Can Additional Sessions Judge or Sessions Judge try offences under Insolvency and Bankruptcy Code, 2016? Bom HC answers

Bombay High Court

Bombay High Court: Sandeep K. Shinde, J., held that Special Court which is to try offences under the Insolvency and Bankruptcy Code, 2016 is the Special Court established under Section 436(2) (b) of the Companies Act, 2013 which consisted of Metropolitan Magistrate or Judicial Magistrate First Class.

The present petition was filed assailing the order “Issue Process” under Section 73(a) and Section 235A of the Insolvency and Bankruptcy Code, 2016 passed by the Additional Sessions Judge on a complaint filed by the Insolvency and Bankruptcy Board of India.

Challenge

The Additional Sessions Judge does not have jurisdiction to entertain the complaint filed by the respondents.

Analysis, Law and Decision

Section 236 of the Insolvency and Bankruptcy Code empowers the Central Government or Board to file a complaint against a person/s having contravened, one of the penal provisions of the I.B. Code constituted or established under the provisions of the Companies Act, 2013.

The Companies Act (17th amendment) sought to establish two different classes of a Special Court; (a) a Single Judge holding office as Session Judge or Additional Sessions Judge and (b) Metropolitan Magistrate or Judicial Magistrate First Class; who shall be appointed by the Central Government with concurrence of the Chief Justice of the High Court within whose jurisdiction, the Judge to be appointed is working.

Which of the above two classes is empowered to try the offences under the I.B. Code?

The plain reading of clause (a) of subsection (2) of Section 435 of the Companies Act in no uncertain terms implies or suggests that the Special Court consists of Judge holding office as a Sessions Judge is empowered to try the offences under Section under this Act”. (emphasized)

‘Under this Act’ the phrase would mean the offences committed under the Companies Act.

Hence, the Companies Act cannot be tried by the Special Court established under clause (a) of sub section 2 of Section 435.

High Court opined that the clear mandate of the legislature was that the “Special Court” comprising of a Sessions Judge or Additional Sessions Judge was only to try offences under the Companies Act, 2013 itself which carry a punishment of imprisonment of 2 years or more.

However, it is clear that “Special Court”, comprising of a Metropolitan Magistrate or Judicial Magistrate First Class is to try “other offences” and the other offences would be offences under the I.B. Code and offences under the CA 2013 but carrying punishment of imprisonment of less than 2 years.

Elaborating further, the Court expressed that Section 236(3) of the I.B. Code creates a deeming fiction that the Special Court trying offences under the I.B. Code shall be deemed to be Court of Sessions.

In view of the above discussion, the impugned proceedings instituted by the respondents in the Court of Additional Sessions Judge were not sustainable for want of jurisdiction. [Satyanarayan Bankatlal Malu v. IBBI, 2022 SCC OnLine Bom 310, decided on 14-2-2022]


Advocates before the Court:

Mr. Amir Arsiwala a/w. Mr. Piyush Deshpande a/w. Mr. Farzeen Pardiwala, Advocate for the Petitioners.

Mr. Pankaj Vijayan a/w. Mr. Mohammed Varawala, Advocate for Respondent no.1.

Mr. Y.M. Nakhawa, APP for State-Respondent no.2.

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