Special Courts under Companies Act 2013

Special Courts under Companies Act 2013

The Ministry of Corporate Affairs has notified certain provisions under the Companies Act, 2013 (“CA, 2013”) for the establishment of Special Courts to specifically deal with and dispose of criminal offences under the CA, 2013 that are punishable with a term of imprisonment of two years or more in a timely manner. The major goal of establishing Special Courts is to separate the disposition process, with Special Courts dealing with serious offences and magistrate courts dealing with minor infractions and violations.

The Ministry of Corporate Affairs has notified the regulations dealing with ‘Special Courts’ with effect from 18 May 2016, in order to offer rapid disposal of offences punished under the Companies Act, 2013, which are punishable by imprisonment for two years or more. The goal of establishing these courts is to allow magistrate courts to hear small infractions, while serious offences should be dealt with by Special courts.

DESIGNATED SPECIAL COURTS

Existing courts in Maharashtra, Jammu and Kashmir, Goa, Gujarat, Madhya Pradesh, West Bengal, and the Union territory of Andaman and Nicobar Islands, as well as Dadra and Nagar Haveli and Daman and Diu, have been designated as Special Courts for the purposes of trying crimes under the Companies Act, 2013. According to the notification, these courts have been designated for the trial of offences punishable by imprisonment for two years or more under the Companies Act, 2013.

SPECIAL COURTS CAN TRIAL OFFENCES

Special Courts have jurisdiction over the following offences under the Companies Act of 2013:

• I offences punishable by a sentence of two years or more under the Companies Act of 2013;
• For any offence committed under the Companies Act, 2013, cases forwarded by a Magistrate (when he believes detention is unnecessary). When a person is arrested and detained in custody, and it appears that the investigation will take longer than the required 24 hours under the Code of Criminal Procedure, 1973 (CrPC), and there are reasonable grounds to believe that the accusation or information is true, the Magistrate may order detention for a period not exceeding 15 days (if a Judicial Magistrate orders it) or 7 days (if an Executive Magistrate orders it), as the case may be. In such instances, the Special Court has the same authority as a Magistrate who has jurisdiction over the case.
• upon: (a) review of the police report of the facts constituting such offence, or (b) if a complaint has been filed in that behalf, take cognizance of an offence under the Companies Act, 2013 without the accused being committed to it for trial;
• attempt an offence for which an accused may be charged under the CrPC in addition to an offence under the Companies Act, 2013 in the same trial;
• If the Special Court deems it necessary, it may try any offence under the Companies Act, 2013, that is punished by imprisonment for a duration of not more than three years in a summary manner, provided that no person can be sentenced to more than one year in jail if convicted in such a trial.

APPEALS AND REVISIONS IN HIGH COURTS FROM SPECIAL COURTS

Notably, the High Court has been granted jurisdiction for the purposes of hearing appeals and revisions, as if the Special Court within the High Court’s local jurisdiction were a Court of Session hearing cases within the High Court’s local jurisdiction.

Section 435 of the Companies Act of 2013 empowers the Central Government to establish or designate as many Special Courts as are necessary for the rapid trial of offences.

Composition

A Special Court is made up of a single judge who is nominated by the Central Government with the approval of the Chief Justice of the High Court in the jurisdiction of which the judge is functioning.

Judge Qualifications

A person shall not be qualified for appointment as a judge of a Special Court unless he is serving as a Sessions Judge or an Additional Sessions Judge immediately prior to such appointment.

Special Courts have jurisdiction over certain offences. 1. Despite anything in the Code of Criminal Procedure, 1973, Section 436 of the Offenses Triable by Special Courts states that (a) All offences under this Act shall be tried only by the Special Court established for the area in which the registered office of the company in relation to which the offence is committed, or, if more than one Special Court is established for such area, by such one of them as the High Court concerned may specify in this regard. (b) a person accused of, or suspected of committing, an offence under this Act is referred to a Magistrate under section 167 of the Code of Criminal Procedure, 1973, sub-section (2) or sub-section (2A), Where such Magistrate is a Judicial Magistrate, such Magistrate may permit the imprisonment of such person in such custody as he sees suitable for a term not exceeding fifteen days in total, and seven days in total where such Magistrate is an Executive Magistrate:

Provided, however, that if such Magistrate believes that detention of such person is unnecessary after the time of detention has expired or before it has expired, he shall order that such person be forwarded to the Special Court with jurisdiction. (c) The Special Court may use the same powers in respect to the person forwarded to it under Section (b) that a Magistrate with jurisdiction to try a matter may exercise in relation to an accused person forwarded to him under Section 167 of the Code of Criminal Procedure, 1973.

A person is not qualified for appointment as a judge of a Special Court unless he is a Sessions Judge or an Additional Sessions Judge immediately prior to such appointment.

Author: Ankita Sharma,
Sharda University