TaxTMI 
TaxTMI 
2008 (1) TMI 608
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....common grievance viz., that the complaints filed against the petitioners/applicants for the offences punishable under section 24 read with section 27 of the Securities Exchange Board of India Act, 1992 ('the SEBI Act' for short) ought to be tried by the Court of Chief Metropolitan/Additional Chief Metropolitan/Metropolitan Magistrate in Mumbai rather than being committed to the Court of Sessions for Greater Mumbai, despite the SEBI (Amendment) Act, 2002 having been brought into force with effect from 29-10-2002 whereunder only the Court of Session can try the said offences and hence they have been heard together and are being decided by a common judgment. The details of the complaints giving rise to these petitions/applications are set out in the following tabular form : Sr. No. Petition/Application Number Complaint Number Offences under SEBI Act Date of order committal 1. App/2238/07 142/S/2003 12, 24(1) &27 14/6/2007 2. App/2239/07 142/S/2003 12,24(1) &27 14/6/2007 3. WP/338/07 793/W/2003 24(1) & 27 5/10/06 4. WP/1154/07 3877/2003 24(1) Not committed 5. WP/1....
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....eturned to the Court of Metropolitan Magistrate so as to pass a fresh order of committal after complying with the said provisions of Cr.P.C. Whereas in the other set of complaints the accused filed an application contending that the alleged offences pertained to the period prior to 29-10-2002 and, therefore, in view of the guarantee under Article 20 of the Constitution the complaints were required to be tried by the Metropolitan/Additional Chief Metropolitan/Chief Metropolitan Magistrate and the Sessions Court did not have the jurisdiction to try the said complaints and consequently it was prayed for remitting the complaints back to the Court which had passed the order of committal. All such applications have been dismissed by the Sessions Court and it has been held by the said Court that the quantum of sentence to be awarded to the accused, if found guilty, shall be as per the pre-amended provisions i.e., a maximum of one year or fine or both and that the Sessions Court is competent to try Summons/Warrant cases, and thus upholding the contentions of SEBI while opposing all such applications. 4. However, in these petitions/applications, as noted earlier, a common contention rais....
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.... commission of the alleged offence. Under section 24(1) of the old Act, an accused could be punished with imprisonment for a term up to one year or with fine or with both. Whereas under section 24(2) of the old Act, if any person failed to pay the penalty imposed by the adjudicating officer, the punishment prescribed was imprisonment for a term which would not be less than one month but which may extend up to three years or with fine which shall not be less than Rs. 2000 which may extend up to Rs. 10,000 or with both. Thus the offences under section 24(1) were summons cases whereas under section 24(2) they were warrant cases and to be tried only by the Court of Metropolitan Magistrate or the Judicial Magistrate, First Class as set out under section 26(2) of the old Act. Under the amended Act the sentence upto one year or up to three years has been enhanced up to ten years and the fine amount which was not quantified under the old Act has been extended to rupees twenty-five crores. The accused are required to be tried for the offences under section 24 read with section 27 of the old Act and not under the amended Act as the cause of action is admittedly prior to 29-10-2002 in all the....
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....ard that the complaints filed for the offences that had taken place prior to 29-10-2002 shall be governed by the unamended SEBI Act of 1992 and not by the amended SEBI Act, 2002. (g)If the complaints are tried by the learned Metropolitan Magistrate or the learned Judicial Magistrate, First Class the remedy of appeal would be before the Court of Sessions and thereafter the accused, if unsuccessful, would still have a remedy of revision under section 397 of Cr.P.C. before this Court. Whereas if the above stated complaints are tried by the Sessions Court, an appeal at the instance of the accused would lie to this Court and thus an additional statutory remedy of revision under section 397 read with section 401 of Cr.P.C. would be taken away. (h)When the complaints were filed by the authorised officer, apart from the list of witnesses no statements of witnesses on the lines of investigation to be carried out under section 164 of Cr.P.C. or section 11C of the SEBI Act, have been filed and the process was issued by the learned Metropolitan Magistrate under section 204 of Cr.P.C. without recording the statement of the complainant and/or the witnesses as the complaint was filed by a p....
