No, you cannot redeem your External Mutual Fund Investments on Upstox.
Mutual funds Investments can be in Demat (via Broker) or Non-demat mode. The ones in demat mode cannot be sold via Upstox since they are stored with your other broker, and this comes with various regulatory and operational restrictions.
For example, to sell the Mutual funds held in Demat form, you will have to complete CDSL/NSDL authorisation, which gives your Broker the authority to sell your Mutual funds holdings. This authority cannot be given to Upstox since Upstox doesn't hold your Mutual funds, your other broker does.