1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE Criminal Application No.2238 of 2007 Videocon International & ors. Applicants Vs. Securities & Exchange Board of India and ors. Respondents With Criminal Application No.2239 of 2007 S.K.Shelgikar Applicant Vs. Securities & Exchange Board of India & ors. Respondents With Writ Petition No.338 of 2007 Dilip Sudhakar Pendse & ors. Petitioners Vs. The State of Maharashtra & anr. Respondents With Criminal Writ Petition No.1154 of 2007 Mr.Avadhoot L. Shilotri Petitioners Vs. The State of Maharashtra & anr. Respondents With Criminal Writ Petition No.1557 of 2007 M/s.Classic Credit Ltd. Petitioner Vs. The State of Maharashtra & anr. Respondents With Criminal Writ Petition No.1598 of 2007 M/s.Panther Investrade Ltd. & ors. Petitioners Vs. The State of Maharashtra & anr. Respondents 2 With Criminal Writ Petition No.1611 of 2007 Phenomenal Plantations Ltd. & ors. Petitioners Vs. Securities & Exchange Board of India and ors. Respondents With Criminal Writ Petition No.1773 of 2007 Arun Kumar Bajoria Petitioner Vs. State of Maharashtra & anr. Respondents Mr.Adik Shirodkar, Senior Cousnel with Ms.Neeta Rajda i/b. M/s.D.S.R. Associates for applicants in Application No.2238 of 2007. Mr.Adik Shirodkar, Senior Counsel with Ms.Neeta Rajda i/b. Mr.Surendra Raja for applicants in Application No.2239 of 2007. Mr.Nitin Pradhan with Ms.S.D.Khot and Mr.Maheen Pradhan i/b. Ms.Ameeta Kuttikrishnan for petitioners in W.P.338 of 2007. Mr.S.V.Marwadi for petitioner in W.P.1154 of 2007. Mr.J.P.Shah with Mr.Gaurav Agarwal and Sachin Kudalkar i/b. M/s. J.P.S. Legal for petitioner in W.P.1557 of 2007. Mr.Amit Desai with mr.Pranav Badheka, Mr.Sandeep Parekh and Mr.Gopal Shenoy i/b. M/s. J.P.S. Legal for petitioners in W.P.1598 of 2007. Mr.Nitin Deshpande for petitioners in W.P. 1611 of 2007. Mr.S.V.Marwadi i/b. Mr.S.P.Narkar for petitioner in W.P.1773 of 2007. Mr.H.H.Ponda, Senior Advocate with Mr. V.N. Shingnapurkar for SEBI in all the matters except W.P.338/07. Mr.Amit Borkar for SEBI in W.P.338/07. 3 Mr.R.F.Lambay for Union of India in W.P.1611/2007. Mr.P.A.Pol, APP for State. CORAM: B.H.MARLAPALLE, J. Reserved on : October 22, 2007 Pronounced on: January 16, 2008 JUDGMENT: 1. Heard the learned counsel for the respective parties. Rule. With the consent of the parties, the petitions / applications have been finally heard at length. 2. This group of petitions / applications filed under Article 227 of the Constitution and/or under Section 482 of Cr.P.C. raise a common grievance viz. that the complaints 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 4 SEBI (Amendment) Act, 2002 having been brought into force with effect from 29th October 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.¦ Petition/ ¦ Complaint ¦ Offences ¦ Date of ¦ No.¦ Application¦ Number ¦ under ¦ committal¦ ¦ Number ¦ ¦ SEBI Act ¦ order ¦ ----------------¦---------------------------------- ¦ ¦ ¦ ¦ ¦ 1. ¦App/2238/07 ¦ 142/S/2003¦ 12, 24(1)¦14/6/2007 ¦ ¦ ¦ ¦ & 27 ¦ ¦ ¦ ¦ ¦ ¦ ¦ 2. ¦App/2239/07 ¦ 142/S/2003¦ 12,24(1) ¦14/6/2007 ¦ ¦ ¦ ¦ & 27 ¦ ¦ ¦ ¦ ¦ ¦ ¦ 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)¦ 15/6/07 ¦ ¦ ¦ ¦ & 27 ¦ ¦ ¦ ¦ ¦ ¦ ¦ 6. ¦WP/1598/07 ¦3952/W/2003¦ 12, 24(1)¦ 15/6/07 ¦ ¦ ¦ ¦ & 27 ¦ ¦ ¦ ¦ ¦ ¦ ¦ 7. ¦WP/1773/07 ¦304/W/2003 ¦ 24(1)& 27¦ Not ¦ ¦ ¦ ¦ ¦ committed¦ ¦ ¦ ¦ ¦ ¦ 8. ¦WP/1611/07 ¦460/S/2003 ¦24(1) & 27¦ 11/10/06 ¦ --------------------------------------------------- 3. On perusal of the R. & P. called from the 5 Court of the Metropolitan Magistrate / Sessions Court the following admitted position emerges: (a) The complaints have been filed on behalf of the SEBI (Securities and Exchange Board of India) by the authorised officer under a specific order passed by the Chairman of SEBI and the said officer is the Legal Manager / Asst. Legal Manager. (b) In all the complaints the cause of action is prior to 29/10/2002, but some of them have been filed prior to 29/10/2002 and the remaining have been filed thereafter and even the complaints filed after 29/10/2002 pray for the conviction and sentence of the accused by the learned Metropolitan / Additional Chief Metropolitan / Chief Metropolitan