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TMI Blog2008 (1) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... filed against the petitioners/applicants for the offences punishable under section 24 read with section 27 of the Securities Exchange Board of India Act, 1992 ('the SEBI Act' for short) ought to be tried by the Court of Chief Metropolitan/Additional Chief Metropolitan/Metropolitan Magistrate in Mumbai rather than being committed to the Court of Sessions for Greater Mumbai, despite the SEBI (Amendment) Act, 2002 having been brought into force with effect from 29-10-2002 whereunder only the Court of Session can try the said offences and hence they have been heard together and are being decided by a common judgment. The details of the complaints giving rise to these petitions/applications are set out in the following tabular form : Sr. No. Petition/Application Number Complaint Number Offences under SEBI Act Date of order committal 1. App/2238/07 142/S/2003 12, 24(1) &27 14/6/2007 2. App/2239/07 142/S/2003 12,24(1) &27 14/6/2007 3. WP/338/07 793/W/2003 24(1) & 27 5/10/06 4. WP/1154/07 3877/2003 24(1) Not committed 5. WP/1557/07 3952/W/2003 12, 24(1) &27 15/6/07 6. WP/1598/07 3952/W/2003 12, 24(1) &27 15/6/07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of complaints the accused filed an application contending that the alleged offences pertained to the period prior to 29-10-2002 and, therefore, in view of the guarantee under Article 20 of the Constitution the complaints were required to be tried by the Metropolitan/Additional Chief Metropolitan/Chief Metropolitan Magistrate and the Sessions Court did not have the jurisdiction to try the said complaints and consequently it was prayed for remitting the complaints back to the Court which had passed the order of committal. All such applications have been dismissed by the Sessions Court and it has been held by the said Court that the quantum of sentence to be awarded to the accused, if found guilty, shall be as per the pre-amended provisions i.e., a maximum of one year or fine or both and that the Sessions Court is competent to try Summons/Warrant cases, and thus upholding the contentions of SEBI while opposing all such applications. 4. However, in these petitions/applications, as noted earlier, a common contention raised is that the above mentioned complaints are not required to be committed/transferred to the Court of Sessions and they are to be tried by the Courts before whom the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whereas under section 24(2) of the old Act, if any person failed to pay the penalty imposed by the adjudicating officer, the punishment prescribed was imprisonment for a term which would not be less than one month but which may extend up to three years or with fine which shall not be less than Rs. 2000 which may extend up to Rs. 10,000 or with both. Thus the offences under section 24(1) were summons cases whereas under section 24(2) they were warrant cases and to be tried only by the Court of Metropolitan Magistrate or the Judicial Magistrate, First Class as set out under section 26(2) of the old Act. Under the amended Act the sentence upto one year or up to three years has been enhanced up to ten years and the fine amount which was not quantified under the old Act has been extended to rupees twenty-five crores. The accused are required to be tried for the offences under section 24 read with section 27 of the old Act and not under the amended Act as the cause of action is admittedly prior to 29-10-2002 in all the complaints, in view of the guarantee enshrined under Article 20(1) of the Constitution. (b)The amendments to section 24 are substantial in nature and the amendment in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )If the complaints are tried by the learned Metropolitan Magistrate or the learned Judicial Magistrate, First Class the remedy of appeal would be before the Court of Sessions and thereafter the accused, if unsuccessful, would still have a remedy of revision under section 397 of Cr.P.C. before this Court. Whereas if the above stated complaints are tried by the Sessions Court, an appeal at the instance of the accused would lie to this Court and thus an additional statutory remedy of revision under section 397 read with section 401 of Cr.P.C. would be taken away. (h)When the complaints were filed by the authorised officer, apart from the list of witnesses no statements of witnesses on the lines of investigation to be carried out under section 164 of Cr.P.C. or section 11C of the SEBI Act, have been filed and the process was issued by the learned Metropolitan Magistrate under section 204 of Cr.P.C. without recording the statement of the complainant and/or the witnesses as the complaint was filed by a public officer. Consequently the requirements of section 208 of Cr.P.C. would not be met for committal of the complaint to the Court of Sessions under section 209 thereunder. (i)The righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendments of 2002 are substantive in nature and consequently procedural and, therefore, they are prospective in nature. In support of all these contentions the learned counsel for the accused relied upon the following decisions : (1) Transmission Corpn. of A.P. v. Chi. Prabhakar 2004 (5) SCC 551; (2) Rosy v. State of Kerala AIR 2000 SC 637; (3) Paranjothi Udiyar v. State 1976 Cri. LJ. 598; (4) Kamal Krishna De v. State 1977 Cri. LJ. 1492; (5) Devarapalli Lakshminarayana Reddy v. V. Narayana Reddy 1976 (3) SCC 252; (6) R.S. Nayak v. A.R. Antulay AIR 1984 SC 684. 