Sessions Judge Or Additional Sessions Judge Not Empowered To Try Offences Under IBC: Bombay High Court

The Bombay High Court in a Bench consisting of Justice Sandeep K. Shinde in the case of Satyanarayan Bankatlal Malu v. Insolvency and Bankruptcy Board of India, while setting aside the order passed by the Additional Sessions Judge u/s 73(a) and Section 235A of the Insolvency and Bankruptcy Code, 2016, held that the Sessions Judge or Additional Sessions Judge is not competent to try offences under the IBC. The same can only be done by a Metropolitan Magistrate or Judicial Magistrate First Class in terms of Section 435 of the Companies Act when read with Section 236 and 237 of the IBC. The Additional Sessions Judge passed an order- "issue process" u/s 73(a) and 235A of the IBC, 2016, which was filed by the IBBI. The Petitioner, in a writ petition u/a 227 of the Constitution of India r/w Section 482, CrPC challenged this order on the ground that the Additional Sessions Judge does not have the jurisdiction to entertain the complaint filed by the Respondents under the IBC. The Counsel appearing on behalf of the Petitioner submitted that in terms of Section 236 of the IBC, the Special Court, established under the Companies Act, 2013 is empowered to try the offences under the IBC. Section 236 of the IBC also states that Special Court shall be 'deemed' to be a Court of Session and a person conducting prosecution shall be 'deemed' to be a Public Prosecutor. Analysis By Court Amendments Made To Section 435 Of The Companies Act, 2013 Position In 2013 Originally, Section 435 of the Companies Act empowered the Central Government to establish Special Courts for speedy trial of offences, only under the Companies Act and Sessions Judge or Additional Sessions Judge were qualified to be appointed as judges of the Special Court. Section 435 After The 2015 Amendment After the amendment was made in 2015 to Section 435, Special Court/s, established by the Central Government consisting of the Judge holding office of Sessions Judge was empowered to try offences only under the Companies Act, which were punishable with imprisonment of two years or more. Other offences under the Companies Act, punishable with imprisonment less than two years, were triable by Court of Metropolitan Magistrate or Judicial Magistrate First Class. Post 2018 Amendment The 2018 Amendment made it more compatible with the object of "speedy trial of offences". This Amendment empowered the Central Government to create two classes of Courts as Special Courts: one, Special Court consist of Judge holding office as a Sessions Judge or Additional Sessions Judge and second, Special Court consist of Metropolitan Magistrate or Judicial MagistrateFirst Class. The primary contention of the Petitioner was that a Sessions Judge or Additional Sessions Judge was only vested with the power to try offences under the Companies Act, punishable with imprisonment of two years or more. Whereas, Special Court consisting of Metropolitan Magistrate or Judicial Magistrate First Class u/s 435(2)(b) is vested with the jurisdiction to try offences other than under the Companies Act, i.e., the IBC. Accepting the contention of the Petitioner, the High Court of Bombay held that Special Court in terms of Section 435(2)(b) of the Companies Act, which consists of Metropolitan Magistrate or Judicial Magistrate First Class is empowered to try offences of two kinds: Those offences under the Companies Act which are punishable with imprisonment of less than two years, and Offences under the Insolvency and Bankruptcy Code. Section 236 And 237 Of The IBC Section 236 of the I.B. Code empowers the Central Government or Board to file a complaint against a person/s, having contravened, one of the penal provisions of the IBC with the "Special Court" constituted or established under the provisions of the Companies Act, 2013. The Court, after analysing Section 236, concluded that it consists of the following aspects: (i) the offences under the I.B. Code are to be tried by the 'Special Court', established under the Companies Act. (ii) the provision of the Code of Criminal Procedure, 1973 (Cr.P.C), shall govern and regulate the proceedings before the Special Court. (iii) the Special Court shall be 'deemed to be a Court of Sessions', AND the person conducting prosecution before the Special Court shall be deemed to be a public prosecutor. Section 237 of the Code provides that the Special Court trying the offences under the IBC shall, 'deem to be a Session Court' and proceedings and orders of the Special Court shall be amenable to Appellate and Revisional jurisdiction of the High Court. The Question That Arose For Consideration Was- which of these two classes of Special Courts, created by Companies Act (amendment) 2017, is empowered to try the offences under the I.B. Code. The Court held- "The object to create another class of Special Court was to speed up the...

Sessions Judge Or Additional Sessions Judge Not Empowered To Try Offences Under IBC: Bombay High Court

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