2008 (1) TMI 608 - HC - Companies Law

SEBI Act Offences: Trial Venue, Amendment Prospective, Committal Orders Quashed

Videocon International Versus Securities and Exchange Board of India and M/s. Classic Credit Ltd. Versus The State of Maharashtra & anr.

The court held that complaints for SEBI Act offences should be tried by the courts where they were initially presented, not Sessions Court. Amendments to ... Substantial amendment in section 24 of the SEBI Act - Held that:- It is held that the amendment in section 24 of the SEBI Act brought into force with effect from 29-10-2002 is a substantial amendment and the amendment in section 26 of the said Act is only consequential, though procedural. The said amendments shall have prospective effect and not retrospective and, therefore, are not applicable to the above stated complaints. The complaints filed before or after 29-10-2002 but in respect of the alleged offences that have taken place prior to the said date are required to be tried by the Court to which they were presented and they are not required to be committed to the Court of Sessions. Hence the above referred complaints shall be tried by the Court they were presented at the first instance. The committal orders passed by the Court of Metropolitan Magistrate/Addl. Chief Metropolitan Magistrate/Chief Metropolitan Magistrate in the complaints referred are hereby quashed and set aside. The Court of Sessions to return the concerned complaints to the respective Courts which had passed the committal order.Trial of the complaints is expedited. Issues Involved:1. Jurisdiction of trial courts for offences under the SEBI Act, 1992.2. Applicability of amendments to the SEBI Act, 2002.3. Compliance with procedural requirements under the Criminal Procedure Code (Cr.P.C.).4. Right to a speedy trial and fair trial.5. Vested rights and retrospective application of laws.Detailed Analysis:Jurisdiction of Trial Courts for Offences under the SEBI Act, 1992:The primary issue was whether complaints for offences punishable under section 24 read with section 27 of the SEBI Act should be tried by the Court of Chief Metropolitan/Additional Chief Metropolitan/Metropolitan Magistrate in Mumbai or be committed to the Court of Sessions for Greater Mumbai. The petitioners argued that the complaints should be tried by the courts where they were initially presented, as the cause of action arose before the SEBI (Amendment) Act, 2002, which mandates that only the Court of Session can try such offences.Applicability of Amendments to the SEBI Act, 2002:The court examined whether the amendments brought by the SEBI (Amendment) Act, 2002, which enhanced the punishment and changed the trial forum to the Court of Sessions, should apply retrospectively. It was argued that Article 20(1) of the Constitution prohibits retrospective application of penal laws to the detriment of the accused. The court held that the amendments to section 24 are substantial and thus prospective, while the amendment to section 26 is consequential and procedural.Compliance with Procedural Requirements under the Cr.P.C.:The court noted that the complaints were committed to the Sessions Court without compliance with sections 200, 202, and 208 of Cr.P.C., which are mandatory for the committal of cases. Specifically, the complaints lacked statements of witnesses recorded during the investigation, which is a requirement under section 208. The court held that the committal orders were unsustainable due to this procedural lapse.Right to a Speedy Trial and Fair Trial:The court emphasized the right to a speedy trial under Article 21 of the Constitution. It was argued that committing the complaints to the Sessions Court would delay the trial, as Sessions trials are generally longer than summary or warrant trials conducted by Magistrate courts. The court agreed that the accused would be deprived of a speedy trial if the complaints were tried by the Sessions Court.Vested Rights and Retrospective Application of Laws:The court discussed the vested right of the accused to be tried by the court where the complaint was initially presented. It held that the amendments to the SEBI Act should not be applied retrospectively, which would otherwise affect the vested rights of the accused. The court also noted the absence of a provision in the SEBI (Amendment) Act, 2002, for transferring pending complaints to the Sessions Court, further supporting the prospective application of the amendments.Conclusion:1. Jurisdiction: The complaints should be tried by the courts where they were initially presented.2. Amendments: The amendments to the SEBI Act, 2002, are prospective and not applicable to offences committed before 29-10-2002.3. Procedural Compliance: The committal orders were quashed due to non-compliance with procedural requirements under Cr.P.C.4. Speedy Trial: The right to a speedy trial supports the trial of complaints by the Magistrate courts.5. Vested Rights: The vested rights of the accused to be tried by the initial court were upheld, and the retrospective application of the amendments was rejected.Final Orders:- The committal orders were quashed.- The complaints were to be tried by the courts where they were initially presented.- The trial of the complaints was expedited.