TaxTMI 
TaxTMI 
2026 (7) TMI 1135
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....ce of the offences punishable under SEBI Act, 1992?" 3. The aforesaid question arises for consideration in the backdrop of the following facts :- 3.1 The Securities and Exchange Board of India (SEBI)-Respondent No. 1/Complainant is a Regulatory Authority established under Section 3 of the SEBI Act, 1992. Osian's Connoisseurs of Art Pvt Ltd ("Osian's") was incorporated under the provisions of the Companies Act, 2013. The Petitioner-Accused No. 1 was a director of Osian's. 3.2 Osian's floated Osian's Art Fund ("OAF"). OAF was settled as a private trust under the Indian Trusts Act, 1882, with the company as a settlor and Oseta Investments Trustee Company Pvt Ltd ("Oseta Trustee") as the trustee in accordance with the Trust Deed dated 10th March 2006. 3.3 On 15th April 2013, the Whole Time Member of SEBI passed an order to the effect that OAF was a collective investment scheme. The said scheme was operated without registration, in violation of Section 12(1-B) of the SEBI Act, 1992 and Regulation 3 of the SEBI (Collective Investment Schemes) Regulations 1999 (CIS Regulation 1999). 3.4 Eventually, after the dismissal of the Appeals preferred by the company, Respondent No. ....
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....ed order on the score of non-compliance of the prerequisite for taking cognizance envisaged under the first proviso to Section 223(1) of the BNSS, 2023, as the said violation, according to the Petitioner, goes to the root of the matter. 6. An Affidavit in Reply has been filed on behalf of Respondent No. 1 controverting the contentions in the Petition in regard to the alleged violation of the statutory prescription. Adverting to the provisions contained in the SEBI Act, 1992, which envisage establishment of Special Court and mode of taking cognizance of the offence by the Special Court, Respondent No. 1 contends, the complaints before the Special Court are not governed by the provisions contained in Section 223 of the BNSS, 2023. The Special Court constituted under the SEBI Act, 1992 is essentially the Court of Sessions and not the Court of Magistrate, and, thus, the provisions contained in Section 223 of the BNSS 2023 do not govern the judicial act of taking cognizance by the Special Court under the provisions of SEBI Act, 1992. SUBMISSIONS 7. In the wake of the aforesaid facts and pleadings, I have heard Mr. Vyapak Desai, the learned Counsel for the Petitioner, and Mr. Su....
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....phasised, is preceded by a detail enquiry by the Authorities under the SEBI Act, 1992. Having regard to the object of the SEBI Act, 1992, and the detail enquiry/investigation proceedings, which precede the filing of the complaint, the Special Court has been empowered to take cognizance of the offences under the SEBI Act, 1992, without pre-cognizance enquiry envisaged by the proviso to Section 223(1) of the BNSS, 2023. Any other view would defeat the purpose of the constitution of the Special Court and the object of expeditious disposal of the prosecutions initiated under the SEBI Act, 1992, submitted Mr. Pasbola. 12. Special emphasis was laid by Mr. Pasbola on the provisions contained in Section 26-D(1) of the SEBI Act, 1992 which declares that for the purposes of the provisions contained in the Code of Criminal Procedure, 1973, the Special Court shall be deemed to be a Court of Session. The necessary corollary, according to Mr. Pasbola, is that, the Sessions Court is not bound by the provisions contained in Section 223 of the BNSS, 2023 which falls under the Chapter dealing with complaints to Magistrates. 13. To buttress the aforesaid submissions, Mr Pasbola placed reliance ....
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....anhita, 2023 (IPC, 1860). The application of the provisions of the BNSS, 2023 would, however, be excluded only when a special law prescribes a special procedure to deal with the investigation, inquiry or the trial of the offences under such special enactments. In the absence of any special procedure in the special statute in regard to a particular matter pertaining to the investigation, inquiry or trial of a special offence; be it the act of taking cognizance of the offence or the trial, the procedure under the BNSS, 2023 shall apply automatically as a default procedure enshrined by the general law governing the Criminal Procedure. To put it in other words, wherever the special enactment does not contain any provision in regard to a particular matter, the corresponding provision in the BNSS, 2023 would be attracted to fill in the gap. 19. Keeping in view the aforesaid well recognized position in law in the matter of application of the general law of procedure, prescribed under BNSS, 2023, to the matters for which the special enactment does not make a special or inconsistent provision, the nature of the change introduced by the BNSS, 2023 in the matter of taking cognizance of the....
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.... the authorities under the SEBI Act, 1992, enhanced the punishment and penalties for the violation of the provisions of the Act and incorporated measures to protect the interest of the investors. A brief resume of the relevant provisions of the SEBI Act, 1992, may be apposite. 25. Section 24(2) of the SEBI Act, 1992 punishes the failure to pay the penalty imposed by the Adjudicating Officer or the Board or failure to comply with any directions or orders passed by the authorities under the SEBI Act, 1992. It reads as under :- "24. Offences- (1).......... (2) If any person fails to pay the penalty imposed by the adjudicating officer or the Board or fails to comply with any directions or orders, he shall be punishable with imprisonment for a term which shall not be less than one month but which may extend to ten years or with fine, which may extend to twenty-five crore rupees or with both." 26. Section 26 of the SEBI Act, 1992 provides for the cognizance of offences by the Courts, as under :- "[26. Cognizance of offences by Courts.- (1) No Court shall take cognizance of any offence punishable under this Act or any rules or regulations made thereunder, ....
