1998 (1) TMI 398 - SC - Companies Law

Special Court's Jurisdiction Extends to All in Securities Transactions

The Special Court, established under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, has jurisdiction to entertain ... Whether the Special Court, functioning under the provisions of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 has jurisdiction to entertain and try the criminal case filed by the respondent-complainant against the appellant-accused? Held that:- Appeal dismissed. The learned single judge of the High Court, as a Special Court, was quite justified in passing the impugned order in connection with the jurisdiction of that court in entertaining and trying the criminal case against the appellant. A conjoint reading of the recitals in the complaint which obviously must be assumed to be true at this stage would show that the accused is alleged to have entered into a transaction in securities, namely, the shares during the relevant period and out of the said transaction is alleged to have received sale proceeds which he has not handed over or transmitted to the complainant who claims to be entitled to the said amount. Thus the offence alleged is certainly relating to the transaction in securities as is said to have been entered into by the accused during the relevant period. Issues Involved:1. Jurisdiction of the Special Court under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.2. Applicability of the Act to non-notified persons.3. Interpretation of Section 7 of the Act.4. Relevance of previous judgments on similar matters.Detailed Analysis:1. Jurisdiction of the Special Court under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992The primary issue in this case is whether the Special Court, established under the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, has jurisdiction to entertain and try the criminal case filed by the respondent-complainant against the appellant-accused. The Special Court, consisting of a learned single judge of the Bombay High Court, held that the proceedings are within its jurisdiction. The appellant-accused challenged this decision, leading to the present appeal.2. Applicability of the Act to Non-Notified PersonsThe appellant-accused argued that the Special Court has no jurisdiction to try him because he is not a notified person under Section 3(2) of the Act. The court examined whether an accused who is not a notified person can be proceeded against before the Special Court if it is alleged that he is involved in any transaction in securities during the relevant period (from 1-4-1991 to 6-6-1992). The court found that the Act's jurisdiction is not limited to notified persons but extends to any person involved in transactions in securities during the specified period.3. Interpretation of Section 7 of the ActThe court interpreted Section 7 of the Act, which states that 'any prosecution in respect of any offence referred to in sub-section (2) of section 3 shall be instituted only in the Special Court.' The court held that the jurisdiction of the Special Court is not contingent upon the accused being a notified person. Instead, it covers any offence relating to transactions in securities committed during the relevant period. The court emphasized that the Special Court has exclusive jurisdiction to try such offences, irrespective of whether the accused is a notified person.4. Relevance of Previous Judgments on Similar MattersThe court considered previous judgments, including Canara Bank v. Nuclear Power Corpn. of India Ltd. and Kudremukh Iron Ore Co. Ltd v. Fairgrowth Financial Services Ltd. However, it found that these cases were not directly applicable to the present issue. The court noted that these judgments dealt with civil actions and the powers of the Custodian under the Act, whereas the present case concerns the criminal jurisdiction of the Special Court.Conclusion:The court concluded that the Special Court has jurisdiction to entertain and try the criminal case against the appellant-accused, even though he is not a notified person. The appeal was dismissed, and the decision of the Special Court was upheld.