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....ed officer, a vested right of forum and that cannot be taken away by the amended provision of section 26(2) of the SEBI Act, by holding that the said amendment is retrospective in nature. The Amendments of 2002 are substantive in nature and consequently procedural and, therefore, they are prospective in nature. In support of all these contentions the learned counsel for the accused relied upon the following decisions : (1) Transmission Corpn. of A.P. v. Chi. Prabhakar 2004 (5) SCC 551; (2) Rosy v. State of Kerala AIR 2000 SC 637; (3) Paranjothi Udiyar v. State 1976 Cri. LJ. 598; (4) Kamal Krishna De v. State 1977 Cri. LJ. 1492; (5) Devarapalli Lakshminarayana Reddy v. V. Narayana Reddy 1976 (3) SCC 252; (6) R.S. Nayak v. A.R. Antulay AIR 1984 SC 684. 7. Mr. Ponda, the learned counsel for the SEBI, on the other hand, urged before this Court supporting the order of committal and submitted that the trial of the pending complaints as on 29-10-2002 or filed thereafter but pertaining to the cause of offence that was prior to 29-10-2002 are required to be committed to and tried by the Sessions Court only in view of the mandate of section 26(2) of the amended SEBI A....
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.... prior to the said date are required to be committed to the Sessions Court which must try the said complaints and the Court of Metropolitan Magistrate or the Court of Judicial Magistrate, First Class will have no power to try such complaints after 29-10-2002. He relied upon a recent decision of the Delhi High Court (S.B.) in the case of Panther Fincap & Management Services Ltd. v. SEBI [Manu/DE/9209/2006] and pointed out that the interpretation of the amended section 26(2) as set out therein is in keeping with the principles applicable in criminal jurisprudence and should be followed by this Court as well. By change of forum, there is no violation of the fundamental rights guaranteed under Articles 14 and 21 of the Constitution and the observations in the case of A.R. Antulay v. R.S. Nayak 1988 (2) SCC 602, do not lay down the general principles in law when by an Act of Parliament the existing forum is changed, the observations made by the Apex Court in the said case cannot be treated to hold that the pending complaints pertaining to the offence prior to 29-10-2002 ought to be tried by the Courts before whom they were presented rather than committing the same to the Sessions Court.....
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.... rights may be involved. The same view was reiterated in Anand Gopal Sheorey's case (supra) and Sukumar Pyne's case (supra). In the case of State of Bombay v. Vishnu Ramchandra AIR 1961 SC 307 on the issue of an enactment to operate prospectively or retrospectively their Lordships observed as under : "1.6 ... The question whether an enactment is meant to operate prospectively or retrospectively has to be decided in accordance with well-settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statute makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events...." (p. 309) The Constitution Bench in the case of Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhashchandra Yograj Sinha AIR 1961 SC 1596, while dealing with the said issue stated,- "...While it is the ordinary rule that substantive rights should not be h....
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....procedure, unless such a construction is textually impossible is presumed to be retrospective in its application, should not be given an extended meaning, and should be strictly confined to its clearly defined limits. (ii )Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal, even though remedial, is substantive in nature. (iii)Every litigant has a vested right in substantive law, but no such right exists in procedural law. (iv)A procedural statute should not generally speaking be applied retrospectively, where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v )A Statute which not only changes the procedure but also creates a new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." (p. 2641) 9. The first question, therefore, that arises for consideration in these petitions/applications is whether the amendments brought into force from 29-10-2002 in the SEBI Act are substantive in nature or they are procedural in nature ....
