In a landmark ruling on the interplay between the SEBI Act and general criminal law, the Bombay High Court quashed the FIR against former Axis AMC Chief Dealer Viresh Joshi, holding that front running is exclusively prosecutable by SEBI under Section 26 of the SEBI Act, and that registration of an FIR by police for the same conduct amounts to circumvention of the Special Act.
The Court held that Section 26 of the SEBI Act creates an express statutory bar against any court taking cognizance of offences punishable under the SEBI Act or the rules and regulations made thereunder, save on a complaint made by the Board. Since the SEBI Act is a Special Act, its provisions prevail over the general law contained in the IPC and the BNSS, and once a Special Act holds the field, the provisions of the general law cannot be invoked to prosecute the same conduct.
The Court reiterated that where the substantive offence alleged is one under a Special Act requiring a complaint by the specified statutory authority, registration of an FIR by the police for the same conduct under the general criminal law amounts to a circumvention of the Special Act and is therefore not maintainable. The Court further held that even if an ordinary citizen approaches the police alleging financial loss arising from front running, it is incumbent upon the police to forward the complaint to SEBI, which alone can decide whether to initiate criminal proceedings under Sections 24 and 26 of the SEBI Act.
The Court clarified that the question whether any independent offence under the IPC or BNS is made out on the same facts would have to be independently considered by SEBI upon a complaint being filed by it.
A Single Judge Bench of Justice Ranjitsinha Raja Bhonsale observed that the allegations, on a bare perusal, prima facie disclosed an offence of front running, which is statutorily recognised as an offence under the SEBI Act and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. The Court took note of the Affidavit dated 8th December 2025 filed by the Assistant Police Inspector of the Economic Offences Wing, which expressly stated that the case pertained to front-running trades executed based on unauthorisedly provided Unpublished Price Sensitive Information, and that the core issue revolved around front running as defined in SEBI’s Circular dated 25th May 2012.
The Court observed that the Investigating Agency, in paragraph 31 of its affidavit, had stated that only offences under Sections 408, 420, 120B and 34 of the IPC were made out, but the Court declined to examine at this stage the contention whether non-public information could be equated with property for the purposes of those IPC offences, since the threshold question of maintainability under Section 26 of the SEBI Act had to be addressed first.
The Court further observed that the SEBI Act is a Special Act enacted to protect investor interests and regulate the securities market, and that SEBI is the expert body entrusted with the responsibility of investigating and prosecuting violations of securities laws. The Court noted that the doctrine of circumvention would apply squarely, as the same conduct could not be reframed under the IPC to bypass the statutory bar contained in Section 26 of the SEBI Act.
Briefly, an FIR was originally lodged with Sion Police Station on 23rd December 2024 by investor Soni Jitendra Parmar, alleging offences under Sections 406, 417, 420, 465, 467, 468, 477A read with Sections 34 and 120B of the Indian Penal Code. The core allegation was that Joshi, while serving as Chief Dealer, had shared non-public information about large impending trades of Axis Mutual Fund with co-accused persons including Sumit Desai, Pranav Vora, Brijesh Kurani, Vaibhav Pandya, and the Marfatia Group, who would then execute front-running trades ahead of Axis Mutual Fund’s substantial orders and square off their positions for wrongful gains.
The complainant claimed losses of over Rs.2.52 lakh crore affecting 66 lakh investors, while the Enforcement Directorate, which had registered an ECIR and recorded statements under Section 50 of the Prevention of Money Laundering Act, alleged that Joshi had personally unjustly enriched himself by approximately Rs.30 crore out of a total fraud of Rs.93 crore. Notably, SEBI had already issued an interim order cum show cause notice dated 28th February 2023 against Joshi for the same conduct, and Axis AMC had subsequently filed a separate complaint dated 12th October 2025 which was merged with the FIR. The original complainant also filed an affidavit dated 3rd October 2025 consenting to the quashing of the FIR on the ground of misunderstanding.
