Bombay HC: Only SEBI Can File a Criminal Complaint for Front Running — Viresh Gangaram Joshi v. State of Maharashtra (2026)
On 13th August 2026, the Bombay High Court delivered a significant ruling clarifying that a private citizen cannot set the criminal law in motion against an alleged "front running" offence by simply lodging an FIR with the police. In Viresh Gangaram Joshi v. State of Maharashtra & Anr. (Criminal Application No. 1036 of 2025), Justice Ranjitsinha Raja Bhonsale quashed an FIR registered against the former Chief Dealer of Axis Mutual Fund, holding that Section 26 of the SEBI Act, 1992 creates a statutory bar: only the Securities and Exchange Board of India (SEBI) can initiate a criminal complaint for an offence under the Act.
Background of the Case
Viresh Gangaram Joshi was the Chief Dealer of Axis Asset Management Company Limited, responsible for executing trades for Axis Mutual Fund's arbitrage and exchange-traded fund schemes. An investor, Respondent No. 2, lodged an FIR with the Sion Police Station (later transferred to the Economic Offences Wing, Mumbai) alleging that Joshi shared non-public information about Axis Mutual Fund's impending large trades with associates, who then "front ran" those trades to make wrongful gains, causing losses to retail investors.
The FIR invoked Sections 406, 417, 420, 465, 467, 468, 477A read with Sections 34 and 120B of the Indian Penal Code, 1860. The prosecution alleged that Joshi, along with co-accused persons including Sumit Desai, Pranav Vora, and Brijesh Kurani, ran a scheme causing losses of over Rs. 2.52 lakh crore to nearly 66 lakh investors. SEBI had separately issued an interim order-cum-show cause notice against Joshi on 28th February 2023, and the Enforcement Directorate had also registered an Enforcement Case Information Report under the Prevention of Money Laundering Act, 2002.
The Core Legal Question
The Applicant's Senior Counsel, Mr. S. Nagmuthu, argued that the entire complaint, however it was dressed up under the IPC, was in substance an allegation of "front running" — an offence defined and regulated exclusively under the SEBI Act and SEBI's Circular dated 25th May 2012. Since Section 26 of the SEBI Act bars a court from taking cognizance of any offence under the Act "save on a complaint made by the Board," it was argued that the police had no authority to register an FIR for this conduct, and only SEBI could initiate criminal proceedings under Sections 24 and 26 of the SEBI Act.
The State and the Enforcement Directorate opposed this, arguing that the investigation had independently disclosed offences of cheating and criminal breach of trust under Sections 408, 420, 120B and 34 of the IPC, and that non-public information could be equated with "property" for the purposes of these offences.
What the Court Held
Section 26 of the SEBI Act is clear and unambiguous: no court can take cognizance of an offence punishable under the SEBI Act except on a complaint filed by the Board (SEBI).
The SEBI Act is a Special Act enacted to protect investors and regulate the securities market, and being a Special Act, it prevails over the general law (IPC/BNS).
A bare perusal of the FIR showed that the allegations, in substance, related to "front running" as defined in SEBI's Circular dated 25th May 2012 — the use of non-public information to trade ahead of a substantial impending order.
Even if an ordinary citizen approaches the police alleging a SEBI Act offence, it is incumbent on the police to forward the complaint to SEBI, which alone can decide whether to initiate criminal prosecution.
Relying on Union of India v. Ashok Kumar Sharma (2021) 12 SCC 674, and High Court rulings from Madhya Pradesh, Allahabad, Gujarat and Calcutta on similar special statutes, the Court held that the "doctrine of circumvention" applies — conduct barred from prosecution under a Special Act cannot be relabelled as an IPC offence to bypass the statutory bar.
The Court did not adjudicate the merits of the front-running allegations, and expressly left open whether independent offences under the general law (IPC/BNS) or a separate complaint by the employer, Axis Mutual Fund, could be made out.
Quashing the FIR registered at Sion Police Station, the Court directed that SEBI independently examine whether the allegations — including those in its 28th February 2023 interim order-cum-show cause notice — make out a criminal offence under the SEBI Act, and to take steps within 12 weeks. Axis Mutual Fund was also given liberty to file its own complaint with SEBI or an appropriate forum over Joshi's alleged misconduct as an employee.
Why This Judgment Matters
This ruling reinforces a recurring theme in Indian securities jurisprudence: where a special statute like the SEBI Act, the Companies Act, or the Securities Contracts (Regulation) Act prescribes its own procedure for prosecution, that procedure cannot be bypassed by invoking the general criminal law. For law students and practitioners, the judgment is a useful study in statutory interpretation — specifically the principle of generalia specialibus non derogant (special law prevails over general law) and the "doctrine of circumvention."
It is also a practical illustration of how front running, insider trading, and market manipulation cases straddle both securities law and criminal law, and why lawyers advising clients in this space need working knowledge of both the SEBI Act framework and the IPC/BNS.
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Read the Full Judgment
For a detailed study, you can download the full text of the Bombay High Court's judgment in Viresh Gangaram Joshi v. State of Maharashtra & Anr. below.
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Frequently Asked Questions (FAQs)
1. What did the Bombay High Court decide in Viresh Gangaram Joshi v. State of Maharashtra?
The Bombay High Court quashed the FIR registered against Viresh Gangaram Joshi, former Chief Dealer of Axis Mutual Fund, holding that the allegations related to "front running" — an offence exclusively under the SEBI Act — and that Section 26 of the SEBI Act bars a court from taking cognizance of such an offence except on a complaint filed by SEBI itself.
2. What is "front running" under securities law?
Front running means using non-public information to buy or sell securities, or enter into options or futures contracts, ahead of a substantial impending transaction, in anticipation that the price will move once that transaction becomes public. SEBI defined this in its Circular dated 25th May 2012.
3. Why couldn't the police register and investigate this FIR?
The Court held that Section 26 of the SEBI Act is a special statutory bar: it does not stop police investigation outright, but it does mean no court can take cognizance of the resulting offence unless SEBI, as the Board, files the complaint. The police were required to forward the complaint to SEBI rather than proceed under the general criminal law.
4. Does this mean Viresh Joshi was cleared of all wrongdoing?
No. The Court expressly clarified that it did not adjudicate the merits of the front-running allegations. It quashed the FIR only on the ground of maintainability under Section 26 of the SEBI Act, and left it open for SEBI to independently examine the allegations, and for Axis Mutual Fund to pursue its own complaint.
5. What is the practical significance of this ruling for lawyers and law students?
It illustrates the principle that a Special Act prevails over general law (generalia specialibus non derogant) and the "doctrine of circumvention" — that conduct barred from prosecution under a special statute cannot be reframed under the IPC/BNS to bypass that bar. It is essential reading for anyone working in securities law, corporate litigation, or criminal law drafting.
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