Only special courts consisting of Metropolitan or Judicial Magistrates empowered to hear complaints under IBC, and not Sessions Court judges: Bombay HC
The Bombay High Court ruled that only special courts consisting of Metropolitan or Judicial Magistrates are empowered to hear complaints under IBC, and not Sessions Court judges.
Background
The petition under Article 227 of the Constitution of India read with Section 482 of the Criminal Procedure Code, 1973 assails the order, Issue Process , under Section 73(a) and Section 235A of the Insolvency and Bankruptcy Code, 2016 passed “Issue Process”, under Section ”, under Section by the Additional Sessions Judge, 58th Court, Mumbai, on a Complaint filed by the Insolvency and Bankruptcy Board of India, a statutory body established under the I.B. Code.
Arguments
Advocate Amir Arsiwala, appearing for the Petitioner, contended that in terms of Section 236 of I.B. Code, the Special Court, established under the Companies Act, 2013 is empowered to try the offenses under the I.B. Code.
He argued that Section 435 of the Companies Act empowers the Central Government to establish Special Courts for speedy trial of the offenses under the Companies Act.
Advocate Pankaj Vijayan, appearing for the Respondents, contended that plain reading of Section 435 of the Companies Act, as amended by Act of 2017, does not admit the interpretation, as sought to be placed by the Petitioners.
He argued that the harmonious construction of provision of Section 236 of the I.B. Code and amended Section 435 of Companies Act, leads to conclude that the Additional Sessions Judge, alone has a jurisdiction to entertain the complaint, since offense referred therein, is punishable with imprisonment for more than three years.
Decision
The single judge bench of Justice Sandeep K. Shinde noted that in view of Section 237 of I.B. Code, Special Court trying the offenses under the I.B. Code 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 court further noted that the offenses other than the Companies Act cannot be tried by the Special Court established under clause (a) of subsection 2 of Section 435. The omission of the phrase under this Act, under Section 435 (2) and its inclusion in section 435 (2) (a) of CA 2013 must be treated to be a deliberate one.
The court held that the Special Court which is to try offences under the I.B. Code is the Special Court established under Section 435 (2) (b) of the Companies Act, 2013 which consists of Metropolitan Magistrate or Judicial Magistrate First Class.
The court quashed and set aside the proceedings instituted in the Court of Additional Sessions Judge, 58th Court, Mumbai.
Case title: Satyanarayan Bankatlal Malu and Ors. v/s Insolvency and Bankruptcy Board of India and Ors.
Citation: WRIT PETITION NO. 2592 OF 2021
