The definition of Court under Section 2(29) the Companies Act, 2013, (the Act, 2013) also includes a ‘Special Court’ constituted under Section 435 of the Act, 2013. Chapter XXVIII constituting Sections 435 to 446B deals with the Special Courts under the CA, 2013. The definition of Court under Section 2(29) the Act, 2013 may be read as under: –
“(29) “Court” means-
(i) the High Court having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any district courts subordinate to that High Court under sub-clause (ii);
(ii) the district court, in cases where the Central Government has, by notification, empowered any district court to exercise all or any of the jurisdiction conferred upon the High Court, within the scope of its jurisdiction in respect of a company whose registered office is situated in the district.
(iii) the Court of Session having jurisdiction to try any offence under this Act or under any previous company law;
(iv) the Special Court established under section 435;
(v) any Metropolitan Magistrate or a Judicial Magistrate of the First-Class having jurisdiction to try any offence under this Act or under any previous company law.”
It is submitted that aforesaid section 2(29) of the Act, 2013 has been notified on 12.09.2013 except clause (iv). Later on, in exercise of the powers conferred by Sub-section (3) of Section 1 of the Act, 2013, the Central Government has appointed the 18th day of May, 2016 vide Notification No. S.O. 1795 (E) dt 18.05.2016, as the date on which the provisions of clause (iv) of sub-section (29) of section 2, sections 435 to 438 (both sections inclusive) and section 440 of the Act, 2013 come into force. It means the provisions of ‘Special Court’ under Sections 435 to 438 (both sections inclusive) and Section 440 were enforced first time in the year 2016 i.e. on 18th day of May, 2016.
It is also pertinent to note that with the introduction of the Act, 2013, the provisions of ‘Special Court’ were brought under Chapter XXVIII of the Act but was not notified then. Initially, Section 435 brought by the Act, 2013 was as under: –
“435. Establishment of Special Courts
(1) The Central Government may, for the purpose of providing speedy trial of offences under this Act, by notification, establish or designate as many Special Courts as may be necessary.
(2) A Special Court shall consist of a single judge who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.
(3) A person shall not be qualified for appointment as a judge of a Special Court unless he is, immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions Judge.”
Section 435 of the Act, 2013 was, therefore, introduced by the Government to expedite the trial and disposal of cases which have piled up under the Act. As the ‘Special Courts’ are exclusively constituted for companies, they are more effective and efficient than general Session Courts. Such a step is a welcome move to further improve the ease of doing business, enforce Corporate Governance and reduce the number of litigations pending at various Courts.
It is also to be noted that even though original Section 435 of the Act, 2013 was not notified, however, the Government had made the amendment in Act, 2013 through Companies (Amendment) Act, 2015 (“the Amendment Act, 2015”) w,e.f. 29.05.2015 wherein amendment in Section 435 was brought in. Section 435 as amended by the Amendment Act , 2015 read as under-
“435. Establishment of Special Courts
(1) The Central Government may, for the purpose of providing speedy trial of offences punishable under this Act with imprisonment of two years or more, by notification, establish or designate as many Special Courts as may be necessary.
Provided that all other offences, shall be tried, as the case may be, by a Metropolitan Magistrate or a Judicial Magistrate of the First-Class having jurisdiction to try any offence under this Act or under nay previous company law.
(2) A Special Court shall consist of a single judge who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.
(3) A person shall not be qualified for appointment as a judge of a Special Court unless he is, immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions Judge.”
It is submitted that Section 435 was envisaged in the Act, 2013 to ensure speedy “trial of offences”. Later, the provision was amended vide Amendment Act, 2015 to ensure “speedy trial of offences punishable under the Act with imprisonment of two years or more”.
Additionally, a ‘proviso’ was added to Section 435 of the Act, 2013 to state that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a Judicial Magistrate of the First-Class having jurisdiction to try any offence under this Act or under any previous company law.
It is pertinent to note that till the amendments by Amendment Act, 2015, no special Court was designated as Special Court by the Central Government having power to notify the same under Section 435(1) of the Act, 2013.
The Ministry of Corporate Affairs (“MCA”) vide Notification No. S.O. 1795 (E) dt 18.05.2016 has first time notified Sections 435 to 438 (both sections inclusive) and section 440 of the Act, 2013 for the setting up of ‘Special Courts’ to specifically deal with and dispose of criminal offences under the CA, 2013 which are punishable with imprisonment of a period of 2 years or more in an expeditious manner.
