2008 (1) TMI 627 - HC - Companies Law

SEBI Act Amendment: Court Upholds Sessions Court Jurisdiction Post-Amendment

The High Court held that complaints filed after the amendment of the SEBI Act, even for offences committed before the amendment, should be tried by the ... Retrospective application of procedural amendments - Forum jurisdiction for trial - Magistrate versus Court of Sessions - Distinction between substantive and procedural law (vested right in substantive law; no vested right in procedure) - Validity of administrative transfer backed by statutory amendment - Summons-case and warrant-case classification under Cr.P.C. - Right of appeal is statutory; revision is a procedural facility not a vested rightRetrospective application of procedural amendments - Forum jurisdiction for trial - Magistrate versus Court of Sessions - Complaints alleging offences committed prior to 29-10-2002 but filed after that date are triable by the Court of Sessions in view of the amendment to section 26(2) of the SEBI Act. - HELD THAT: - The Court held that the amendment to section 26(2) changing the forum from 'no Court inferior to a Metropolitan Magistrate' to 'no Court inferior to a Court of Sessions' is procedural, relating to forum, and thus presumptively retrospective. Relying on settled principles distinguishing procedural changes from substantive ones, the Court concluded that pending complaints filed after the amendment must be tried in the forum designated by the amended statute, even if the alleged acts occurred before the amendment. The Court further explained that insofar as substantive punishment remains governed by the pre-amendment law (one year maximum), such cases continue to be summons-cases under the Code and will proceed under Chapter XX procedure, albeit before the Sessions Court because of the statutory change in forum. [Paras 17, 18, 19]The Sessions Court has jurisdiction to try complaints filed after 29-10-2002 even if the alleged offence occurred before that date.Validity of administrative transfer backed by statutory amendment - Distinction from administrative orders lacking legislative backing (A.S. Impex Ltd.) - Administrative orders of the High Court and consequential orders of the District and Sessions Judge transferring SEBI complaints to Sessions Court were valid because they implemented the statutory amendment. - HELD THAT: - The Court distinguished A.S. Impex Ltd. where administrative transfer sought to bypass a special legislative scheme, observing that those orders lacked legislative backing. By contrast, the transfers in the present matter were effected in the context of an amendment to section 26(2) of the SEBI Act that altered the competent forum. Because the administrative orders merely implemented the changed statutory mandate, they did not unlawfully usurp or bypass any exclusive jurisdiction conferred by statute; therefore the transfers were valid. [Paras 15, 16, 19]The High Court's administrative orders and the District and Sessions Judge's consequential orders transferring the cases to the Sessions Court are valid.Summons-case and warrant-case classification under Cr.P.C. - Right of appeal is statutory; revision is a procedural facility not a vested right - Trying the matter in the Sessions Court does not deprive the accused of the right of appeal; revision is not a vested right and its forum may be affected by the change in procedure. - HELD THAT: - The Court explained that even though the forum for trial changed, the convicted person retains a statutory right of appeal (to the High Court if tried by Sessions Court). Change of forum for appeal does not amount to denial of the right to appeal because the right is to appeal, not to a particular court. As to revision, the Court reiterated that revisional jurisdiction is a supervisory procedural power of the High Court and does not confer a substantive vested right on a litigant; consequently, alteration in procedural provisions affecting revision does not amount to deprivation of a vested right. [Paras 10, 11, 14, 15, 16]The change of forum does not extinguish the right of appeal; any alteration in revisional remedies does not constitute denial of a vested right.Final Conclusion: The writ petitions are dismissed. Complaints filed after 29-10-2002 are properly triable by the Sessions Court pursuant to the procedural amendment to section 26(2) of the SEBI Act; the High Court's administrative transfers implementing that amendment are valid; and change of forum does not deprive the accused of the statutory right of appeal (while revision remains a non vested procedural remedy). Issues Involved:1. Jurisdiction of Court post-amendment for offences committed prior to the amendment.2. Impact of administrative orders on jurisdiction.3. Applicability of procedural amendments retrospectively.4. Rights of appeal and revision post-amendment.Detailed Analysis:1. Jurisdiction of Court Post-Amendment for Offences Committed Prior to the Amendment:The primary issue was whether pending complaints for offences committed before the amendment of the SEBI Act on 29-10-2002 should be tried by the Court of Sessions or by a Magistrate. The amendment increased the punishment for certain offences from one year to ten years, making them triable by a Sessions Court. The Court concluded that complaints filed after the amendment, even if related to offences committed before the amendment, should be tried by the Court of Sessions. This conclusion was based on the interpretation of Section 26 of the SEBI Act, which was deemed procedural and thus applicable retrospectively.2. Impact of Administrative Orders on Jurisdiction:Administrative orders from the High Court and District and Sessions Judge transferred SEBI cases to the Court of Additional Sessions Judge. The petitioners challenged these orders, arguing that their offences, committed before the amendment, should be tried by a Magistrate. The Court upheld the administrative orders, noting they were backed by legislative provisions and did not violate any statutory rights. The Court distinguished this case from A.S. Impex Ltd., where administrative orders were not supported by legislative backing.3. Applicability of Procedural Amendments Retrospectively:The Court held that procedural amendments, such as changes in the forum for trial, apply retrospectively. This principle was supported by precedents from the Supreme Court, which state that procedural changes do not affect substantive rights and are presumed to apply to pending cases unless explicitly stated otherwise. The amendment to Section 26 of the SEBI Act, changing the trial forum to the Court of Sessions, was considered procedural.4. Rights of Appeal and Revision Post-Amendment:Petitioners argued that being tried by the Court of Sessions deprived them of the right to appeal to the Sessions Court and subsequent revision to the High Court. The Court rejected this argument, stating that the right to appeal remains intact, albeit the forum changes. The Court emphasized that the change in the forum of appeal does not amount to denial of the right to appeal. The Court also clarified that revision under Section 397 of the Cr.P.C. is not a statutory right but a procedural facility.Conclusion:The High Court dismissed the writ petitions, affirming that the Court of Sessions has the requisite jurisdiction to entertain complaints filed after the amendment, even if the offences were committed before the amendment. The administrative orders transferring cases to the Court of Sessions were upheld as valid and backed by legislative provisions. The procedural nature of the amendment justified its retrospective application, and the petitioners' rights to appeal were not deemed violated by the change in the trial forum.