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.... the accused shall be punishable with imprisonment for a term which may extend to ten years or with fine which may extend to twenty five crore rupees or with both. 12. As per section 2(w ) of Cr.P.C. 'summons case' means a case relating to an offence, and not being a warrant case. Whereas under section 2(x) 'warrant case' means a case relating to an offence punishable with death, imprisonment for life or imprisonment for a term exceeding two years. Section 4 of Cr.P.C. deals with the trial of offences under the Indian Penal Code and other laws. Thus when the offence is punishable with imprisonment for more than seven years, it ought to be tried by a Court of Sessions when such offence is set out in other laws (other than the Indian Penal Code). The SEBI Act falls in the category of 'other laws' and, therefore, when the offence is punishable with imprisonment for more than seven years, necessarily it has to be tried by a Court of Sessions and if the offence is punishable with imprisonment up to seven years, it ought to be tried by the Judicial Magistrate, First Class. In the unamended SEBI Act, the sentence of imprisonment provided was up to one year or three years as the case ma....
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....the General Clauses Act, 1897, it is apparent that all the proceedings and the rights, privileges, obligations accrued or arising out of sections 24 and 26 of the unamended SEBI Act have remained in tact and cannot be disturbed on the enforcement of the amended Act. The SEBI (Amendment) Act, 2002 is, therefore, prospective in operation and cannot be made retrospective only on the basis of the change in forum under section 26. 13. It is undoubtedly true that an accused does not have a vested right of selecting a forum for trial and what is guaranteed is a right of trial and that too a fair trial either to prosecute or to defend. However, in the instant case the arguments advanced on behalf of the accused need not be taken as the arguments insisting for a particular forum for trial. The case made out for the accused in these petitions in support of their contentions that the above stated complaints must be tried by the Court to which they were presented, is based on the scheme of the Criminal Procedure Code in respect of the complaints filed otherwise than on the police report. It is in this context that the reference has been made to the provisions of section 190, 200, 202, 204, ....
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....sions prescribing the procedure for the trial before a Court of Sessions. Chapter XIX deals with the procedure for trial of warrant cases, Chapter XX deals with the procedure for trial of summons cases and Chapter XXI prescribes the procedure for summary trial. As per section 260(1) of Cr.P.C. notwithstanding anything contained in the Code, any Chief Judicial Magistrate, any Metropolitan Magistrate, any Magistrate of the First Class specially empowered in that behalf by the High Court, may, if he thinks fit, try in a summary way the offences not punishable with death, imprisonment for life or imprisonment for a term exceeding two years. It is thus clear that the offences under section 24 of the unamended SEBI Act could be tried by the Metropolitan Magistrate in a summary way in respect of the offences which are alleged to have taken place prior to 29-10-2002. The scheme of Cr.P.C. provides for speedy trials in certain class of cases and with this view in mind it makes four different sets of provisions for the trial of four classes of cases, i.e., summary trials, trial of summons cases, trial of warrant cases and trial of cases triable by the Court of Sessions. Broadly speaking this....
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.... public interest or that it serves the social interest also, does not make it any the less the right of the accused. It is in the interest of all concerned that the guilt or innocence of the accused is determined as quickly as possible in the circumstances. (2) Right to speedy trial flowing from article 21 encompasses all the stages, namely the stage of investigation, inquiry, trial, appeal, revision and re-trial.... (3) The concerns underlying the right to speedy trial from the point of view of the accused are : (a)****** (b )the worry, anxiety, expense and disturbance to his vocation and peace, resulting from an unduly prolonged investigation, inquiry or trial should be minimal." (p. 270) Since it is the accused who is charged with the offence and is also the person whose life/liberty is at peril, it is but fair to say that he has a right to be tried speedily. Being an accused of crime is cause for concern and it affects the reputation and the standing of the person in the society. It is a cause for worry and expense. The provisions of the Criminal Procedure Code, as noted hereinabove provide for different trials before different forums as set out under Chapters XV....
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....conferred under this Chapter for the imposition of penalty." On the issue of transfer of the proceedings from the old forum to the new forum Their Lordships in Dhadi Sahu's case (supra) observed as under: "It may be stated at the outset the general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the Court or the Tribunal where they are pending to the Court or the Tribunal which, under the new law, gets jurisdiction to try them. It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the Court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue....
