₹2.52-lakh crore fraud: HC strikes down FIR against former chief dealer at Axis Mutual Fund
High Court Nullifies FIR in Major Axis Mutual Fund Front-Running Case
Bharatmorningnews.com – The Bombay High Court has set aside a police First Information Report targeting Viresh Gangaram Joshi, who previously served as the chief dealer at Axis Mutual Fund. The legal action stems from accusations that Joshi, alongside his collaborators, swindled approximately 6.6 million investors out of ₹2.52 lakh crore through a sophisticated front-running scheme connected to the fund's trading operations.
Legal Grounds for the Decision
Justice Ranjitsinha Raja Bhosale, presiding over a single-judge bench, ruled that the FIR could not proceed due to a statutory restriction embedded within the Securities and Exchange Board of India Act of 1992. The judge clarified that this ruling did not exonerate Joshi or dismiss the accusations against him entirely. Instead, it highlighted that the allegations fell squarely under the SEBI Act's jurisdiction.
According to Section 26 of the legislation, judicial bodies must receive a formal complaint from SEBI or its designated representatives before initiating proceedings for offenses covered by the Act. The court determined that the police had bypassed this essential procedural requirement when registering the FIR.
Background of the Complaint
The original FIR emerged from a grievance filed by Soni Parmar, a resident of Antop Hill. She claimed to have incurred monetary damages resulting from Joshi's alleged misconduct. At the time, Joshi, aged 52 and living in Mulund, along with four other individuals, established three separate entities. These companies allegedly leveraged privileged, unpublished data that Joshi accessed in his capacity as chief dealer to secure personal financial benefits, thereby inflicting harm on mutual fund investors.
When Joshi petitioned the high court for the FIR's cancellation, his legal team emphasized that Section 26 explicitly prohibits prosecution under the SEBI Act unless initiated through proper channels. They contended that Parmar needed to submit her complaint directly to SEBI, as the securities legislation serves as the specialized framework for such market violations.
Government and ED Opposition
Both the state administration and the Enforcement Directorate resisted Joshi's petition. The ED, which had been probing money-laundering dimensions of the matter based on the Sion police FIR, maintained that adequate evidence existed to demonstrate that Joshi and his co-conspirators also violated provisions of the Indian Penal Code.
Despite this opposition, the high court upheld Joshi's position regarding the specific legal constraint imposed by the SEBI Act. Justice Bhosale stated:
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.
Future Regulatory Actions Permitted
The court emphasized that its decision would not hinder SEBI from conducting an independent review of the accusations and pursuing appropriate measures if it concludes that Joshi committed a criminal breach under the SEBI Act. Additionally, the bench permitted Axis Mutual Fund—which had previously merged its police complaint with the Sion FIR—to file a formal grievance with SEBI against its ex-chief dealer.
Highlighting the potential consequences for market stability, the court noted:
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,
adding that it expected SEBI to implement
prompt, swift and effective steps
to safeguard investor interests and uphold market integrity.
Parallel Proceedings and Timeline
Joshi currently faces multiple concurrent investigations. SEBI's probe revealed that he shared advance details about Axis Mutual Fund's upcoming transactions with associates, enabling them to trade ahead of the fund's orders and capitalize on subsequent price fluctuations. In July 2026, SEBI issued its concluding directive, which included a seven-year prohibition from securities markets, a ₹3 crore financial penalty, and an order requiring the return of ill-gotten profits. The regulator also initiated actions against additional parties involved in the scheme.
Separately, the Enforcement Directorate detained Joshi on August 2, 2025, after conducting searches across several locations. The agency asserted that the front-running mechanism yielded considerable unauthorized profits and utilized mule accounts alongside a trading terminal located in Dubai. Axis Mutual Fund has previously clarified that the ED's investigation pertains solely to the alleged conduct of a former staff member and remains unrelated to the fund's ongoing business activities.
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