Special Courts
Special Courts
Special courts are one most commendable
constitute introduced by this Act. Companies Act, 2013 has provided space for
“Special Court” by inserting a new section in the Act. With the intention to
punish the guilty, the Legislature has bring in, the Special Courts in the
Companies Act, 2013. The Companies Act, 2013 overrides the related provisions
of the CrPC.
Need of Special Court:
Slowing down of trial of offences
and delaying judgments affects the interest of the related parties of
Companies. Scams happening over the last few decades in the corporate world
have increased the need of setting up of Special Court. The main reason for
establishment of such special court is technicalities involved in these
technical matters and Speedy trial of all the offences under the Act.
The intention behind setting up these
courts is to let magistrate courts try minor violations, and that graver
offences should be dealt by Special Courts.
Advantages of Special Court:
§ It
will facilitate in good corporate governance and stricter implementation of the
Law.
§ Speedy
Trial of all the offences under the Act.
Bare Act Language:
Definition:
As
stated in section 2(29) of CA, 2013 ‘Court’ means – Special Courts established
under Section 435 of the CA, 2013.
1. The
Central Government may, for the purpose of providing speedy [2]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.
[3]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 any 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.
Use of the Word “Special Court” under
the Act:
S. No.
|
Section No.
|
Title of Section
|
1.
|
209
|
Search and seizure.
|
2.
|
212
|
Investigation into affairs of company by Serious Fraud
Investigation Office
|
3.
|
274
|
Directions for filing statement of affairs
|
4.
|
435
|
Establishment of special courts
|
5.
|
439
|
Offences triable by special courts
|
6.
|
437
|
Appeal
and revision.
|
7.
|
438
|
Application of Code to proceedings before a special
court
|
8.
|
440
|
Transitional provisions.
|
9.
|
441
|
Compounding of certain offences.
|
10.
|
445
|
Compensation for accusation without reasonable cause.
|
The Ministry of
Corporate Affairs has notified the provisions dealing with ‘Special Courts’
with effect from 18 May 2016.
A.
Places of Special
Courts:
The
Central government hereby, after obtaining the concurrence of the respective
Chief justices of the High Courts, designates the following Courts mentioned in
the Table below as Special Courts for the purposes of trial of offences
Unfishable under the Companies Act, 2013 with imprisonment of two years or more
in terms of section 435 of the Companies Act, 2013.
B.
Constitution of
Special Courts:
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.
§
Single Judge: A
Special Court shall consist of a single judge 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: Such
judge of a Special Court shall be qualified only if he is immediately before
such appointment, holding office of a Sessions Judge or an Additional Sessions
Judge.
C.
Scope of Appeal and
Revision:
[4]Special courts are subject to the
jurisdiction of the relevant High Court in the same manner as the criminal
courts come under it, under the Code of Criminal Procedure, 1973. If Special
court is within the local limits of the jurisdiction of High Court, then
whenever the Court of Session is trying cases, in such case High Court has the power to
appeal and revision.
D.
Code of proceeding
Before Special Court:
Section 438 provides
that 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 deemed to be a Court of Session and the person
conducting a prosecution before a Special Court shall be deemed to be a Public
Prosecutor.
E.
How do special courts work?
The Act further
provides that where a person is
(a)
accused of, or
(b) suspected of the
commission of, an offence under this Act
and such a case is
forwarded to a Magistrate under sub-section (2) or sub-section (2A) of section
167 of the Code of Criminal Procedure, 1973, the Magistrate may authorize the
detention of such person for a maximum period of 15 days or 7 days as the case
may be. Where Such magistrate considers that the detention of such person
upon or before the expiry of the period of detention is unnecessary, he shall
order such person to be forwarded to the Special Court having jurisdiction.
F.
Jurisdiction of the Special Court
All offence specified
under section 435(1) of Companies Act shall be triable only by the Special
Court for the area in which the registered office of the company in relation to
which the offence is committed.
