Srividya C G vs Serious Fraud Investigation Office WP No. 4380 of 2018
Facts:
1) The Serious Fraud Investigation Officer (SFIO) filed a complaint under Section 439 read with Section 212 of the Act, 2013, and under Section 621 read with Sections 235 and 624 of the Act, 1956, along with Section 193 of the Criminal Procedure Code. The proceedings before the LIX Additional City Civil and Sessions Judge, Special Court, under the Companies Act, 2013, Bengaluru City, for offenses punishable under Sections 36 read with Section 448 and 447 of the Companies Act, 2013, and Section 68 read with Section 628 of the Companies Act, 1956, are challenged in these petitions.
Issue: Whether the petition can be allowed ?
Arguments:
Petitioners:
1) Counsel submitted that special Court constituted under Section 435 of Act, 2013 lacked jurisdiction to take cognizance of the offence alleged to have been committed and made penal under the provisions of Act, 1956, since the Special Court constituted can try an offender, who is said to have committed an offence, which is made penal under the provisions of Act, 2013.
2) It was submitted that Proceeding is hypothesis that the Special Court has the jurisdiction to take cognizance of the offences complained of, Section 621(1) of Act, 1956 which is in parimateria with Section 439(2) of Act,2013 postulates that the Special Court can exercise such power of cognizance only with the complaint is filed by (i) Registrar, (ii) Shareholder, and (iii) a person authorized by the Central Government in that behalf. The present complaint is not filed by a person enumerated in Section 621(1) of the Act, 1956.
3) Counsel submitted that The accused No.13 is a resident of Thane which places certainly beyond the territorial jurisdiction of the Special Court. Therefore, the Special Court before issuing process against him should have conducted an enquiry or directed an investigation as contemplated under Section 202(1) of Cr.PC. Therefore, the issuance of process stands vitiated for non compliance of mandatory provision contained in Section 202(1) of Cr.PC.
4) It was submitted that Section 2(29)(iii) of the Companies, 2013 inter alia states that the `Court’ means the Court of Sessions having jurisdiction to try any offence under this Court or under any previous Companies law. Therefore, the court of sessions as stated in Section 2(29)(iii) means a Court established by the State Government under Section 9(1) of the Cr.PC, and the Special court under Section 435 of the Act, 2013 to establish by the Central Government for providing speedy trial of the offences under this Act. Therefore, the contention of the SFIO irrespective of the quantum of punishment, the Court of sessions had the jurisdiction under Section 2(29) of the Act, 2013 is without any substance.
5) It was submitted that The alleged offense in the complaint pertains to the period between 2005 to 2012, predating the commencement of the Companies Act, 2013. Section 465 of the Act, 2013, which deals with the repeal of certain enactments and savings, was enforced from 30.01.2019. Therefore, at the time when the Special Court took cognizance of the offenses, the Companies Act, 1956, was in force. Consequently, the Special Court established to try offenses under the Act, 2013, lacked jurisdiction to try offenses under the Act, 1956.
6) The power of the Special Court, which is a Sessions Court, is limited to taking cognizance of offenses specified under Sub-Section (1) of Section 435 of the Act, 2013. Therefore, offenses not specified in Section 435(1) are subject to the bar under Section 193 of the Criminal Procedure Code (Cr.PC). Section 435 provides for the establishment of a Special Court for trying offenses under the Act, 2013, and not for trying offenses under the Act, 1956. Therefore, the provision contained in Section 435(1) cannot be retrospectively applied to try offenses under the Act, 1956.The scheme of the Companies Act, 1956, and the Companies Act, 2013, differs significantly.
7) Accused No.11 was not an Officer of Kingfisher Airlines Limited but a mere Service Provider. Therefore, the sanction should be restricted to directors or officers of the Company and not extended to the petitioner, who is neither an officer nor a director.
8) Counsel submitted that provisions of the Act, 2013 cannot be retrospectively applied to acts performed under the Act, 1956. The allegation against the petitioner pertains to recommending the swap ratio, which occurred in the year 2008. Therefore, the provisions of Act 2013 cannot be retrospectively applied. The valuation performed by accused No.15 is within his professional capacity, and different valuation methods are prescribed, reflecting professional wisdom.