7. Mr. Ponda, the learned counsel for the SEBI, on the other hand, urged before this Court supporting the order of committal and submitted that the trial of the pending complaints as on 29-10-2002 or filed thereafter but pertaining to the cause of offence that was prior to 29-10-2002 are required to be committed to and tried by the Sessions Court only in view of the mandate of section 26(2) of the amended SEBI Act. When the mandate of section 26(2) of the SEBI Act states that no court inferior to that of a Court of Sessions shall try any offence punishable under the Act, there is no choice left with the learned Metr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no power to try such complaints after 29-10-2002. He relied upon a recent decision of the Delhi High Court (S.B.) in the case of Panther Fincap & Management Services Ltd. v. SEBI [Manu/DE/9209/2006] and pointed out that the interpretation of the amended section 26(2) as set out therein is in keeping with the principles applicable in criminal jurisprudence and should be followed by this Court as well. By change of forum, there is no violation of the fundamental rights guaranteed under Articles 14 and 21 of the Constitution and the observations in the case of A.R. Antulay v. R.S. Nayak 1988 (2) SCC 602, do not lay down the general principles in law when by an Act of Parliament the existing forum is changed, the observations made by the Apex Court in the said case cannot be treated to hold that the pending complaints pertaining to the offence prior to 29-10-2002 ought to be tried by the Courts before whom they were presented rather than committing the same to the Sessions Court. In short, as per Mr. Ponda, the observations made in A.R. Antulay's case (supra) are an orbiter and they do not lay down any specific principles regarding the retention of forum. The learned counsel further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operate prospectively or retrospectively their Lordships observed as under : "1.6 ... The question whether an enactment is meant to operate prospectively or retrospectively has to be decided in accordance with well-settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statute makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events...." (p. 309) The Constitution Bench in the case of Shah Bhojraj Kuverji Oil Mills and Ginning Factory v. Subhashchandra Yograj Sinha AIR 1961 SC 1596, while dealing with the said issue stated,- "...While it is the ordinary rule that substantive rights should not be held to be taken away except by express provision or clear implication, many Acts, though prospective in form, have been given retrospective operation, if the intention of the Legislature is apparent. This is more so, when the Acts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and limitation is procedural in nature, whereas law relating to right of action and right of appeal, even though remedial, is substantive in nature. (iii)Every litigant has a vested right in substantive law, but no such right exists in procedural law. (iv)A procedural statute should not generally speaking be applied retrospectively, where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v )A Statute which not only changes the procedure but also creates a new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." (p. 2641) 9. The first question, therefore, that arises for consideration in these petitions/applications is whether the amendments brought into force from 29-10-2002 in the SEBI 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. 10. The Delhi High Court in the case of Panther Fincap & Management Services Ltd. (supra) has held that the amendment brought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being a warrant case. Whereas under section 2(x) 'warrant case' means a case relating to an offence punishable with death, imprisonment for life or imprisonment for a term exceeding two years. Section 4 of Cr.P.C. 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 Sessions 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 Sessions 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-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. 13. 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 need not be taken as the arguments insisting for a particular forum for trial. The case made out for the accused in these petitions in support of their contentions that the above stated complaints must be tried by the Court to which they were presented, is based on the scheme of the Criminal Procedure Code in respect of the complaints filed otherwise than on the police report. It is in this context that the reference has been made to the provisions of section 190, 200, 202, 204, 208 and 209 of Cr.P.C. Section 4(1) of Cr.P.C. provides for investigation, enquiry or trial for every offence under IPC whereas section 4(2) provides for offences under any other laws which may be investigated, enquired into, tried and otherwise dealt with according to the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.P.C. 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 Cr.P.C. 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 Sessions. 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from article 21 encompasses all the stages, namely the stage of investigation, inquiry, trial, appeal, revision and re-trial.... (3) The concerns underlying the right to speedy trial from the point of view of the accused are : (a)****** (b )the worry, anxiety, expense and disturbance to his vocation and peace, resulting from an unduly prolonged investigation, inquiry or trial should be minimal." (p. 270) 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 Sessions Court may prolong for a long period than a summary trial/summons case trial or a warrant case trial. The accused, therefore, are justified in claiming that they are deprived of a speedy trial if the pending complaints are transferred/committed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the Court or the Tribunal where they are pending to the Court or the Tribunal which, under the new law, gets jurisdiction to try them. It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the Court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of the change of jurisdiction of the different Tribunals or forums." 