Mumbai: Observing that proceedings for an offence under Securities and Exchange Board of India Act can be initiated only on a complaint by Sebi, Bombay High Court has quashed an FIR against former Axis Asset Management Company Ltd chief dealer Viresh Joshi in an alleged front-running case.Justice Ranjitsinha Bhosale on Aug 13 said, “It is the Sebi who has to take steps to initiate the proceedings.” Sebi is entrusted with the responsibility of regulating the market and safeguarding the investors and the securities market and “would have the expertise to analyse the allegations for offences under the Sebi Act.”The Dec 23, 2024, FIR was registered at Sion police station, and later transferred to Economic Offences Wing, under IPC, including criminal breach of trust, cheating and forgery.Complainant Soni Parmar alleged that Joshi shared in advance non-public information about substantial trades/large orders with co-accused and others. After the trades/orders were placed in the market, Joshi and his co-accused would then sell the shares they had bought. The information was shared through mobile numbers and WhatsApp calls. By this modus operandi—which comprised co-accused Sumit Desai, Pranav Vora, Vaibhav Pandya and Marfatia group—a huge profit was made, causing loss to Parmar and other investors. Parmar alleged Joshi cheated 66 lakh investors and caused a loss of over Rs 2.52 lakh crore. Enforcement Directorate’s advocate said the total fraud is Rs 93 crore, of which Rs 29 crore only has been secured.Senior advocate S Nagmuthu, for Joshi, argued that the offence of front running or passing of non-public information was an offence only under Sebi Act and not under IPC/BNS. Further, offences in the FIR are also not made out. Nagmuthu said Soni on Oct 3, 2025, consented to quashing the FIR on the ground that it was filed on some misunderstanding.Justice Bhosale agreed with Nagmuthu that Section 26 bars courts from taking cognisance of offences punishable under Sebi Act except on Sebi’s complaint. “The Sebi Act is a special Act… the same would prevail over general law,” he added. He said, considering the seriousness of the allegations, the gravity of the offence, if a prima facie offence is made out, and the adverse financial impact not only on the securities market but on the entire financial system, “this court trusts that the SEBI will take prompt, swift and effective steps and action” to protect the interest of the investors and integrity of the securities market.Quashing the FIR, Justice Bhosale said it will be open to Sebi to independently consider whether the allegations against Joshi make out a criminal offence under Sebi Act. He directed it to take necessary steps within 12 weeks.
