Special Courts with Sessions Judges cannot try offences under IBC: Bombay High Court

The Bombay High Court on Monday ruled that only special courts consisting of Metropolitan or Judicial Magistrates are empowered to hear complaints under the Insolvency and Bankruptcy Code (IBC), and not courts consisting of Sessions Court judges [Satyanarayan Bankatlal Malu & Anr v. IBBI & Anr]..Justice SK Shinde observed that the objective of the legislature was to not burden a Special Court comprising a Sessions Judge with trials under the IBC.“If trials in offences under I.B. Code were also to be tried by the Special Court comprising of Sessions Judge or Additional Sessions Judge, it would frustrate to object of the speedy trial for which, the Special Courts have been established,” the single-judge held..The ruling came in a plea filed by two individuals assailing an order of the Sessions Court issuing summons to them in a complaint filed by the Insolvency and Bankruptcy Board of India (IBBI), a statutory body under the IBC. The petition stated that the Sessions Judge did not have the jurisdiction to entertain the complaint filed by the IBBI.The plea stated that as per Section 236 of IBC, the Special Courts under the Companies Act were empowered to try offences under the IBC as a Court of Sessions. The petitioners argued that the objective behind Section 236 was a speedy trial of offences and to achieve the same, there were two classes of special courts introduced:one consisting of Judge holding office as Sessions or Additional Sessions Judge; andanother consisting of Metropolitan or Judicial Magistrate First Class..They contended that by amending Section 435 of the Companies Act, after Section 236 of the IBC, the legislature intended that for speedy trial of offences under IBC, the Metropolitan Magistrate or Judicial Magistrate are courts deemed to be special courts.The High Court accepted this contention. .The Court noted that courts consisting of Sessions Judges were to try offences under the Companies Act, whereas courts consisting of Magistrates were to try offences under Acts other than the Companies Act.With these observations, the Court concluded that the proceedings initiated by the IBBI in the Sessions Court were not sustainable. The order issuing process against the petitioners was held as being without jurisdiction, unsustainable, and hence quashed..Advocates Amir Arsiwala, Piyush Deshpande and Farzeen Pardiwala appeared for the petitioners.Advocates Pankaj Vijayan and Mohammed Varawala represented the IBBI.Additional Public Prosecutor YM Nakhawa represented the State..[Read Judgment]