SEBI's Exclusive Jurisdiction Affirmed as Court Stresses Compliance with Section 26 of SEBI Act
In a landmark judgment, the Bombay High Court has quashed the FIR against Viresh Gangaram Joshi, the former Chief Dealer at Axis Mutual Fund, over allegations of front running. The decision, delivered by Justice Ranjitsinha Raja Bhonsale, emphasized the exclusive jurisdiction of the Securities and Exchange Board of India (SEBI) in prosecuting such offences, underscoring the mandatory requirement for a complaint to be filed by SEBI itself.
The case revolved around allegations that Joshi, along with co-accused, misused non-public information for personal gains, causing significant financial losses to investors. The FIR, originally filed by an investor, claimed a loss of over Rs. 2.52 lakh crore due to fraudulent activities. However, the court highlighted the SEBI Act's stipulation that only SEBI can initiate proceedings for such offences, thereby invalidating the FIR.
Justice Bhonsale noted the serious nature of the allegations and the potential impact on market integrity, urging SEBI to take swift and effective action. The court's ruling reinforces the SEBI Act's position as a special law, which prevails over general laws like the Indian Penal Code in securities market-related offences.
The judgment also provided liberty to Axis Mutual Fund, Joshi's employer, to pursue independent complaints regarding alleged misconduct under general law. The decision mandates SEBI to consider any complaints filed by the Axis Mutual Fund or others within 12 weeks.
The case highlights the intricate balance between regulatory oversight and judicial intervention, reaffirming SEBI's role in safeguarding market integrity and investor interests.
Bottom Line :
FIR related to the offence of front running under SEBI Act quashed due to non-compliance with Section 26 of SEBI Act, which mandates that only SEBI can file a complaint for such offences.
Statutory provision(s): SEBI Act, 1992 Sections 24, 24A, 26, Indian Penal Code Sections 408, 420, 120B, 34, Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528.
Viresh Gangaram Joshi v. State of Maharashtra, (Bombay) : Law Finder Doc id # 2961342
