Insolvency and Bankruptcy Code, 2016 – ss.236, 73(a) and 235A – Trial of offences by Special Court – Petition by the Corporate Debtor for initiation of the Corporate Insolvency Resolution Process – Petition admitted and interim Resolution Professional appointed – Meanwhile, the respondent/ExDirector of the Corporate Debtor filed an application for the withdrawal in light of One Time Settlement and the same was allowed by the NCLT – On account of non-compliance of the terms of the OTS by the respondents, the NCLT found it to be a fit case to prosecute the respondents – Appellant-Board then filed a complaint against the respondents before the Sessions Judge u/ss. 73(a) and 235A – Sessions Judge directed issuance of process against the respondents – Respondents filed writ petition before the High Court for the quashing the order passed by the Sessions Judge for the want of jurisdiction – High Court allowed the petition – Correctness: Held: Special Court presided by a Sessions Judge or an Additional Sessions Judge would have jurisdiction to try the complaint under the Code – Under s. 236(1) the reference is only to the fact that the offences under the Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 – Reference is not general but specific – Instant case is a case of ‘legislation by incorporation’ and not a case of ‘legislation by reference’ – Provision with regard to Special Court has been bodily lifted from s. 435 of the Companies Act, 2013 and incorporated in s. 236(1) – Provision of s. 435 of the Companies Act, 2013 with regard to Special Court would become a part of s. 236(1) as on the date of its enactment – Any amendment to s. 435 of the Companies Act, 2013, after the date on which the Code came into effect would not have any effect on the provisions of s. 236(1) – Special Court at that point of time only consists of a person who was qualified to be a Sessions Judge or an Additional Sessions Judge – Thus, the reasoning of the High Court that in view of the 2018 Amendment only the offences under the Companies Act would be tried by a Special Court of Sessions Judge or Additional Sessions Judge and all other offences including under the Code shall be tried by a Metropolitan Magistrate or Judicial Magistrate of the First Class, is untenable – High Court erred in quashing the complaint only on the ground that it was filed before a Special Court presided by a Sessions Judges – High Court could have directed the complaint to be withdrawn and presented before the appropriate court having jurisdiction – Impugned judgment passed by the High Court is quashed and set aside. [Paras 41-46,48] Legislation – ‘Legislation by incorporation’ or a ‘legislation by reference’ – Distinction between:
Held: Effect of incorporation means the bodily lifting of the provisions of one enactment and making it part of another so much so that the repeal of the former leaves the latter wholly untouched – However, in the case of a reference or a citation of the provisions of one enactment into another without incorporation, the amendment or repeal of the provisions of the said Act referred to in a subsequent Act will also bear the effect of the amendment or repeal of the said provisions. [Para 27]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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