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

Accepting the contentions of the petitioners, Justice Sandeep K Shinde clarified that the jurisdiction to try offences under the IB Code lies with the Court of Metropolitan Magistrate or Judicial Magistrate First Class established as a Special Court under Section 435 of the Companies Act, 2013 (as amended in 2017) and not with the Court of Additional Sessions Judge established under the same provision.

The Court reasoned that it was only after the enactment of the IB Code in December 2016 that Section 435 of the Companies Act, which empowers the Central Government to establish Special Courts for speedy trial of offences, was amended in 2017 to empower the Central Government to establish a Court of Metropolitan Magistrate or Judicial Magistrate First Class as a Special Court to try offences not under the Companies Act. Before this amendment, such Courts were only empowered to try offences under the Companies Act that were punishable with imprisonment for less than two years and were not Special Courts.

Thus, drawing inference from the chronology of amendments, the Court stated that it was a clear mandate of the legislature that the Special Court comprising of a Sessions Judge or Additional Sessions Judge [i.e. 435 (2) (a)] is only to try offences under the Companies Act, 2013 which carry a punishment of imprisonment of two years or more and that Special Court comprising of a Metropolitan Magistrate or Judicial Magistrate First Class is to try "other offences".

The Court observed

"the legislature thought it fit not to burden a Special Court comprising of Sessions Judge or Additional Sessions Judge with the trials also under the IB Code"

The Court also noted that a plain reading of clause (a) of subsection (2) of Section 435 of the Companies Act, 2013 implies that the Special Court consisting of Judge holding office as a Sessions Judge is empowered to try offences "under this Act". The phrase 'under this Act', only means the offences committed under the Companies Act. Therefore, the offences other than the Companies Act cannot be tried by the Special Court established under clause (a) of subsection (2) of Section 435. While on the contrary, Special Court consisting of Metropolitan Magistrate or Judicial Magistrate First Class as proposed in clause (b) is invested with jurisdiction to try the "case of other offences". The phrase other offences means offences under other Acts than Companies Act and the offences under the Companies Act punishable with imprisonment less than two years.

The Court also observed that the language of Section 236(3) of the IB Code which creates a deeming fiction that the Special Court trying offences under the IB Code shall be deemed to be a Court of Sessions would have been unnecessary if the intention of the legislature was that offences under IB Code are to be tried by the Sessions Court. The Court observed

"if trials in offences under the IB Code were also to be tried by the Special Court comprising of Sessions Judge or Additional Sessions Judge, it would frustrate the object of the speedy trial for which the Special Courts have been established."