G. Offence Trailed by Special Court As per the provisions of the Companies
Act, 2013, following offences are triable by Special Courts:
1.Offences for which the Companies Act, 2013, provides for
imprisonment of 2 years or more
2.The Special Court may exercise, with respect to the
accused or suspected person forwarded to it by the relevant Magistrate, the
same power which a Magistrate having jurisdiction to try a case may exercise
under section 167 of the Code of Criminal Procedure, 1973 in relation to an accused person.
3.A Special Court may also take cognizance of an offence
under this Act without the accused being committed to it for trial upon:
- Perusal
of the police report of the facts constituting an offence; or
- Upon a complaint in that
behalf.
H.
Special Powers of the Special Court
1.When trying an offence under the
Act, a Special Court may also try an offence other than an offence under the
Act with which the accused may, under the Code of Criminal Procedure, 1973 be
charged at the same trial.
2.Notwithstanding anything contained
in the Code of Criminal Procedure, 1973 the Special Court may, if it thinks
fit, try in a summary way any offence under this Act, which is punishable with
imprisonment for a term not exceeding three years. However the maximum sentence of imprisonment
in a summary trial on conviction shall not exceed one year.
I.
Offence to be Non-
Cognizable
This Section provides
that every offence except those offences referred to in sub- section (6) of
section 212 shall be deemed to be non-cognizable within the meaning of the said
code.
§
Court shall take the offence as cognizable
only on receipt of complaint made by:
v
Registrar
v
Shareholder of Company
v
Person authorized by Central
Government
§
Court may take the offence as cognizable,
offence relating to issue and transfer of securities and nonpayment of
dividend, on a complaint in writing, by a person authorized by the SEBI.
Nothing of section 439 applicable on prosecution by a
Company of any of its Officer.
§
Attendance of Complainant:
Where the complainant is the Registrar or a person authorized by the Central
Government as given under sub-section (2), the presence of such officer before
the court trying the offences shall not be necessary unless the court requires
this personal attendance at the trial.
§
Non-application of sub-section (2)
on the action of the liquidator:- The provisions of sub- section (2)
shall not apply to any action taken by the liquidator or a Company in respect
of any offence alleged to have been committed in respect of any of the matter
in chapter XX or in any other provision of this Act relating to winding up of
the Companies.
J.
Offence Cognizable:
o
Providing misleading or false
information on Incorporation.
o
Misstatement in Prospectus
o
Fraudulently inducing a person to
invest money
o
Personating for acquisition of
securities
o
Destruction of Documents.
K.
MEDIATION AND
CONCILIATION PENAL (SECTION 442):
Meanings:
Mediation:
In common
parlance mediation means intervention of some third party in a dispute with the
intention to resolve the dispute.
Conciliation: Conciliation means the process of
adjusting or settling disputes in a friendly manner through extra judicial
means.
The new provision
introduced by CA, 2013 . Section 442 of the CA, 2013 deals with the
constitution and functioning of the mediation and conciliation panel in order
to dispose the matter.
I.
Central Government to maintain the
Panel of Meditators: The Central Government Shall
maintain a panel of experts to be known
as Mediation and conciliation panel for mediation between the parties during
the pendency of any proceedings before the Central Government or the Tribunal
or Appellate Tribunal under this
Act.Hence, it is important that the case should be pending before the central
tribunal or the Tribunal or Appellate Tribunal
under this Act
II.
Panel Consisting of Experts:
The panel shall consist of such number of experts having such qualification as
may be prescribed
III.
Filing of the application :Application
for mediation and conciliation can be made by
§ Any
of the parties to the proceedings( It shall be accompanied with such fees and
in such form as may be prescribed )
§ The
Central Government or the Tribunal or the Appellate Tribunal before which nay
proceeding is pending may, suo moto refer any ,matter pertaining to such
proceedings to such number of experts as it may deem fit.
IV.
