Viresh Gangaram Joshi Vs State of Maharashtra (Bombay High Court)
Summary: The Bombay High Court allowed Criminal Application No. 1036 of 2025 and quashed FIR No. 0369 of 2024 dated 23 December 2024 registered with Sion Police Station, concerning allegations of front running against the Applicant, who had served as Chief Dealer/Chief Trader with Axis Asset Management Company Limited. The FIR alleged offences under Sections 406, 417, 420, 465, 467, 468, 477A read with Sections 34 and 120B of the Indian Penal Code, 1860. The allegations were that the Applicant, having access to non-public information regarding substantial impending orders of Axis Mutual Fund, shared that information with co-accused and other persons who traded before the Mutual Fund’s orders and subsequently squared off their positions, thereby making wrongful gains.
The record showed that SEBI had issued an interim order-cum-show cause notice dated 28 February 2023 against the Applicant under Sections 11(1), 11(4), 11(4A), 11B(1), 11B(2), 11(5) and 27 of the SEBI Act, read with the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005. The High Court noted that the allegations in the FIR prima facie concerned front running. SEBI’s Circular dated 25 May 2012 defines front running as use of non-public information to directly or indirectly buy or sell securities, or enter into options or futures contracts, in advance of a substantial order in the same or related securities or contracts, anticipating a price change when the information becomes public. The Court also referred to Regulation 4(1) and Regulation 4(2)(q) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
