HIGH COURT OF
Videocon International
v.
Securities and
Exchange Board of
B.H.
Marlapalle, J.
CRIMINAL
APPLICATION NOS. 2238 TO 2239 OF 2007
WRIT
PETITION NOS. 338 of 2007
and
criminal writ petition nos. 1154, 1557,1598, 1611 and
1773 OF 2007
JANUARY
16, 2008
Section 24, read
with section 26, of the Securities Exchange Board of India Act, 1992 - Offences
- Whether amendment in section 24 brought into force with effect from
29-10-2002 is a substantial amendment and amendment in section 26 is only
consequential in view of enlargement of sentence period under section 24 -
Held, yes - Whether when forum of trial has been changed in consequence of
substantial amendment, it has to be read with main section providing for
sentence and it cannot be read in isolation - Held, yes - Whether consequently,
amendments to section 24, read with section 26, shall have prospective effect
and not retrospective - Held, yes - Whether, therefore, complaints under
section 24 filed before or after 29-10-2002 but in respect of alleged offences,
that have taken place prior to said date, are required to be tried by Court to
which they were presented and they are not required to be committed to Court of
Session - Held, yes
Facts
The SEBI filed complaints against the various
petitioners/ applicants for offences punishable under section 24, read with
section 27, before the Court of Chief Metropolitan/Additional Chief
Metropolitan/Metropolitan Magistrate. In all the complaints, the cause of
action was prior to 29-10-2002, but some of them had been filed prior to
29-10-2002 and the remaining had been filed thereafter. Later, the SEBI filed
an application for committal of the complaints under section 209 of the Code of
Criminal Procedure, 1973 to the Session Court. That application was allowed.
The applicants filed application before the Session Court, contending that the
alleged offences pertained to the period prior to 29-10-2002 and, thus, in view
of the guarantee under article 20 of the Constitution, the complaints were
required to be tried by the Metropolitan Magistrate/Additional Chief
Metropolitan/Chief Metropolitan Magistrate and the Session Court did not have
jurisdiction to try the said complaints. In other set of cases, the applicants
prayed for quashing of the committal order on the ground that it did not comply
with requirements of sections 200,202 and 208 of the
Code and, consequently, it was prayed that the complaints be returned to the
Court of Metropolitan Magistrate so as to pass a fresh order of committal after
complying with the said provisions of Code. The Session Court dismissed said
applications. Thus, instant petitions/ applications were filed wherein common
contention raised was that the complaints were not required to be
committed/transferred to the Court of Session and they were to be tried by the
Courts before whom they were presented by the authorized officer at the first
instance, despite the SEBI (Amendment) Act, 2002 having been brought into force
with effect from 29-10-2002.
Held
The first question, that
arose for consideration in instant petitions/applications, was whether
the amendments brought into force from 29-10-2002 in the Act are substantive in
nature or they are procedural in nature or they are substantial in nature and
by consequence, there are procedural changes regarding the forum of trial under
section 26. [
Prior to the SEBI (Amendment) Act, 2002 under
sub-section (1) of section 24, the accused would be punishable with imprisonment
for a term extending to one year or fine or with both. Whereas under
sub-section (2), the accused was punishable with imprisonment for a term which
would not be less than one month, but which might extend to three years or with
fine which would not be less than two thousand rupees and might extend to ten
thousand rupees or with both. On amendment, the punishment has been
substantially enhanced. Under sub-section (1), the accused shall be punishable
with imprisonment for a term which may extend to ten years or with fine which
may extend to twenty five crore rupees or with both.
