{"id":321724,"date":"2024-05-08T19:00:43","date_gmt":"2024-05-08T13:30:43","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=321724"},"modified":"2024-05-08T19:43:49","modified_gmt":"2024-05-08T14:13:49","slug":"explained-supreme-court-verdict-jurisdiction-special-court-presided-sessions-judge-complaint-ibc","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/05\/08\/explained-supreme-court-verdict-jurisdiction-special-court-presided-sessions-judge-complaint-ibc\/","title":{"rendered":"Explained| Supreme Court\u2019s verdict on Jurisdiction of Special Court presided by Sessions Judge or Add. Sessions Judge to try complaint under IBC"},"content":{"rendered":"
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Supreme Court:<\/span> In an appeal against the judgment and order passed by Bombay High Court, wherein, the Court quashed complaint filed by Insolvency and Bankruptcy Board of India (\u2018IBBI\u2019) on the ground that it was filed before a Special Court presided by a Sessions Judge, as in view of the subsequent amendment, the offences under the Insolvency and Bankruptcy Code, 2016<\/a> (\u2018Code\u2019) shall be tried only by a Metropolitan Magistrate or a Judicial Magistrate of the First Class, the division bench of BR Gavai*<\/span> and Sandeep Mehta, JJ. has held that the reference to \u2018Special Court established under Chapter XXVIII of the Companies Act, 2013<\/a>\u2019 in Section 236(1) of the Code is a \u2018legislation by incorporation\u2019 and not a case of \u2018legislation by reference\u2019, thus the Special Court presided by a Sessions Judge, or an Additional Sessions Judge will have jurisdiction to try the complaint under the Code. Further, the Bench remitted the matter to the High Court to consider the petition of the respondents afresh on merits.<\/p>\n

IBBI has challenged the order passed by Bombay High Court, wherein the Court allowed the petition filed by Ex-Directors of SBM Paper Mills Pvt. Ltd., challenging the order passed by Additional Sessions Judge, wherein it directed issuance of process against the Ex- Directors on account of a Complaint filed by the IBBI under Section 236 of the Code read with Sections 190<\/a>, 193<\/a> and 200<\/a> of the Code of Criminal Procedure, 1973<\/a> (\u2018CrPC\u2019) for the offences punishable under Section 73(a) and Section 235A of the Code.<\/p>\n

Whether Special Court under the Code would be as provided under Section 435 of the Companies Act as it existed at the time when the Code came into effect, or it would be as provided under Section 435 of the Companies Act after the 2018 Amendment?<\/p>\n

The Court took note of Section 236(1) of the Code and said that it begins with a non-obstante clause. It provides that the offences under the Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013<\/a>. Chapter XXVIII of the Companies Act, 2013<\/a> deals with \u2018Special Courts\u2019.<\/p>\n

Further, the Bench noted that as per Section 435(3)<\/a> of the Companies Act, 2013<\/a>, as it existed on the date on which the Code came into effect (after the 2015 Amendment), a person to be qualified for appointment as a Judge of a Special Court was required to hold office of a Sessions Judge or an Additional Sessions Judge immediately before his appointment as a Judge of a Special Court.<\/p>\n

The Court noted that Section 435<\/a> of the Companies Act, 2013<\/a> as it originally existed, provided for only one class of Special Courts i.e. a person holding office of a Sessions Judge or an Additional Sessions Judge. All offences under the Companies Act, 2013<\/a> were required to be tried by such Special Courts. The 2015 Amendment to Section 435 also provided for only one class of Special Courts i.e. a person holding the rank of a Sessions Judge or an Additional Sessions Judge. The change that was brought out was that, only offences punishable under the Companies Act, 2013<\/a> with imprisonment of two years or more were to be tried by the Special Courts, whereas all other offences i.e. offences punishable with imprisonment of less than two years were to be tried by the jurisdictional Metropolitan Magistrate or the Judicial Magistrate of the First Class.<\/p>\n

Further, it noted that by the 2018 Amendment, two classes of Special Courts were established:<\/p>\n