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....rce of power for the High Court to supervise the subordinate courts. It does not in any way confer a right on a litigant aggrieved by any order of the subordinate court to approach the High Court for relief. The scope for making a revision under section 115 is not linked with a substantive right. 15. and 16. ****** 17. Right of appeal is statutory and when conferred by statute it becomes a vested right. . . . distinction between the right of appeal and right of revision is based on differences implicit in the two expressions. An appeal is continuation of the proceedings; in effect the entire proceedings are before the appellate authority and it has power to review the evidence subject to statutory limitations prescribed. But in the case of revision, whatever powers the revisional authority may or may not have, it has no power to review the evidence, unless the statute expressly confers on it that power...." (p. 2439) 17. The learned counsel for the accused, on the other hand, submitted that the remedy of revision under section 397 read with section 401 of Cr.P.C. cannot be compared with the remedy of revision under section 115 of Cr.P.C. and, therefore, the submissions of ....
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....led. (5) Where under this Code an appeal lies but an application for revision has been made to the High Court by any person and the High Court is satisfied that such application was made under the erroneous belief that no appeal lies thereto and that it is necessary in the interests of justice so to do, the High Court may treat the application for revision as a petition of appeal and deal with the same accordingly." As per sub-section (1) of section 401 the High Court may, in its discretion exercise any of the powers conferred on a Court of appeal by sections 386, 389, 390 and 391, while deciding a revision application under section 397. As per sub-section (2), no order in a revision application shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by a pleader in his defence and sub-section (3) does not empower the High Court to convert a finding of acquittal into one of conviction which means a revision application cannot be treated as an appeal against an order of acquittal as set out under section 378 of the Code. As per sub-section (4) where an appeal lies and no appeal is brought, no proceeding....
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.... "In a country where democratic form of Government is adopted, liberty of citizen is of paramount importance and our Constitution provides for several procedural safeguards in that regard. While dealing with the liberty of a subject meant for safeguarding the interest of the accused, the procedure play an important role. The history of liberty is said to be the history of procedure. An accused person who is alleged to have committed an offence must ordinarily be tried in accordance with law as existed at the relevant time when the offence was alleged to have been committed. Clause (1) of Article 20 of the Constitution forbids enhancement of punishment. No person shall be liable for punishment under any penal law except for violation of a law in force at the time of commission of the act charged as an offence nor he or she shall be inflicted with greater punishment than that which might have been inflicted under the law in force at the time of the commission of the offence. By reason of the Amending Act, 2000, the accused is not only deprived from a procedure which was beneficial to him but he is also deprived of a right to file a criminal revision in terms of sections 397 and 401 o....
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....the powers available to a Court of appeal against an order of conviction. I am, therefore, inclined to hold that the revision application under section 397 read with section 401 of Cr.P.C. is a statutory remedy and if the complaints are allowed to be tried by the Sessions Court, in the absence of any specific provision in the amended SEBI Act for transfer of the cases from the Court of Metropolitan Magistrate to the Sessions Court, the accused will be deprived of such a statutory remedy of revision and on that count also the complaints are required to be tried by the Courts before whom they were presented by the authorised officer. From the eight complaints stated in para 2 above, some of them have been filed after 29-10-2002 though the cause of action arose prior to the said date. 22. Section 11C was introduced in the SEBI Act by the Amendment of 2002 and it provides for investigation to be undertaken by the Board through an Investigating Authority. The complaints filed after 29-10-2002 clearly showed that no investigation was carried out under section 11C of the SEBI Act and consequently even though the complaints have been committed, they are without any investigation papers ....