The main objective for the setting up of ‘Special Courts’ is to divide the disposal mechanism i.e. the grave offences would be tried by the ‘Special Courts’, whereas the ‘minor contraventions and violations would be tried by Magistrate Courts’.
It is submitted that despite of holding the provision of ‘Special Courts’ under the Act, 2013, the Courts have been designated by the Government after more than two years since provisions of this began to take effect.
In exercise of the powers conferred by sub-section (1) of section 435 of the Act, 2013, the Central Government, after obtaining the concurrence of the respective Chief Justices of the High Courts, had notified, vide Notification Number S.O. 1796 (E) dated May, 18, 2016, ‘Special Courts’ for the purposes of ‘speedy trial’ of offences punishable under the Act, 2013 with imprisonment of two years or more in terms of Section 435 in the following 8 States/Union territories: Jammu & Kashmir, Maharashtra, Dadra and Nagar Haveli and Daman and Diu, Goa, Gujarat, Madhya Pradesh, Andaman and Nicobar Islands, West Bengal.
Further, MCA had notified, vide Notification Number S.O. 2554(E) dated July 27, 2016, ‘Special Courts’ in the State/Union territories of : Delhi- “Court of Additional Sessions Judge-03, South-West District, Dwarka”.
Further, MCA had notified, vide Notification Number S.O. 2843(E) dated September 1, 2016, ‘Special Courts’ in the following 5 States/Union territories: Chhattisgarh, Rajasthan, Punjab and Haryana, Madras and Manipur.
Further, MCA had notified, vide Notification Number S.O. 945(E) dated March 23, 2017, ‘Special Courts’ in the following 2 States/Union territories: Telangana and Andhra Pradesh.
Further, MCA, vide Notification Number S.O. 2872 dated August 31, 2017, has constituted a ‘Special Courts’ in Bihar to provide for speedy trial of offences under the Act, 2013.
Further, MCA had notified, vide Notification Number S.O. 3529(E) dated November 3, 2017, ‘Special Courts’ in the State/Union territories of Tamil Nadu [except Districts of Coimbatore, Dharmapuri, Dindigul, Erode, Krishnagiri, Namakkal, Nilgiris, Salem and Tiruppur].
Further, MCA had notified, vide Notification Number S.O. 528(E) dated February 5, 2018, ‘Special Courts’ in the following 4 States/Union territories: Kerala, Laksshadweep, Odisha and Assam.
Further, MCA had notified, vide Notification Number S.O. 1710(E) dated April 23, 2018, ‘Special Courts’ in the State/Union territories of Uttar Pradesh- “9th Court of Additional District and Sessions Judge, Kanpur Nagar”.
It is submitted that the Government had made further amendments in Act, 2013 through Companies (Amendment) Act, 2017 (“the Amendment Act, 2017”) w,e.f. 07.05.2018, wherein some amendments in Section 435 was brought in. Section 435 as amended by Amendment Act, 2017 read as under:-
“435. Establishment of Special Courts
(1) The Central Government may, for the purpose of providing speedy trial of offences under this Act, by notification, establish or designate as many Special Courts as may be necessary.
(2) A Special Court shall consist of-
(a) a single judge holding office as Session Judge or Additional Session Judge, in case of offences punishable under this Act with imprisonment of two years or more; and
(b) a Metropolitan Magistrate or a Judicial Magistrate of the First Class, in the case of other offences.
who shall be appointed by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed in working.”
Before the Amendment Act, 2017, Metropolitan Magistrate or a Judicial Magistrate of the First Class could not be designated as ‘Special Court’. However, after this, these Courts can also be designated as ‘Special Court’ for speedy trail of offence punishable under the Act, 2013 with imprisonment of less than two years.
Companies (Amendment) Act, 2020.
It is submitted that the Companies (Amendment) Act, 2020 (“the Amendment Act, 2020”) was passed by the Parliament on September 22, 2020 to decriminalised minor procedural or technical lapse under the Act, 2013 into civil wrong and also to exclude the offences under Section 452 (punishment provided for wrongful withholding of any property) of the Act to fall under the jurisdiction of ‘Special Courts’.
It is submitted that most of the provisions of Amendment Act, 2020 has come into force with effect from 21st December 2020. MCA has issued in the Official Gazette a Notification No. S.O. 4646(E) in this regard on 21st December, 2020. It is pertinent to mention that Section 60 of the Amendment Act, 2020 regarding exclusion of the offences under Section 452 (punishment provided for wrongful withholding of any property) of the Act to fall under the jurisdiction of Special Courts is not notified yet.
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