[
Section 4 of the Code
deals with the trial of offences under the Indian Penal Code and other laws. Thus, when the offence is punishable with
imprisonment for more than seven years, it ought to be tried by a Court of
Session when such offence is set out in other laws (other than the Indian Penal
Code). The SEBI Act falls in the category of ‘other laws’ and, therefore, when
the offence is punishable with imprisonment for more than seven years,
necessarily, it has to be tried by a Court of Session and if the offence is
punishable with imprisonment up to seven years, it ought to be tried by the
Judicial Magistrate, First Class. In the unamended
SEBI Act, the sentence of imprisonment provided was up to one year or three
years as the case may be and, therefore, under section 26(2) of the unamended Act, the forum for trial of the complaints was
that of Metropolitan Magistrate or Judicial Magistrate, First Class. On
amendment to section 24 by the SEBI Amendment Act, 2002, the sentence under
sub-section (1) as well as sub-section (2) has been enhanced up to ten years
and, therefore, in consequence to this enhancement of sentence, the forum for
trial of the complaint has been changed to the Court of Session which indicates
that the forum of trial has been changed only on account of the enhancement of
the sentence from one year to ten years or from three years to ten years. It,
therefore, cannot be accepted that the amendment to section 26(2) is merely
procedural in nature and it ought to be held that the said amendment is a
consequential amendment in view of the enlargement of sentence period under
section 24. Undoubtedly the amendment to section 24 is substantial in nature.
When the forum of trial has been changed in consequence of the substantial
amendment, it has to be read with the main section providing for sentence and
it cannot be read in isolation. Consequently, the amendment to section 24, read
with section 26, must be held to be prospective in operation. Both these
sections are complimentary to each other and inseparable in operation. The
amended provision has virtually repealed old provision, namely sections 24 and
26 bringing into effect the enhanced punishment and corresponding change in
forum making it compatible with the Schedule to the Code. The effect of such a repeal is covered by section 6 of the General Clauses Act,
1897.
In view of article 20(1) of the Constitution
and section 6 of the General Clauses Act, 1897, all the proceedings and the
rights, privileges, obligations accrued or arising out of sections 24 and 26 of
the unamended SEBI Act have remained intact and
cannot be disturbed on the enforcement of the amended Act. The SEBI (Amendment)
Act, 2002 is, therefore, prospective in operation and cannot be made
retrospective only on the basis of the change in forum under section 26. [
It is undoubtedly true that an accused does
not have a vested right of selecting a forum for trial and what is guaranteed
is a right of trial and that too a fair trial either to prosecute or to defend.
However, in the instant case, the arguments advanced on behalf of the accused
needed not be taken as the arguments insisting for a particular forum for
trial. The case made out for the accused in those petitions in support of their
contentions that the complaints must be tried by the Court to which they were
presented, was based on the scheme of the Criminal Procedure Code in respect of
the complaints filed otherwise than on the police report. It was in that
context that the reference had been made to the provisions of sections 190,
200, 202, 204, 208 and 209 of the Code.
Section 190 of the Code confers powers on the
Magistrate, to take cognizance of an offence, who are of the manners, therein
prescribed and the term ‘Magistrate’ in the said section is a compendious term
which includes Judicial Magistrate First Class, Metropolitan Magistrate,
Judicial Magistrate of Second Class and Executive Magistrate. At the same time,
there is another Court of original jurisdiction viz. the Court of Session also being set up
under section 6 of the Code. Under section 193 of the Code, except as otherwise
expressly provided therein or by any other law for the time being in force, no
Court of Session shall take cognizance of any offence as a Court of original
jurisdiction, unless the case has been committed to it by a Magistrate. In
other words, a Court of Session can take cognizance of an offence only upon an
order of committal made by the Magistrate under section 209 of the Code and in
no other manner. If the Magistrate takes cognizance of an offence upon a
complaint which appears to be exclusively triable by
the Court of Session, he has to proceed according to sections 202(2), 208 and
209 of the Code. As per section 260(1) of the Code, notwithstanding anything
contained in the Code, any Chief Judicial Magistrate, any Metropolitan
Magistrate, any Magistrate of the First Class specially empowered in that
behalf by the High Court, may, if he thinks fit, try in a summary way the
offences not punishable with death, imprisonment for life or imprisonment for a
