Introduction

The Ministry of Corporate Affairs, vide notification number S.O. 2872 dated August 31[1], 2017,  has constituted a Special Court in Bihar to provide for speedy trial of offences under the Companies Act, 2013 (hereinafter referred  to as the “Act”). The Special Court has been constituted in pursuance to Section 435 of the Act, which provides that the Central Government may establish or designate Special Courts to provide for speedy disposal of offences under the Act.

Legislative Intent of Section 435

A lot of scams have occurred in the corporate world in the past few decades. Delay in judgements affects the rights of the related parties of the companies. Section 435 was, therefore, introduced by the government to expedite the trial and disposal of cases which have piled up under the Act. As the Special Courts are exclusively constituted for companies, they are more effective and efficient than general Session Courts. Such a step is a welcome move to further improve the ease of doing business, enforce corporate governance and reduce the number of litigations pending at various courts.

Evolution of Section 435

Section 435 was envisaged in the Companies Act, 2013 to ensure speedy “trial of offences”. Later, the provision was amended vide Companies Amendment Act, 2015 to ensure “speedy trial of offences punishable under the Act with imprisonment of two years or more”.

Additionally, a proviso was added to Section 435 to state that all other offences shall be tried, as the case may be, by a Metropolitan Magistrate or a Judicial Magistrate of the First Class having jurisdiction to try any offence under this Act or under any previous company law.

Constitution of Special Courts

As per Section 435, Special Courts are constituted by the Central Government by appointing a single judge with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working. A person shall be qualified for being appointed as a judge of a Special Court if such person is, immediately before such appointment, holding office of a Sessions Judge or an Additional Sessions Judge.

Accordingly, the Central Government, in concurrence with the Chief Justice of High Court of Patna, designated the Court of Additional District and Sessions Judge, Patna as Special Court for speedy disposal of offences which are punishable with imprisonment of two years or more.

Other States where Special Courts have been notified:

The Ministry of Corporate Affairs had notified, vide Notification number S.O. 1796 (E) dated May, 18, 2016[2], Special Courts in the following 8 states/union territories: Jammu & Kashmir, Maharashtra, Dadra and Nagar Haveli and Daman and Diu, Goa, Gujarat, Madhya Pradesh, Andaman and Nicobar Islands, West Bengal.

Further, the Ministry of Corporate Affairs had notified, vide Notification number S.O. 2843(E) dated September 1, 2016[3], Special Courts in the following  states/union territories: Chhattisgarh, Rajasthan, Punjab and Haryana, Madras and Manipur.