Introduction
The provisions related to Special Courts were provided under Chapter XXVIII of the Companies
Act, 2013. Although the provisions related to Special Courts i.e. Section 435 to 438 & 440were
not notified for being in force till 2016. In the Report of Companies Law Committee chaired by
Shri Tapan Ray dated February 1, 2016, noted that the establishment/designation of Special
Courts under the Act would result in faster prosecution of defaulting companies. The Committee
recommended the early establishment/designation of the Special Courts. It was also
recommended to be considered that the Special Courts at the subordinate level may also be
established, in addition to the Sessions Judge or Additional Sessions Judge. The Central
The government is empowered to establish or designate Special Courts by notification to provide speedy trial of offenses under the Companies Act, 2013. Consequently,
Ministry of Corporate Affairs notified sections 435 to 438 and section 440 vide notification dated
May 18, 2016. The purpose of Special Courts is to provide speedy trial of offenses under the
Companies Act, 2013. Although the option of approaching the regular courts for trial of offenses
under the Companies Act was available to complainants for the want of expertise and special
attention required for these offenses, it was necessary to establish the Special Courts. The
Special Courts are generally designated from the existing setup of the court system dealing with
criminal offenses. The Special Courts were facilitated by the Companies (Amendment) Act, 2019
by strengthening the Internal Adjudication Mechanism, resulting in a reduced burden on Special
Courts and allowing them to focus on serious offenses under the 2013 Act.
The genesis of Special Courts
The special court shall consist of a single judge holding office as Session Judge or Additional
Session Judge for offense providing for imprisonment of two years or more and Metropolitan
Magistrate or a Judicial Magistrate of the First Class, in any other case 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. Section 60 of the Companies
(Amendment) Act, 2020 has given an exception to Section 452 from the applicability of provisions
related to Special Courts. The excluded section provides for Punishment for wrongful
withholding of property by the officer or employee of a company.
* CS Kushal Kumar, Executive Academics, The ICSI.Views expressed in the Article are the sole expression of the Author and may not express the views of theInstitute.
Number of Special Courts
The Ministry of Corporate has issued 18 circulars as of date designating various courts as
Special Courts. The state-wise inclusive list of courts is as under:
States Number of Special Courts
UT of Dadra & Nagar Haveli and Daman & Diu,
Goa, Gujarat, Madhya Pradesh, UT of Andaman
& Nicobar Islands, West Bengal, NCT of Delhi,
Chhattisgarh, Rajasthan, Punjab, Haryana, UT of
Chandigarh, Puducherry, Manipur, Meghalaya,
Telangana, Andhra Pradesh, Telangana, Bihar,
Karnataka, Odisha, Nagaland, Manipur &
Arunachal Pradesh.
1
Tamil Nadu, Kerela, UT of Lakshadweep, Assam
and Uttar Pradesh.
2
UT of Jammu & Kashmir, Maharashtra and
Uttarakhand.
3
Total Number of Courts 41
Recently, the Ministry of Corporate Affairs has designated 5 Special Courts in respect of the cases
filled by SEBI vide notification dated November 27, 2020. The place-wise list of these courts is
as under:
Place Number of Courts
Mumbai 2
Kolkata and Chennai 1
Total 4
Complaints before the courts and Offence to be Non-Cognizable
The offenses under the Companies Act, 2013 are deemed to be non-cognizable, except the offenses
covered under Section 447 (Punishment for Fraud). The complainants under the Companies
Act, 2013 is restricted and may include the Registrar of Companies, a shareholder/member of the
The company, any person authorized by the Central Government, any person authorized by the
Securities and Exchange Board of India. The Special Courts shall take cognizance only on the
complaint of persons/authorities mentioned under Section 439 of the Companies Act, 2013.
The jurisdiction of the courts is decided based on the registered office of the Company or
if more than one court has jurisdiction, as may be specified by the High Court.
High Court is the appellate authority for Special Courts and NCLAT is the appellate authority for
NCLT.
Powers of the Special Court
Under the Companies Act, 2013, the judicial magistrate or executive magistrate may authorize the
detention for 15 Days or 7 Days only respectively. These magistrate(s) are also empowered to
forward the person accused to the Special Court without unnecessary detention. The Special
Courts are empowered to take cognizance of the offense without the accused being committed for
trial upon perusal of the police report and also to try an offense under the Code of Criminal
The procedure, 1973 with which the accused may be charged at the same trial. The Special Courts
may also try an offense summarily for which the imprisonment is provided for a term not
exceeding three years. However, the punishment for conviction in a summary trial is limited to
one year. The provisions of reversion back to the regular trial and conditions thereto are also
provided under the act. The person conducting a prosecution before a Special Court shall be
deemed to be a Public Prosecutor. Transitional Provisions
The transitional provisions are added and power rests with the Court of Session or the Court of
Metropolitan Magistrate or a Judicial Magistrate of the First Class for the trial of an offense under the
act. The powers of the high court relating to transfer cases and appeals are reserved specifically
as per the provisions of section 407 of the Criminal Procedure Code.
Conclusion
The need and benefits of designating the special courts may be seen in Para 6 of the Order
dated 14.12.2018 passed by the Special Court in the matter of Serious Fraud Investigation
Office and Ors. and Rahul Modi and Ors. The extracts are as under:
Admittedly as per the provisions of Section 212(3) of the Companies Act, the investigations
ordered are required to be completed within the specified time. But the issue is even if it is not so
done, what should be the consequences and whether further proceedings or investigations shall be
unlawful? The answer to the mind of this court is simply no because the time frame mentioned
is to complete the investigations in a time-bound manner but the said time can be extended from
time to time by the same authority.
The quantum of monetary impact on the economy involved in corporate cases and the expertise
required to deal with these cases swiftly, undoubtedly substantiates the need and importance of
designation and establishment of Special Courts.
Reference
http://ebook.mca.gov.in/default.aspx
https://www.mca.gov.in/Ministry/pdf/Report_Companies_Law_Committee_01022016.pdf
https://main.sci.gov.in/supremecourt/2019/231/231_2019_Judgement_27-Mar-2019.pdf
Comments
Post a Comment