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....record are produced. However, the Investigating Authority may call for any book, register, other document and record if they are needed again. However, if the person on whose behalf the books, registers, other documents and records are produced requires certified copies of the books, registers, other documents and record produced before the Investigating Authority, it shall give certified copies of such books, registers, other documents and record to such person or on whose behalf the books, registers, other documents and records were produced. Sub-section (5) provides that any person, directed to make an investigation under sub-section (1), may examine on oath, any manager, managing director, officer and other employee of any intermediary or any person associated with securities market in any manner, in relation to the affairs of his business and may administer an oath accordingly and for that purpose may require any of those persons to appear before him personally. Sub-section (6) provides that if any person fails without reasonable cause or refuses (a) to produce to the Investigating Authority or any person authorised by him in this behalf any book, register, other documen....
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....insider trading or market manipulation. Sub-section (10) provides that the Investigating Authority shall keep in its custody the books, registers, other documents and record seized under this section for such period not later than the conclusion of the investigation as it considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing director or the manager or any other person, from whose custody or power they were seized and inform the Magistrate of such return. However, the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof. Sub-section (11) provides that every search or seizure made under this section, save as otherwise provided in the proposed section, shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to searches or seizures made under that Code. 23. The learned counsel for the accused rightly submitted that the intention of the Parliament in introducing section 11C was to provide for an investigation to be carried out by the I....
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....r XV "Complaints to Magistrates". Sub-section (1) states that any Magistrate on receipt of complaint of offence may, if he thinks fit, postpone the issue of process against the accused for resorting to any of the two courses i.e. either enquire into the case himself or direct an investigation to be made. But if the offence is triable by Court of Sessions, the Magistrate cannot make a direction for investigation. Hence the Magistrate taking cognizance of an offence upon a complaint, when such offence is not triable by Sessions Court, can adopt either of the three courses viz. (i) straightway issue the process, or (ii) he can postpone the issue of process for holding an enquiry, or (iii) he can direct an investigation to be made but if the offence is triable by a Court of Sessions, it is impermissible for the Magistrate to direct an investigation, as per the proviso below sub-section (2) of section 202. On the interpretations of section 202(2) of Cr.P.C., Thomas, J. in Rosy's case (supra) observed as under : "14. The crucial issue therefore is, when the offence, sought to be taken cognizance of by the magistrate, is exclusively triable by the Court of Sessions, is it incumbent on ....
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....s of which the magistrate, who proceeds from the stage in section 204, has to supply to the accused free of cost (in a complaint case involving an offence triable exclusively by a Court of Sessions). As the words used are 'shall furnish' it is almost a compelling duty on the magistrate to supply the said documents to the accused. How can the magistrate supply such documents [In the present context the documents referred to in the third category mentioned in Clause (iii) are not important.] The first category delineated in Clause (i) of section 208 consists of 'statement recorded under section 200 or section 202 of all persons examined by the magistrate.' It is now important to note that the words 'if any' have been used in the second category of documents which is delineated in Clause (ii) of section 208 but those words are absent while delineating the first category. In my view those two words have been thoughtfully avoided by Parliament in Clause (i). 17. If a magistrate is to comply with the aforesaid requirements in section 208 of the Code (which he cannot obviate as the language used in the sub-section is of any indication) what is the manner in which he can do it in a case....
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....e the guilt of the accused. If no inquiry under section 202 is to be conducted a magistrate who decides to proceed only on the averments contained in the complaint filed by a public servant (who is not a witness to the core allegation) and such a case is committed to the Court of Sessions, its inevitable consequence would be that the Sessions Judge has to axe down the case at the stage of section 226 itself as the public prosecutor would then be helpless to state 'by what evidence he proposes to prove the guilt of the accused.' If the offence is of a serious nature or is of public importance the consequence then would be miscarriage of justice." (p. 642) 24. Undoubtedly the view taken by the other member of the Bench (M.B. Shah, J.) are not on the same lines regarding the interpretations of sections 202 and 204 of Cr.P.C. However, in the instant complaints, though the list of witnesses has been placed on record, the statements of such witnesses have not been recorded either in the course of investigation under section 11C of the SEBI Act or by the learned Metropolitan Magistrate before issuance of process by himself by postponing the issuance of process under section 202 as the ....