16. In Garikapathi Veeraya's case (supra), the following principles have been laid down by the Constitution Bench regarding the vested rights of legal remedies: "(i )That the legal pursuit of a remedy, suit, appeal and second appeal ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal is statutory and when conferred by statute it becomes a vested right. . . . distinction between the right of appeal and right of revision is based on differences implicit in the two expressions. An appeal is continuation of the proceedings; in effect the entire proceedings are before the appellate authority and it has power to review the evidence subject to statutory limitations prescribed. But in the case of revision, whatever powers the revisional authority may or may not have, it has no power to review the evidence, unless the statute expressly confers on it that power...." (p. 2439) 17. The learned counsel for the accused, on the other hand, submitted that the remedy of revision under section 397 read with section 401 of Cr.P.C. cannot be compared with the remedy of revision under section 115 of Cr.P.C. and, therefore, the submissions of Mr. Ponda do not come in their way to hold that the remedy of revision under the Criminal Procedure Code is a remedy alike an appeal and in any case is a much wider remedy as compared to the scope of revision under section 115 of Cr.P.C. As per the accused the remedy of revision is a statutory remedy which was available to them on the day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revision as a petition of appeal and deal with the same accordingly." As per sub-section (1) of section 401 the High Court may, in its discretion exercise any of the powers conferred on a Court of appeal by sections 386, 389, 390 and 391, while deciding a revision application under section 397. As per sub-section (2), no order in a revision application shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard either personally or by a pleader in his defence and sub-section (3) does not empower the High Court to convert a finding of acquittal into one of conviction which means a revision application cannot be treated as an appeal against an order of acquittal as set out under section 378 of the Code. As per sub-section (4) where an appeal lies and no appeal is brought, no proceeding by way of revision shall be entertained at the instance of the party who could have appealed. At the same time as per sub-section (5) of section 401, where an appeal lies under the Cr.P.C. but an application for revision has been made to the High Court by any person and the High Court is satisfied that such application was made under the erroneous bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure. An accused person who is alleged to have committed an offence must ordinarily be tried in accordance with law as existed at the relevant time when the offence was alleged to have been committed. Clause (1) of Article 20 of the Constitution forbids enhancement of punishment. No person shall be liable for punishment under any penal law except for violation of a law in force at the time of commission of the act charged as an offence nor he or she shall be inflicted with greater punishment than that which might have been inflicted under the law in force at the time of the commission of the offence. By reason of the Amending Act, 2000, the accused is not only deprived from a procedure which was beneficial to him but he is also deprived of a right to file a criminal revision in terms of sections 397 and 401 of the Code of Criminal Procedure...." It is pertinent to note that the words used by Their Lordships are "to be tried in accordance with law as existed at the relevant time" instead of "be punished in accordance with law as existed at the relevant time". The learned counsel for the accused, therefore, submitted that even though the Sessions Court has held that in the trial b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... politan Magistrate to the Sessions Court, the accused will be deprived of such a statutory remedy of revision and on that count also the complaints are required to be tried by the Courts before whom they were presented by the authorised officer. From the eight complaints stated in para 2 above, some of them have been filed after 29-10-2002 though the cause of action arose prior to the said date. 22. Section 11C was introduced in the SEBI 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 of the SEBI Act and consequently even though the complaints have been committed, they are without any investigation papers including the statement of witnesses recorded on oath during the course of investigation. Section 11C consists of eleven sub-sections as under : Sub-section (1) provides that where the Securities and Exchange Board of India has reasonable ground to believe that the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market, or any interme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch books, registers, other documents and record to such person or on whose behalf the books, registers, other documents and records were produced. Sub-section (5) provides that any person, directed to make an investigation under sub-section (1), may examine on oath, any manager, managing director, officer and other