term exceeding two years. It is, thus, clear that the offences under section 24
of the unamended SEBI Act could be tried by the
Metropolitan Magistrate in a summary way in respect of the offences which are
alleged to have taken place prior to 29-10-2002. The scheme of the Code
provides for speedy trials in certain class of cases and with this view in
mind, it makes four different sets of provisions for the trial of four classes
of cases, i.e., summary trials, trial of summons cases, trial of warrant
cases and trial of cases triable by the Court of
Session. Broadly speaking, this classification of the offences for the purpose
of applying these different sets of provisions is according to the gravity of
the offences, though in classifying the offences fit for summary trial, the
experience and power of the trying Magistrate has also been taken into
consideration, but the net result of these provisions is that the offences,
which are summarily triable, can be more speedily
tried than summons cases, summons cases can be more speedily tried than warrant
cases and warrant cases can be more speedily tried than the sessions cases. It
was in that context that the petitioners insisted that in the respective
complaints, the trial ought to be continued before the Metropolitan Magistrate,
so that they would face the trial under Chapter XIX, XX or XXI, as the case
might be. The submissions of the respondent that the summary trial could be
conducted by the Session Court had no support in law. Part II of the First
Schedule to the Code classifying the offences under the laws other than the IPC
clearly states that the offences punishable with imprisonment for less than
three years or with fine only are to be tried by the Magistrate which means the
Magistrate of First Class or the Metropolitan Magistrate. There was one more
danger in accepting the submissions of the respondent in that regard, viz.,
it would imply that the amendments to section 24 are prospective in nature, but
the amendments in section 26 are retrospective. In fact, the scheme of sections
24 and 26 is complimentary to each other and inseparable in operation inasmuch
as section 24 deals with the imposition of penalty whereas section 26(2) deals
with the trial of such offences upon filing of complaint under section 26(1).
All these steps/aspects of trial of offences under the SEBI Act are
procedurally dependent upon the Code.
Since it is the accused who
is charged with the offence and is also the person whose life/liberty is at
peril, it is but fair to say that he has a right to be tried speedily. Being an
accused of crime is cause for concern and it affects the reputation and the
standing of the person in the society. It is a cause for worry and expense. The
provisions of the Criminal Procedure Code, as noted hereinabove, provide for
different trials before different forums as set out under Chapters XVIII to
XXI. Comparatively, the trial by the Session Court may prolong for a long
period than a summary trial/summons case trial or a warrant case trial. The
accused, therefore, were justified in claiming that they would be deprived of a
speedy trial if the pending complaints were transferred/committed to the Court
of Session for trial as per the amended SEBI Act. [
There is one more aspect which also requires
consideration and that is the absence of a specific provision for transfer of
the pending complaints from the Court of Metropolitan Magistrate/Judicial
Magistrate First Class to the Court of Session in the amended SEBI Act. This is
one more test in support of the prospectivity in
operation of the SEBI (Amendment) Act. [
The revision application under section 397,
read with section 401, of the Code is a statutory remedy and if the complaints
are allowed to be tried by the Session Court, in the absence of any specific
provision in the amended SEBI Act for transfer of the cases from the Court of
Metropolitan Magistrate to the Session Court, the accused will be deprived of
such a statutory remedy of revision and on that count also, the complaints were
required to be tried by the Courts before whom they were presented by the authorised officer. From the eight complaints, some of them
had been filed after 29-10-2002 though the cause of action arose prior to the
said date. [
Section 11C was introduced in the Act by the
Amendment of 2002 and it provides for investigation to be undertaken by the
Board through an investigating authority. The complaints filed after 29-10-2002
clearly showed that no investigation was carried out under section 11C and,
consequently, even though the complaints had been committed, they were without
any investigation papers including the statement of witnesses recorded on oath
during the course of investigation. [
The accused rightly submitted that the
intention of the Parliament in introducing section 11C was to provide for an
investigation to be carried out by the investigating authority at the instance
of the Board and to empower the investigating officer with consequential
authority, on par with the scheme of sections 164 and 165 of the Code and the
