Case Name: Insolvency and Bankruptcy Board of India v. Satyanarayan Bankatlal Malu & Ors.
Case Number: Criminal Appeal No. 3851 of 2023
Date of Judgment: April 19, 2024
Quorum: B.R. Gavai, J.
FACTS OF THE CASE
The case involves a dispute regarding the interpretation of Section 236(1) of the Code of Criminal Procedure (CrPC) in relation to the Companies Act, 2013. The central question is whether offenses under the CrPC should be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. The court examines whether the reference in Section 236(1) of the CrPC to the Special Court indicates legislation by reference or legislation by incorporation. It concludes that the reference is specific, indicating legislation by incorporation, and therefore any subsequent amendments to the Companies Act, 2013, would not affect the provisions of Section 236(1) of the CrPC. Consequently, the court holds that offenses under the CrPC should be tried by a Special Court presided over by a Sessions Judge or an Additional Sessions Judge. However, since the High Court did not consider the merits of the case, the matter is remitted back to the High Court for fresh consideration.
ISSUES
- Interpretation of Section 236(1) of the Code of Criminal Procedure (CrPC) concerning the trial of offenses under the Companies Act, 2013.
- Determination of whether the offenses under the CrPC should be tried exclusively by the Special Court established under Chapter XXVIII of the Companies Act, 2013.
- Clarification on whether the reference to the Special Court in Section 236(1) of the CrPC signifies legislation by reference or legislation by incorporation, and its implications on subsequent amendments to the Companies Act, 2013.
LEGAL PROVISIONS
- Section 236(1) of the Code of Criminal Procedure (CrPC): This section deals with the trial of offenses under the Companies Act, 2013 and stipulates that such offenses shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013.
- Chapter XXVIII of the Companies Act, 2013: This chapter outlines the provisions related to Special Courts established under the Companies Act, 2013 for the trial of offenses under the said Act.
- Companies Act, 2013: Various provisions of the Companies Act, 2013 are relevant to understanding the jurisdiction and procedures related to the trial of offenses under this Act.
CONTENTIONS OF THE APPELLANT
The appellant argued that the reference in Section 236(1) of the Code of Criminal Procedure (CrPC) to the trial of offenses under the Companies Act, 2013 by the Special Court established under Chapter XXVIII of the Companies Act, 2013 is specific and not general. They contended that this specificity indicates a case of legislation by incorporation rather than legislation by reference. Furthermore, the appellant asserted that if the provision is deemed to be legislation by incorporation, the effect would be that the provision regarding the Special Court, as mentioned in Section 435 of the Companies Act, 2013, would become a part of Section 236(1) of the CrPC. This means that any subsequent amendments to Section 435 of the Companies Act, 2013, after the enactment of the CrPC, would not affect the provisions of Section 236(1) of the CrPC. The appellant highlighted that the CrPC has undergone two subsequent amendments, namely the 2015 Amendment and the 2018 Amendment. They argued that if the legislative intent was to give effect to the subsequent amendments in the Companies Act regarding Section 435, the legislature could have amended Section 236(1) of the CrPC accordingly. Since no such amendment was made, the provision regarding the reference to the Special Court in Section 236(1) of the CrPC remained frozen as of the date of the CrPC’s enactment. Therefore, the appellant contended that the High Court erred in its interpretation and conclusion that offenses under the Code should be tried only by a Metropolitan Magistrate or a Judicial Magistrate of the First Class in light of the subsequent amendments to the Companies Act. They argued that even if the reference in Section 236(1) of the CrPC is considered a legislation by reference, offenses punishable under the Code with imprisonment of two years or more should be tried by a Special Court presided over by a Sessions Judge or an Additional Sessions Judge, as per the applicable provisions.
CONTENTIONS OF THE RESPONDENT
The respondent argued that the provision in Section 236(1) of the Code of Criminal Procedure (CrPC) regarding the trial of offenses under the Companies Act, 2013 by the Special Court established under Chapter XXVIII of the Companies Act, 2013 should be interpreted in light of subsequent amendments to the Companies Act. They contended that the subsequent amendment to the Companies Act in 2018 altered the composition of the Special Court, limiting it to presided over by a Sessions Judge or an Additional Sessions Judge only for offenses under the Companies Act. Therefore, they argued that offenses under the Code should be tried by a Metropolitan Magistrate or a Judicial Magistrate of the First Class, as per the amended provisions. The respondent emphasized that the legislative intent behind the amendment to the Companies Act was to establish Special Courts exclusively for trying offenses under the Companies Act, with a composition comprising Sessions Judge or an Additional Sessions Judge. They argued that this amendment should be given effect to ensure uniformity and coherence in the trial of offenses. Furthermore, the respondent contended that since the offenses under the Code were distinct from those under the Companies Act, they should not be subject to the jurisdiction of the Special Court established under Chapter XXVIII of the Companies Act, especially considering the specific provisions introduced by the 2018 amendment. In summary, the respondent’s contentions centered around the interpretation of the provisions of the CrPC in light of subsequent amendments to the Companies Act, arguing for a coherent and uniform approach in the trial of offenses under both statutes.
COURT’S ANALYSIS AND JUDGEMENT
The court conducted a thorough analysis of the legal provisions concerning the trial of offenses under the Companies Act, 2013, as outlined in Section 236(1) of the Code of Criminal Procedure (CrPC). It noted that the provision specifically mandated that offenses under the Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013. The court observed that the reference in Section 236(1) of the CrPC was specific rather than general. It pointed out that the provision only referred to the trial of offenses under the Code by the Special Court established under Chapter XXVIII of the Companies Act, without any broader application to offenses under other statutes.
Based on the principle of legislation by incorporation, the court held that the provision in Section 236(1) of the CrPC was effectively lifted from Section 435 of the Companies Act, 2013 and incorporated into the former. Therefore, any subsequent amendments to Section 435 of the Companies Act would not affect the provisions of Section 236(1) of the CrPC. The court noted that although the Companies Act underwent subsequent amendments in 2015 and 2018, which altered the composition of the Special Court, these amendments did not impact the provisions of Section 236(1) of the CrPC. It emphasized that the legislative intent behind the amendment to the Companies Act was not reflected in Section 236(1) of the CrPC. Furthermore, the court held that offenses under the Code, regardless of subsequent amendments to the Companies Act, should continue to be tried by the Special Court established under Chapter XXVIII of the Companies Act, as mandated by Section 236(1) of the CrPC.
In conclusion, the court allowed the appeal, quashed the impugned judgment of the High Court, and held that the Special Court presided by a Sessions Judge or an Additional Sessions Judge would have jurisdiction to try offenses under the Code. However, since the High Court did not consider the merits of the case, the matter was remitted to the High Court for fresh consideration on its merits. This judgment reaffirmed the interpretation of Section 236(1) of the CrPC and upheld the jurisdiction of the Special Court established under Chapter XXVIII of the Companies Act for trying offenses under the Code.
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Judgement Reviewed by- Shruti Gattani