Magistrate. (c) In some complaints SEBI has even engaged a private advocate rather engaging the services of the Public / Asst. Public Prosecutor. (d) Along with the complaint, though the list of witnesses has been filed, no statements of any witnesses as recorded by the Investigating Officer / Authorised Officer, on oath or otherwise, have been 6 placed on record by the complainant and obviously the investigation as per Section 11C of the SEBI Act was not conducted before the complaints were filed after 29/10/2002. (e) Though the complaints were pending anywhere from three to six years, at no point of time even after 29th October 2002 the SEBI filed an application for committal of the complaints under Section 209 of Cr.P.C. and the committal orders have been passed only on the basis of the order dated 30th June 2006 issued by the Registrar General of this Court regarding establishment of a Special Court for trial of the cases filed under the SEBI Act. (f) After the complaints were committed to the Sessions Court under Section 209 of Cr.P.C., separate applications were filed before the Sessions Court but the relief prayed for was not on the same lines. In one set of cases the accused prayed for quashing of the committal order on the ground that it did not comply with the requirements of Sections 200, 202 and 208 of Cr.P.C. and consequently it was prayed that the complaints be returned to the Court of Metropolitan Magistrate so as to pass a fresh order 7 of committal after complying with the said provisions of Cr.P.C. Whereas in the other set 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 8 committed / transferred to the Court of Sessions and they are to be tried by the Courts before whom they were presented by the authorised officer at the first instance. 5. The SEBI Act was enacted to provide for the establishment of a Board to protect the interest of investors in securities and to promote the development and to regulate the securities market and for matters connected therewith or incidental thereto and it was brought into force on 30th January 1992. The SEBI notified Regulations for the prevention of fraudulent and unfair trade practices in transactions relating to securities and titled as Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. It also framed the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation, 1992. The Parliament amended the SEBI Act by SEBI (Amendment) Act, 2002 and the amendments were brought into force with effect from 29/10/2002 and as per the unamended Section 26, the Court competent to try the complaints for the offences under Section 24 read with Section 27 of the SEBI Act was the Court of Metropolitan 9 Magistrate or Judicial Magistrate of the First Class. However, as per the amended Section 26(2) no Court inferior to that of a Court of Session shall try any offence punishable under the said Act and no Court shall take cognizance of any offence punishable or any Rules or Regulations framed thereunder, save on a complaint made by the Board, thereby deleting the words "with the previous sanction of the Central Government" from sub-section (1) of Section 26. 6. Briefly stated the grounds in support of the prayer that the above stated complaints ought to be tried by the Court before whom they were presented at the first instance and that the Court of Session does not have power to try these cases are as under: (a) Article 20(1) of the Constitution of India lays down the doctrine of prospective effect and no person alleged to have committed an offence can be prosecuted and convicted of any offence except for violation of a law in force at the time of commission of the act charged as an offence and at the same time he/she cannot be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of commission of the alleged 10 offence. Under Section 24(1) of the old Act, an accused could be punished with imprisonment for a term upto one year or with fine or with both. 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 upto three years or with fine which shall not be less than Rs.2000/- which may extend upto 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 upto three years has been enhanced upto 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. 