Appointment of expert/s from panel:
The Central Government or the tribunal or the Appellate
Tribunal before which any proceeding is pending may appoint one or more experts
from the panel as may be deemed fit.
V.
Fees Terms & Conditions of the
Experts : The fee and other terms and conditions of the experts of Mediation & Conciliation
Panel shall be such as may be prescribed
VI.
Procedure for the disposal of
matter: In order to dispose of the matter, the Mediation And Conciliation Panel shall
follow such procedure as may be prescribed .
VII.
Period for the disposal of matter: The
Mediation And Conciliation Panel shall dispose of the matter reffered to it
within the period of three months and from the date of such refrence and
forward its recommendations to the Central Government or the Tribunal or
Appellate Tribunal as the case may be
VIII.
Filing of the Objections on the
Recommendations of the Panel: Any party aggrieved by the
recommendations of the Mediation And Conciliation may file objections to the
Central Government or the tribunal or the Appellate Tribunal as the case may be.
L.
COMPANY PROSECUTORS
(SECTION 443):
§
Appointment:
The Central Government may appoint (generally, or for any case, or in any case,
or for any specified class of cases in any local area) company prosecutors for
the conduct of prosecutions arising out of this Act.
§
Power & Privileges:
The Company Prosecutor shall have all the powers and privileges conferred to
Public Prosecutors appointed under section 24 Code of Criminal Procedure, 1973.
M. APPEAL AGAINST ACQUITTAL (SECTION
444):The Central government may direct
§ Any company prosecutor, or
§ Authorized any other person either by name or by virtue
of his office, to present an appeal from an order to acquittal passed by any
court, other than a High Court..
Appeal presented by such prosecutor
or other person shall be deemed to have been validly presented to the appellate
court.
N.
COMPENSATION FOR ACCUSATION
WITHOUT REASONABLE CAUSE (SECTION 445):
The provision of
Section 250 fo the Code of Criminal Procedure, 1973 shall apply mutatis
mutandis to compensation for accusation without reasonable cause before the
Special Court or the Court of Session.
O.
APPLICATION OF FINES
(SECTION 446):
The court
imposing any fine under this Act may direct that the whole or any part thereof
shall be applied in or towards payment of the costs of the proceedings, or in
or towards the payment of a reward to the person on whose information the
proceedings were instituted.
P.
APPLICATION OF FINES (SECTION 446):
The new provision
made in Companies Act, 2013 with regard to Special Court is a boon and all
concerned parties can hope for speedy settlement of cases. Since it is made exclusively
for Companies, and for the specific offences, it could be more effective and
efficient than general session Courts. It helps in better enforcement of
Corporate Governance.
Q.
Offences under the
Companies Act, 2013, for Which Minimum Punishment is 2 Years or More
Section
|
Offence
|
Who is Punishable
|
305(4)
|
False declaration of solvency by
a Director during voluntary winding up
|
Director
|
336(1)
|
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
|
Fraudulently misrepresenting material
information about the company to the Company Liquidator during winding up
|
||
336(2)
|
Taking in pawn or pledge or
otherwise receipt of the property, knowing it to be pawned, pledged, or
disposed of wherein such
|
Any person who does such act
knowingly
|
447
|
Commitment of fraud provided
fraud in question involves public interest
|
Any person found guilty of such
fraud
|
449
|
Intentionally giving false
evidence upon any examination on oath or solemn affirmation, authorised under
the Companies Act, 2013
|
Any person giving such false
evidence
|
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
|
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Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION. This is only a knowledge sharing initiative and author do not intend to solicit any business or profession.
[1]
Notified by notification dated 18th May, 2016.
[2]
Substituted by The
Companies (Amendment) Act, 2015 w.e.f. 29th of May, 2015. for the words "trial of
offences under this Act", the words "trial of offences punishable
under this Act with imprisonment of two years or more"
[3]
Inserted by The Companies (Amendment) Act, 2015 w.e.f. 29th
of May,
[4]
Section 437
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