The definition of Court under Section 2(29) the Companies Act, 2013, (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 Act, 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 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.

As mentioned above, 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 Act, 2013. Therefore, the transitional provisions provided under Section 440 of the Act, 2013 has come into force w.e.f. 18th May, 2016.

Power of Special Court to try any offence under Companies Act in a ‘Summary way’.

Due to increase the pendency of matters, existing Court is overburdened. Therefore, Section 435 is envisaged in the Act, 2013 to ensure speedy trial of offences” under the Companies Act and ‘Special Court’ shall try offence punishable under the Act, 2013 speedily and fast and without any delay. Please note that speedy trial does not mean that summarily trial. The power of ‘Summary Trial’ is provided under sub-section (3) of Section 436 of the Act, 2013.

First, we should know about application of Code of Criminal Procedure, 1973 (hereinafter referred to as the “Code”) over the proceedings before the ‘Special Court’. In this regard, please note that the provisions contained in the Code of shall be applicable to the proceedings conducted before the ‘Special Court’. In purpose of the same, the Special Court shall be deemed to be a Sessions Court or the court of Metropolitan Magistrate or a Judicial Magistrate of the First Class accordingly.  The person conducting proceedings before the Special Court shall be deemed to be a Public Prosecutor. Section 438 of the Act, 2013 may be read as under-

Application of code to proceedings before special court

“438. Save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply to the proceedings before a Special Court and for the purpose of the said provisions, the Special Court shall be deemed to be a Court of Session or the Court of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be, and the person conducting a prosecution before the Special Court shall be deemed to be a Public Prosecutor.”

Pursuant to Section 438 of the Act, 2103, save as otherwise provided in this Act, the provisions of the Code of Criminal Procedure,1973 shall apply to the proceedings before a ‘Special Court’ and for the purposes of the said provisions, the Special Court shall be #[Court of Session or the Court of Metropolitan Magistrate or a Judicial Magistrate of the First Class, as the case may be] and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor.

#Substituted for the words “Court of Session” by the Companies (Amendment) Act 2017 vide Notification No. S.O. 1833(E) dated 7th May, 2018.

It is stated that Section 438 of Act, 2013 was started with the following words “Save as otherwise provided in this Act, the provisions …..”, which  was provided that if there is any other provision of the Act, 2013 then such specific permission shall prevail over this section.

Basically, the law relating to criminal procedure applicable to all criminal proceedings in India is contained in the Code. The Code is an Act to consolidate and amend the law relating to Criminal Procedure.  It is stated that Section 2(n) of the Code defines offence as “any act or omission made punishable by any law for the time being in force”. Further, Section 40 of the Indian Penal Code (“IPC”) defines offence as “to denote a thing made punishable under the Code”. Therefore, to constitute an offence, the particular ‘act’ should be specifically made punishable under the Code or any other law. So, an act which has not been made punishable expressly under any law, is not termed as an offence. Therefore, it is submitted that each and every offence under the Code or any other law for the time being in force shall be triable under the Code except in case where there is specific provision under any other law.

It is mentioned in Section 435 of the Act, 2013 that for the purpose of Speedy Trial of Offence under the Act, the Central Government has power to designate many special courts through notification. But, Speedy trial does not mean that summarily trial. The power of ‘Summary Trial’ is provided under sub-section (3) of Section 436 of the Act, 2013, which may be read as under-

“3. Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Special Court may, if thinks fit, try in a summary way any offence under this Act which is punishable with imprisonment for a term not exceeding three years.

Provided that in the case of any conviction in a summary trial, no sentence of imprisonment for a term exceeding one year shall be passed.

Provided further that when at the commencement of, or in the course of, a summary trial, it appears to the Special Court that the nature of the case is such that the sentence of imprisonment for a term exceeding one year may have to be passed or that it is, for any other reason, undesirable to try the case summarily, the Special Court shall, after hearing the parties, record an order to that effect and thereafter recall any witnesses who may have been examined and proceed to hear or rehear the case in accordance with the procedure for the regular trial .

It is stated that if the ‘Special Court’ thinks fit, it may try in a ‘summary way’, any offence under the Act, 2013, which is punishable with imprisonment for a term not exceeding 3 years, provided that in the case of any conviction in such trial, person cannot be sentenced for imprisonment for a term exceeding 1 year.

As sub-section (3) of Section 436 of the Act, 2013 start with a “no-obstante clause”, therefore, the offences which may be tried in a summary way under the Code shall not consider to try in summary way under the Act, 2013. Under Section 260 of the Code “offences not publishable with death, imprisonment for life or imprisonment for a term exceeding two years” may be tried in a summary way. But pursuant to sub-section (3) of Section 436 of the Act, 2013, ‘Special Court’ under Companies Act, can try in a summary way any offence under this Act which is punishable with imprisonment for a term not exceeding three years

It is also important to note that at the time of ‘Summary Trail’ by ‘Special Court’ the provisions contained in Section 260 to Section 265 of the Code shall be applicable except specific provision provided under sub-section (3) of Section 436 of the Act, 2013.

Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.

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