Sessions Judge lacks jurisdiction in Insolvency Code case

The court held that the complaint filed by the Insolvency and Bankruptcy Board of India against the petitioners for offenses under the Insolvency and Bankruptcy Code could not be entertained by the Sessions Judge due to lack of jurisdiction. The order issuing process against the petitioners was deemed jurisdictionally improper. It was determined that the Special Court to try offenses under the Insolvency and Bankruptcy Code is the one established under Section 435(2)(b) of the Companies Act, 2013, comprising Metropolitan Magistrates or Judicial Magistrates First Class. Consequently, the proceedings in Special Case No. 853/2020 in the Court of Additional Sessions Judge were quashed.

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Issues Involved:
1. Jurisdiction of the Additional Sessions Judge to entertain the complaint under the Insolvency and Bankruptcy Code (I.B. Code).
2. Interpretation and applicability of Section 236 and 237 of the I.B. Code.
3. Interpretation and applicability of Section 435 of the Companies Act, 2013, as amended.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Additional Sessions Judge to entertain the complaint under the Insolvency and Bankruptcy Code (I.B. Code):
The petition challenged the jurisdiction of the Additional Sessions Judge, 58th Court, Mumbai, to entertain a complaint filed by the Insolvency and Bankruptcy Board of India. The petitioners argued that the learned Additional Sessions Judge does not have jurisdiction to entertain the complaint under the I.B. Code. They contended that the offences under the I.B. Code should be tried by a Special Court consisting of a Metropolitan Magistrate or Judicial Magistrate First Class, not by a Sessions Judge or Additional Sessions Judge. This argument was based on the interpretation of Section 236 and 237 of the I.B. Code and the amendments to Section 435 of the Companies Act, 2013.

2. Interpretation and applicability of Section 236 and 237 of the I.B. Code:
Section 236 of the I.B. Code, which came into force on December 1, 2016, empowers the Central Government or Board to file complaints against persons contravening penal provisions of the I.B. Code with the Special Court established under the Companies Act, 2013. The provision states that the Special Court shall be deemed to be a Court of Sessions, and the person conducting the prosecution shall be deemed to be a Public Prosecutor. Section 237 of the I.B. Code states that the High Court may exercise all powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure, 1973, on a High Court, as if a Special Court were a Court of Session trying cases within its local limits. The petitioners argued that the deeming fiction created by Section 236(3) indicates that offences under the I.B. Code should be tried by a Special Court consisting of Metropolitan Magistrates or Judicial Magistrates First Class, not by Sessions Courts.

3. Interpretation and applicability of Section 435 of the Companies Act, 2013, as amended:
Section 435 of the Companies Act, 2013, was amended in 2015 and 2017. The 2017 amendment, which came into effect on May 7, 2018, established two classes of Special Courts: (a) a single judge holding office as a Sessions Judge or Additional Sessions Judge for offences punishable under the Companies Act with imprisonment of two years or more, and (b) a Metropolitan Magistrate or Judicial Magistrate First Class for other offences. The petitioners argued that the phrase "under this Act" in Section 435(2)(a) implies that only offences under the Companies Act can be tried by a Special Court consisting of a Sessions Judge or Additional Sessions Judge. In contrast, offences under the I.B. Code should be tried by a Special Court consisting of Metropolitan Magistrates or Judicial Magistrates First Class, as per Section 435(2)(b).

The judgment concluded that the complaint filed by the Insolvency and Bankruptcy Board of India against the petitioners for offences under the I.B. Code could not have been entertained by the learned Sessions Judge for want of jurisdiction. The order issuing process against the petitioners was without jurisdiction. The court held that the Special Court 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 Magistrates or Judicial Magistrates First Class. Consequently, the proceedings in Special Case No. 853/2020 in the Court of Additional Sessions Judge, 58th Court, Mumbai, were quashed and set aside.

Separate Judgments:
There were no separate judgments delivered by different judges in this case. The judgment was delivered by a single judge and does not mention the name of the judge.

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