Respondents:
1) Counsel submitted that offences were committed under the old Act, and the accused are to be charged under the old Act. Accordingly, the complaint was presented stating that the accused had committed offences under the old Act. The old Act was repealed, followed by the enactment of the Companies Act, 2013, with effect from 12.09.2013. Sanction was obtained under the new Act, and a complaint was submitted under the new Act before the Special Court established under Section 435 of the Act, 2013, and cognizance thereof was taken of the offence as per the new Act, 2013.
2) Counsel submitted that All these aspects are procedural matters, and the SFIO was required to follow the procedure established under the new Act. Therefore, the offence which was committed under the repealed Act would not cease to be triable after the repeal of the Act, and Section 6 of the General Clauses Act will come into play enabling the continuation of proceedings, including the investigation, as if the repealing had not been passed.
3) It was submitted that The Special Court established under Section 435 of the new Act is vested with the jurisdiction to try offences with imprisonment of two years or more, and the offence under Section 68 of the Act, 1956, is punishable with imprisonment for more than two years. Although under the old Act, the Magistrate had the jurisdiction to try the said offence, the change of forum after the enactment of the new Act being procedural, the amendment of the forum would operate retrospectively.
4) The restrictions contained in Section 202 of Cr.PC will not be applicable to the present case, since the SFIO, which is a statutory investigation authority under the provisions of the new Act, has conducted investigation, submitted a report, and filed the complaint.
Decision: HC allowed the petition.
Rationale:
1) It noted that the offences were allegedly committed under the Act, 1956. The investigation of the offences alleged against the petitioner commenced after the enactment of the Act, 2013. The offence punishable under Section 68 of the Act, 2013 was triable by a Magistrate of First Class. The SFIO conducted an investigation in exercise of the power under Section 212 of the Act, 2013.
2) It held that Section 435 clearly states that the Special Court can only try the offences under this Act with imprisonment of two or more years, which means the Act, 2013, and not the offences under the Act, 1956. For the other offences with imprisonment less than two years or offences punishable under previous company law i.e., Act, 1956, the proviso states that, they shall be tried by the Judicial Magistrate of the First Class.
3) It held that Section 465 of the Act, 2013, which deals with the repeal of certain enactments and savings, was given effect from 30.1.2019, vide notification dated 31.1.2019. The cognizance of the offences under Section 68 of the Act, 1956, was taken on 28.12.2017 by the Special Court. Therefore, as on the date when the cognizance was taken, the Act, 1956, was in force, and the cognizance of the offence under Section 68 of the Act, 1956, could have been taken only by the Judicial Magistrate First Class, as stated under Section 622 of the Act, 1956.
4) It held that Court of Sessions, as defined under Section 9 of Cr.PC, means a Court established by the State Government and presided by a Judge to be appointed by the High Court. Therefore, the Special Court established under Section 435 cannot be equated with the Court established under Section 9 of Cr.PC, since the power to establish and appoint a Presiding Officer is vested with the State Government insofar as it relates to the Sessions Court under Section 9 of Cr.PC, and with the Central Government insofar as it relates to the Special Court under Section 435 of the Act, 2013.
5) The cognizance of the offence under Section 68 of the Act, 1956, can be taken only on a complaint in writing by the person/s as enumerated in Section 621 of the Act, 1956, and the jurisdiction to take cognizance was vested with the Magistrate, as stated under Section 622 of the Act, 1956.
6) The alleged offenses were purportedly committed during the period when the Companies Act of 1956 was in effect. The initiation of legal proceedings under Section 36, in conjunction with Sections 447 and 448 of the 2013 Act, lacks legal authority. The petitioners cannot be prosecuted for actions that were not deemed punishable under the provisions of the 1956 Act. This purported action violates Article 20, Sub Clause 1 of the Constitution of India, which safeguards against retrospective criminalization.
Order:
