Special Courts – A sure cure?
Vivek Sadhale (Co-Founder, LegaLogic Consulting)
Vikas Agarwal (Co-Founder)
There is no doubt that cases have piled up under the Companies Act. Reason are many. To enable effective and efficient justice, the Companies Act, 2013, had introduced provisions relating to setting up a Special Courts to try offences punishable under the Act.
The provisions pertaining to establishment of Special Courts and matters connected thereto were not made effective at the time of enactment of most of the provisions of the Companies Act, 2013, w.e.f. April 1, 2013.
The Ministry of Corporate Affairs subsequently amended provisions pertaining to Special Courts in May 2015 and stated that offences which are punishable under the Act with imprisonment of two years or more can be tried by Special Courts. The amendment further provided that all other offences shall be tried by a Metropolitan Magistrate or a Judicial Magistrate of First Class having jurisdiction to try offences under the Act.
The Ministry of Corporate Affairs has notified the provisions dealing with ‘Special Courts’ with effect from May 18, 2016, with the designation of eight Special Courts vide its notification dated May 18, 2016.
Special Courts Designated
Eight courts have been designated as special courts by the Ministry of Corporate Affairs after receiving the concurrence of the respective High Court Chief Justices. These are as follows:
Sr. No | Existing Court | Jurisdiction as Special Court |
1 | Courts of Additional Special Judge, Anti-Corruption at Jammu and Srinagar | State of Jammu and Kashmir |
2 | Presiding Officers of Court No’s. 37 and 58 of the City Civil and Sessions Court, Greater Mumbai | State of Maharashtra |
3 | Court of Principal District and Sessions Judge, Union territory of Dadra and Nagar Haveli at Silvassa | Union Territories of Dadra and Nagar Haveli and Daman and Diu |
4 | Court of District Judge-1 and Additional Sessions Judge, Panaji | State of Goa |
5 | Court of Principal District and Sessions Judge, Ahmedabad (Rural), situated at Mirzapur, Ahmedabad. | State of Gujarat |
6 | 9th Additional Sessions Judge, Gwalior Madhya Pradesh. | State of Madhya Pradesh |
7 | Court of Additional District and Session Judge, Port Blair, Andaman and Nicobar Islands. | Union territory of Andaman and Nicobar Islands. |
8 | 2nd Special Court, Calcutta. | State of West Bengal |
Composition
A Special Court will consist of a single judge who will 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.
Qualification of Judge
A person will 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.
Offences Triable by Special Courts
Consequent to amendment made in May 2015, the special courts would deal with trial of offences under the Companies Act, 2013, that are punishable with imprisonment of two years or more.
If the Special Court thinks fit, it may try in a summary way, any offence under the Companies 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.
Appeal/Revisions from Special Courts to High Courts
In terms of Section 437 of the Companies Act, 2013, the High Court within whose jurisdiction Special Court were trying cases and passed such order, will have a power to entertain appeal or application for revision against / of the order passed by the Special Courts.
Offences under the Companies Act, 2013, for which minimum punishment is 2 years or more
Sr. No | Offence | Who is Punishable | Section |
1 | False declaration of solvency by a Director during voluntary winding up | Director | 305(4) |
2 | Intentionally and fraudulently concealing material information about the company, relating to properties, debts, creditors, financial statements from the Company Liquidator during winding up | Officer (including any person in accordance with whose directions or instructions the directors of the company have been accustomed to act) | 336(1) |
3 | Fraudulently misrepresenting material information about the company to the Company Liquidator during winding up | ||
4 | Taking in pawn or pledge or otherwise receipt of the property, knowing it to be pawned, pledged, or disposed of wherein such property was pawned, pledged or disposed off (in 12 months preceding the commencement of the winding up) on credit and not been paid for and was not in the ordinary course of business | Any person who does such act knowingly | 336(2) |
5 | Commitment of fraud provided fraud in question involves public interest | Any person found guilty of such fraud | 447 |
6 | Intentionally giving false evidence upon any examination on oath or solemn affirmation, authorised under the Companies Act, 2013
Intentionally giving false evidence in any affidavit, deposition or solemn affirmation, in or about the winding up of any company under the Companies Act, 2013, or otherwise in or about any matter arising under the Companies Act, 2013 | Any person giving such false evidence | 449 |
Conclusion
“Special Courts” is indeed a welcome step. Time will tell if eight Special Courts presently designated will be sufficient enough to cope up with the increasing number of cases.