Case Law Details
Satyanarayan Bankatlal Malu Vs IBBI (Bombay High Court)
It can be noticed that under Section 435 of the Companies Act, Special Court, comprising of Sessions Judge or Additional Sessions Judge, was in place since 2013 and it retained its jurisdiction to try the offences under the Companies Act. Amendment of 2017, for the first time brought into existence and empowered Central Government, to establish Court comprising of Metropolitan Magistrate or Judicial Magistrate First Class, as ‘Issue Process’, under Section Special Court, under Section, after I.B. Court came into force. Why for this another class of Court was created? The object to create another class of Special Court was to speed up the trial of offences under the I.B. Code. If that was not a object as contended by the Respondent, the question is, why for Central Government has been empowered to designate Court of Metropolitan Magistrate or Judicial Magistrate First Class as Special Court under Section 435 of the Companies Act? Answer is simple. It is after Section 236 of I.B. Code, came into force Section 435 of the Companies Act was amended (17th amendment Act) on 7th May, 2018 and another class of Court (Metropolitan Magistrate and Judicial Magistrate First Class) have been created as Special Courts for speedy trial in offences under the I.B. Code. Therefore, keeping in mind, the said object, legislature thought it fit, not to burden a Special Court comprising of Sessions Judge or Additional Sessions Judge with the trials, also under I.B. Code. If trials in offences under I.B. Code were also to be tried by the Special Court comprising of Sessions Judge or Additional Sessions Judge, it would frustate to object of the speedy trial for which, the Special Courts have been established. This underlined object is visible from clause (a) and (b) of subsection (2) of Section 435 of Companies Act as amended, for quick reference let me reproduce the relevant provisions of Section 435.
The plain reading of clause (a) of subsection (2) of Section 435 of the Companies Act in no uncertain terms implies or suggests that the Special Court consists of Judge holding office as a Sessions Judge is empowered to try the offences “Issue Process”, under Section under this Act ”, under Section. (emphasized). The phrase ‘under this Act’, only means the offences committed under the Companies Act. Therefore, the offences other than the Companies Act cannot be tried by the Special Court established under clause (a) of subsection 2 of Section 435. While on the contrary, Special Court consists of Metropolitan Magistrate or Judicial Magistrate First Class proposed in clause (b) is invested with jurisdiction to try the “case of other offences”. (emphasized). The phrase “other offences”, means offences under other Acts, than Companies Act and the offences under the Companies Act punishable with imprisonment less than two years.
therefore, the omission of the phrase “under this Act” in section 435 (2) (b) and its inclusion in section 435 (2) (a) of CA 2013 must be treated to be a deliberate one. It would follow that the clear mandate of the legislature is that the “Special Court” comprising of a Sessions Judge or Additional Sessions Judge [i.e. 435 (2) (a)] is only to try offences under the CA 2013 itself which carry a punishment of imprisonment of two years or more. However, it is clear that “Special Court” comprising of a Metropolitan Magistrate or Judicial Magistrate First Class is to try “other offences”. The phrase “other offences” contained in section 435 (2) (b), in contradistinction to section 435 (2) (a) of CA 2013, would include (1) offences under the I.B. Code, and (2) offences under the CA 2013 but carrying punishment of imprisonment of less than two years. Mr. Arsiwala has correctly argued that provisions of law which curtail the general jurisdiction of criminal courts must be interpreted strictly.
It may also be noted that Section 236 (3) of the I.B. Code creates a deeming fiction that the Special Court trying offences under I.B. Code shall be “deemed to be Court of Sessions”, under Section. If the intention of the legislature was that offences under I.B. Code are to be tried by the Sessions Court, then this subsection would have been unnecessary. According to the Petitioners, this is an indication as to the true and proper interpretation of Section 435 of the Companies Act, 2013 and Section 436 of I.B. Code. Thus for all the above reasons, the impugned proceedings have been instituted by the Respondents (Complainant) in the Court of Addtional Sessions Judge, were not sustainable for want of jurisdiction. As a consequence order, ‘issue process’ passed by the learned Additional Sessions Judge against the Petitioners, in a complaint by the Respondents/Board was without jurisdiction and therefore not sustainable equally. It is therefore to be held that Special Court “Issue Process”, under Section which is to try offences under the I.B. Code is the Special Court established under Section 435 (2) (b) of the Companies Act, 2013 which consists of Metropolitan Magistrate or Judicial Magistrate First Class. The Petition is therefore allowed in terms of prayer clause (a).
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