employee of any intermediary or any person associated with securities market in any manner, in relation to the affairs of his business and may administer an oath accordingly and for that purpose may require any of those persons to appear before him personally. Sub-section (6) provides that if any person fails without reasonable cause or refuses (a) to produce to the Investigating Authority or any person authorised by him in this behalf any book, register, other document and record which it is his duty under sub-section (2) or sub-section (3) to produce; or (b) to furnish any information which it is his duty under sub-section (3) to furnish; or (c) to appear before the Investigating Authority personally when required to do so under sub-section (5) or to answer any question which is put to him by the Investigating Authority in pursuance of that sub-section; or (d) to sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector or the manager or any other person, from whose custody or power they were seized and inform the Magistrate of such return. However, the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof. Sub-section (11) provides that every search or seizure made under this section, save as otherwise provided in the proposed section, shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to searches or seizures made under that Code. 23. The learned counsel for 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, 165 of Cr.P.C. 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 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Magistrate taking cognizance of an offence upon a complaint, when such offence is not triable by Sessions 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 Sessions, it is impermissible for the Magistrate to direct an investigation, as per the proviso below sub-section (2) of section 202. On the interpretations of section 202(2) of Cr.P.C., Thomas, J. in Rosy's case (supra) observed as under : "14. The crucial issue therefore is, when the offence, sought to be taken cognizance of by the magistrate, is exclusively triable by the Court of Sessions, is it incumbent on the magistrate to conduct an inquiry as enjoined in the proviso to section 202(2) of the Code or can he dispense with such inquiry. The answer would not have been difficult if we go by the placement of the said proviso alone, as it can then be said that inquiry is not a must. If the said proviso was placed in section 200 of the Code even a doubt that the legislative idea is to have all witnesses examined by the magistrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category mentioned in Clause (iii) are not important.] The first category delineated in Clause (i) of section 208 consists of 'statement recorded under section 200 or section 202 of all persons examined by the magistrate.' It is now important to note that the words 'if any' have been used in the second category of documents which is delineated in Clause (ii) of section 208 but those words are absent while delineating the first category. In my view those two words have been thoughtfully avoided by Parliament in Clause (i). 17. If a magistrate is to comply with the aforesaid requirements in section 208 of the Code (which he cannot obviate as the language used in the sub-section is of any indication) what is the manner in which he can do it in a case where he failed to examine the witnesses before issuing process to the accused ? The mere fact that the word 'or' employed in Clause (i) of section 208 is not to be understood as an indication that the magistrate is given the freedom to dispense with the inquiry if he has already examined the complainant under section 200. A case can be visualized in which the complainant is the only eye- witness or in which all the eye-witnesses were al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e helpless to state 'by what evidence he proposes to prove the guilt of the accused.' If the offence is of a serious nature or is of public importance the consequence then would be miscarriage of justice." (p. 642) 24. Undoubtedly the view taken by the other member of the Bench (M.B. Shah, J.) are not on the same lines regarding the interpretations of sections 202 and 204 of Cr.P.C. However, in the instant complaints, though the list of witnesses has been placed on record, the statements of such witnesses have not been recorded either in the course of investigation under section 11C of the SEBI Act or by the learned Metropolitan Magistrate before issuance of process by himself by postponing the issuance of process under section 202 as the complaint was filed by a public servant purport-ing 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 of Cr.P.C. 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of mind and this is one more reason to quash and set aside the order of acquittal. At the same time the issue as to whether the Sessions Court had the powers to adjudicate upon the committal order was not raised. 26. In the premises these petitions/applications succeed and the same are hereby allowed as under : (a)It is held that 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, are 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 have taken place prior to the said date are required to be tried by the Court to which they were presented and they are not required to be committed to the Court of Sessions. Hence the above referred complaints shall be tried by the Court they were presented at the first instance. (d)The committal orders passed by the Court of Metropolitan Magistrate/Addl. Chief Metropolitan Magistrate/Chief Metropolitan Magistr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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