Prospective operation of SEBI amendments preserves pre-amendment trial forum and procedure for pending complaints.

The 2002 amendments to the Securities and Exchange Board of India Act, 1992, were treated as prospective because they substantially enhanced punishment under Section 24 and altered the trial forum under Section 26(2) only as a consequential change. Article 20(1) of the Constitution and Section 6 of the General Clauses Act were applied to preserve pre-amendment liabilities, and pending complaints based on conduct before 29-10-2002 remained under the earlier regime. Complaints were therefore triable by the original Magistrate court, not the Court of Session. Committal orders were also found unsustainable where the procedural requirements under the Code of Criminal Procedure and the investigation framework under Section 11C had not been complied with.

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Issues: (i) Whether the 2002 amendments to the Securities and Exchange Board of India Act, 1992, enhancing punishment under Section 24 and changing the trial forum under Section 26(2), applied retrospectively to complaints based on alleged offences committed before 29-10-2002. (ii) Whether complaints in such matters were required to be tried by the Magistrate before whom they were presented or by the Court of Session. (iii) Whether committal orders could stand in the absence of compliance with the procedural requirements under the Code of Criminal Procedure, 1973 and the investigation framework introduced by Section 11C of the Act.

Issue (i): Whether the 2002 amendments to the Securities and Exchange Board of India Act, 1992, enhancing punishment under Section 24 and changing the trial forum under Section 26(2), applied retrospectively to complaints based on alleged offences committed before 29-10-2002.

Analysis: The amendments were held to be not merely procedural. Section 24 was substantially amended by enhancing punishment, and Section 26(2) changed the forum only as a consequence of that enhanced punishment. The Court read Sections 24 and 26 together and treated them as complementary and inseparable. Article 20(1) of the Constitution of India and Section 6 of the General Clauses Act, 1897 were applied to preserve accrued rights and liabilities under the unamended law. The absence of an express transfer provision for pending complaints also supported the conclusion that the amended regime was not intended to disturb pending pre-amendment proceedings.

Conclusion: The amendments were prospective and did not apply to complaints based on offences committed before 29-10-2002.

Issue (ii): Whether complaints in such matters were required to be tried by the Magistrate before whom they were presented or by the Court of Session.

Analysis: The Court held that the accused did not possess a vested right to choose a forum in the abstract, but the forum question had to be tested in the setting of the pre-amendment statutory scheme and the Cr.P.C. Under the unamended Act, the offences were triable by a Magistrate. Since the amended forum change was held prospective, the pending complaints arising from pre-amendment conduct remained triable by the original court. The Court also accepted that shifting such matters to the Court of Session could impair the accused's statutory revisional remedy and affect the practical incidents of a speedy trial.

Conclusion: The complaints had to be tried by the court before which they were originally presented and were not required to be tried by the Court of Session.

Issue (iii): Whether committal orders could stand in the absence of compliance with the procedural requirements under the Code of Criminal Procedure, 1973 and the investigation framework introduced by Section 11C of the Act.

Analysis: The Court found that, in the complaints filed after 29-10-2002, no investigation under Section 11C had been carried out and no statements of witnesses recorded during such investigation were placed on record. It further held that the committal orders were passed without due compliance with the procedural safeguards contemplated by Sections 200, 202, 208 and 209 of the Code of Criminal Procedure, 1973. The Court treated compliance with Section 208 as a condition precedent to commitment and found the orders mechanically passed on the basis of the later notification designating a Special Court, without proper application of mind.

Conclusion: The committal orders were unsustainable and were quashed.

Final Conclusion: The pre-amendment offences under the Securities and Exchange Board of India Act, 1992 remained subject to the earlier trial regime, and the pending complaints were restored to the original Magistrate courts for trial.

Ratio Decidendi: Where a statutory amendment substantially enhances punishment and only consequentially changes the trial forum, the amendment operates prospectively unless the legislature clearly indicates otherwise, and pending prosecutions arising from pre-amendment conduct continue under the unamended forum and procedure.

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