said report could be filed with the complaint to be presented to the Court of
Metropolitan Magistrate/Judicial Magistrate, First Class at the first instance
and the same would also comply with the requirements of section 208 so as to
pass an order of committal under section 209 of the Code. In the absence of the
powers of investigation with the Board prior to 29-10-2002 and in the absence
of such investigation having been carried out under section 11C in the
complaints filed after 29-10-2002, there would be no
compliance of the requirements of section 208 before passing the order of
committal under section 209. In the absence of the compliance of section 208,
there would be no material for the prosecutor to proceed with the trial of the
complaint before the Session Court and the complaints would have to be
dismissed and, consequently, the accused would have to be discharged under section
227 of the Code. Chapter XIV of the Code sets out conditions requisite for
initiation of proceedings and section 190 thereunder
specifies the power of a Magistrate to take cognizance of the offence by three
different courses, i.e., (a)
upon receiving a complaint of facts which constitutes such offence, (b)
upon a police report of such facts, and (c) upon information received
from any person other than a police officer or upon his own knowledge that such
offence has been committed. Taking cognizance of the offence involves the
exercise of deciding whether process should be issued to the accused as
envisaged under section 204 of the Code. However, there is an interregnum stage
between the filing of the complaint and issuance of process and that is section
202 of the Code which deals with postponement of the process and it is under
Chapter XV - ‘Complaints to Magistrates’. Sub-section (1) states that any
Magistrate, on receipt of complaint of offence, may, if he thinks fit, postpone
the issue of process against the accused for resorting to any of the two
courses, i.e., either enquire into the case himself or direct an
investigation to be made. But if the offence is triable
by the Court of Session, the Magistrate cannot make a direction for
investigation. Hence, the Magistrate taking cognizance of an offence upon a
complaint, when such offence is not triable by the
Session Court, can adopt either of the three courses, viz., (i) straightway issue the process, or (ii) he can
postpone the issue of process for holding an enquiry, or (iii) he can
direct an investigation to be made but if the offence is triable
by a Court of Session, it is impermissible for the Magistrate to direct an
investigation, as per the proviso below sub-section (2) of section 202. [
In the instant complaints, though the list of
witnesses had been placed on record, the statements of such witnesses had not
been recorded either in the course of investigation under section 11C or by the
Metropolitan Magistrate before issuance of process by himself by postponing the
issuance of process under section 202 of the Code as the complaint was filed by
a public servant purporting to act in the discharge of his official duties.
Consequently, while the committal order was passed under section 209 in the
complaints (except two), the requirements of section 208 were not complied with
inasmuch as there were no statements recorded under section 200 or section 202
of any persons examined by the Magistrate or any statement recorded during the
course of investigation undertaken under section 11C of the SEBI Act before
filing of the complaint and, hence, the accused were right in their contentions
that the order of committal so passed was vitiated and the same was
unsustainable. [
The committal order in all the committed
complaints had been passed only on the basis of the notification dated 9-6-2003
issued by the Law and Judiciary Department and published in the State
Government Gazette. As per the said notification, a
In the premises, those petitions/applications
succeeded and the same were hereby allowed in terms of the following
directions:
(a) The amendment in section 24
of the SEBI Act brought into force with effect from 29-10-2002 is a substantial
amendment and the amendment in section 26 of the said Act is only
consequential, though procedural.
(b) The said amendments shall
have prospective effect and not retrospective and, therefore, were not
applicable to the above stated complaints.
(c) The complaints filed before
or after 29-10-2002 but in respect of the alleged offences, that had taken
place prior to the said date, were required to be tried by the Court to which
they were presented and they were not required to be committed to the Court of
Session. Hence, the complaints in question would be tried by the Court to which they were presented at the first instance.
(d) The committal orders passed
by the Court of Metropolitan Magistrate/Addl. Chief
Metropolitan Magistrate/Chief Metropolitan Magistrate in the complaints were to
be quashed and set aside. The Court of Session was to be directed to return the
concerned complaints to the respective Courts which had passed the committal
order.
(e) Trial of the complaints
would be expedited. [
nn