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....0. Section 26-A envisages the establishment of Special courts for the purpose of providing speedy trial of the offences under the SEBI Act, 1992. Sub-section (3) of Section 26-A provides that, a person shall not be qualified for appointment as a judge of a Special Court unless he is, immediately before such appointment, holding the office of a Sessions Judge or an Additional Sessions Judge, as the case may be. Section 26-A is, thus, plainly restricted to the aspect of establishment of the Special Courts and the qualification of the person to preside over the Special Courts. 31. Section 26-D of the SEBI Act, 1992 expressly makes the provisions of the Code, 1973 (now BNSS, 2023) applicable to the proceedings before a Special Court and further declares that, for the purposes of the said provisions, the Special court shall be deemed to be a Court of Session. 32. On its plain reading, Section 26-D makes the provisions of the Code, 1973 applicable to the proceedings before a Special Court unless, there is a contrary provision in the SEBI Act, 1992, itself. Thus, although sub-section (1) of Section 26-D begins with an inbuilt saving clause by using the expression, 'save as otherwise....
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....ern the legislative intent, in the case at hand. 36. In the light of the aforesaid resume of the provisions contained in SEBI Act, 1992, the submissions canvassed on behalf of the parties deserve to be appreciated. 37. I find it difficult to accede to the submission of Mr. Pasbola that, Section 26-D of the SEBI Act, 1992 provides a mechanism for the manner of taking cognizance of the offences. The reliance placed by Mr. Pasbola on the decisions in the cases of Ajit Kumar Palit (supra) and State of W.B. Vs. Bejoy Kumar Bose (supra), to buttress the submission that, the Special Court is empowered to take cognizance on the complaint without providing an opportunity of hearing to the accused, as envisaged by Section 223 of the BNSS, 2023, appears inapposite. 38. In the case of Ajit Kumar Palit (supra), the Supreme Court was confronted with the question of proper construction of Sections 4 and 5 of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 ("West Bengal Amendment Act, 1949"). The said Act was enacted to provide for the speedy trial of the offences specified in the Schedule appended thereto. Interpreting the provisions of the West Bengal Amendment Act, 19....
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....he argument of Mr. Sen, the Special Judge took cognizance merely on the complaint of the Sub-Inspector of Police without proceeding in accordance with Section 200, Cr.P.C. the entire proceedings are vitiated. 9. We are unable to accede to the above submission of Mr. Sen. It is true that the amendment has introduced the manner of taking cognizance in accordance with Section 190(1)(a) & (b), Cr.P.C. appearing in Chapter XV of the Criminal Procedure Code, 1973 but the legislature in the amendment at the same time, has advisedly omitted to include Section 200, Cr.P.C. and the other provisions of the next Chapter which is Chapter XVI dealing with "complaints to Magistrates". 10. It is clear that under Section 4(2) of the Act, the allotment by the State Government to the Special Judge of a case involving of scheduled offences vests the necessary jurisdiction in the special Judge to proceed to trial and is, therefore, equivalent to that Court's taking cognizance of the offence (See Ajit Kumar Palit's case (supra). Because of the amendment of Section 5(2) in 1960, it may be now open to the Special Judge to apply his judicial mind to the complaint apart from allotment of t....
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.... SCC OnLine SC 903, arising out of the provisions contained in PML Act, 2002, the Supreme Court has emphasized the applicability of the provisions contained in the proviso to Section 223(1) of the BNSS, 2023 to the complaints filed under PML Act, 2002. 45. Section 43 of the PML Act, 2002 provides for the constitution of the Special Courts. It provides that the Special Court shall be a Court of Session which has been designated by a notification issued by the Central Government. Section 44 of the PML Act, 2002, inter alia, provides that notwithstanding anything contained in the Code, 1973 :- (b) a Special Court may, [* * *] upon a complaint made by an authority authorised in this behalf under this Act take [cognizance of offence under section 3, without the accused being committed to it for trial]: [Provided that after conclusion of investigation, if no offence of money-laundering is made out requiring filing of such complaint, the said authority shall submit a closure report before the Special Court; or] ...... 46. Section 46 of the PML Act, 2002 makes the provisions of the Code, 1973 applicable to the proceedings before the Special Court, save as otherwise ....
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....ntaining Sections 223 to 226, will also apply to a complaint under Section 44 of the PMLA. As the complaint has been filed after 1st July, 202, Section 223 of the BNSS will apply to the present complaint. 6. The proviso to sub-section (1) of Section 223 puts an embargo on the power of the Court to take cognizance by providing that no cognizance of an offence shall be taken by the Magistrate without giving the accused an opportunity of being heard. 7. In this case, admittedly, an opportunity of being heard was not given by the learned Special Judge to the appellant before taking cognizance of the offence on the complaint. Only on that ground, the impugned order dated 20th April, 2024, will have to be set aside." (emphasis supplied) 49. In a recent pronouncement in the case of Parvinder Singh (supra), the Supreme Court again considered the applicability of the first proviso to Section 223(1) of the BNSS, 2023 to a prosecution complaint under PML Act, 2002. The Supreme Court upon construction of the proviso to Section 223(1) enunciated that, though Chapter XVI of the BNSS, 2023 lays down the procedural law dealing with complaints made to a Magistrate, the....