Hearing Accused At Pre-Cognizance Stage Mandatory Under BNSS For Offences Under SEBI Act: Bombay High Court

The Bombay High Court has held that the first proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023, mandating an opportunity of hearing to the accused before taking cognizance of a complaint applies to prosecutions under the Securities and Exchange Board of India Act, 1992. The Court observed that the Special Court could not take cognizance of an offence under the SEBI Act without first hearing the accused.

Justice N. J. Jamadar was hearing a writ petition filed challenging an order of the Special Court taking cognizance of an offence punishable under Section 24(2) of the SEBI Act and issuing process. The prosecution arose from allegations that Osian's Art Fund failed to comply with directions issued by SEBI requiring the refund of investors' money with interest. SEBI filed a complaint against the petitioner and another director before the Special Court.

The petitioner confined his challenge to the ground that the Special Court had taken cognizance on the complaint without affording him an opportunity of hearing as required under the first proviso to Section 223(1) of the BNSS. SEBI opposed the petition, contending that the Special Court under the SEBI Act is deemed to be a Court of Session and that Section 223 of the BNSS did not govern the taking of cognizance by such Court.

The Court observed that under Section 4(2) of the BNSS, the provisions of the BNSS apply to offences under special enactments unless the special statute prescribes a different procedure. It held that while Section 26 of the SEBI Act prescribes that cognizance can be taken only on a complaint made by the Board, it deals only with the mode of initiation of prosecution and not the manner of taking cognizance.

The Court further held that Section 26-D of the SEBI Act expressly makes the provisions of the BNSS applicable to proceedings before the Special Court, save as otherwise provided in the Act, and that the SEBI Act does not contain any provision prescribing a different procedure for taking cognizance.

Referring to the first proviso to Section 223(1) of the BNSS, the Court observed that it marked a departure from the earlier position by mandating that no cognizance on a complaint shall be taken without giving the accused an opportunity of being heard. The Court held that once the manner of taking cognizance is governed by Section 223, compliance with the proviso is mandatory.

“The Special Court cannot take cognizance of the offences punishable under the SEBI Act, 1992, without compliance of the peremptory requirement of providing an opportunity of hearing to the accused, as provided under the first proviso to Section 223(1) of the BNSS, 2023,” the Court observed.

Accordingly, the Court allowed the writ petition, quashed the order taking cognizance and issuing process solely on the ground of non-compliance with the first proviso to Section 223(1) of the BNSS, and directed the Special Court to provide the petitioner an opportunity of hearing before passing a fresh order regarding cognizance in accordance with law.

Case Title: Neville Tuli v. Securities and Exchange Board of India & Anr. [Writ Petition No. 5242 of 2025]

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