fund’s impending trades to associates, who traded ahead of the fund’s orders to profit from the resulting price movement. SEBI’s final order in July 2026 barred Joshi from the securities market for seven years, imposed a ₹3 crore penalty on him and ordered disgorgement of the unlawful gains, while also taking action against other entities in the case.

The ED had separately arrested Joshi on August 2, 2025, following searches at multiple locations. The agency alleged that the front-running operation generated substantial illicit profits and involved the use of mule accounts and a Dubai-based trading terminal.

Axis Mutual Fund had earlier said the ED investigation concerned the alleged actions of a former employee and had no connection with the fund house’s current operations.

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