11 (b) The amendments to Section 24 are substantial in nature and the amendment in Section 26 of the SEBI Act is consequential, though may be termed as procedural and, therefore, the amended provisions will be applicable prospectively and not retrospectively. Consequently the trial of the complaints must be under the old Act i.e. as per the SEBI Act as applicable prior to 29/10/2002 as the cause of action arose prior to the said date of amendment. (c) If the period of sentence was upto one year, obviously the period of limitation to file the complaint as per the provisions of Cr.P.C. would be three years only and in some of these complaints, as referred to hereinabove, a separate application was moved by the accused praying to dismiss the complaints as they were filed beyond the limitation of three years. (d) Though the amendments in the SEBI Act were brought into force with effect from 29/10/2002, till 14th June 2007 the complainant did not move any application before the learned Metropolitan 12 Magistrate praying that the complaint be committed to the Court of Sessions in view of the amended Act and that the learned Metropolitan Magistrate did not have the jurisdiction to try the complaint. (e) Article 20(1) of the Constitution read with Section 6 of the General Clauses Act, 1897 must lead to the conclusion that all the proceedings and the rights, privileges, obligations accrued / arising within Sections 24 and 26 of the SEBI Act, 1992 have remained in-tact and cannot be disturbed by the SEBI Amendment Act, 2002 which is prospective in operation and it cannot be made retrospective. If Section 24 is given prospective effect and Section 26 is provided with retrospective effect, there will be a good amount of anomalies created which was beyond the contemplation of the Legislature such as (a) the Sessions Court will not be in a position to try any offender entitled to be punished for a maximum punishment of one year under the old Act summarily in view of the command of Section 260 of Cr.P.C. and (b) the accused would not be entitled to exercise his vested right as contemplated under Section 256 of Cr.P.C. 13 (f) In SEBI Appeal No.1 of 2002, SEBI Appeal No.8 of 2002 and SEBI Appeal No.9 of 2002 which were decided by this Court (Division Bench) it was the contention of the Board that the complaints filed for the offences that had taken place prior to 29/10/2002 shall be governed by the unamended SEBI Act of 1992 and not by the amended SEBI Act, 2002. (g) 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 14 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 right of speedy trial is a guarantee to the accused as enshrined under Article 21 of the Constitution of India and if the complaints are committed to the Sessions Court, the trial would be covered by Chapter XVIII and not under Chapter XX or Chapter XXI of Cr.P.C. Consequently the accused will be deprived of the guarantee of speedy trial which otherwise before the learned Metropolitan Magistrate, would be summary or warrant trial, as the case may be. It was also submitted that the benefit of Sections 256, 257 and 258 of Cr.P.C. as available in favour of the accused would be taken away if the complaints are tried before the Court of Sessions. (j) The trial by Sessions Court would result in 15 procedural discrimination which is impermissible in law and intolerable of the fundamental rights as envisaged under Articles 14 and 21 of the Constitution. Sections 200, 202 proviso, 204, 208 and 209 of Cr.P.C. are those steps provided under the Code for private complaint relating to offences exclusively triable by Court of Sessions and as regards the proceedings initiated on the police report, the relevant provisions would be Sections 154, 173, 207 and 209 of the said Code. The provisions of Section 200 and Section 202 cannot be read in isolation but the entire scheme will have to be taken into account to ascertain the legislative intent and to fathom the true meaning thereof. There cannot be a situation where an accused based on a police report is at advantageous position qua the procedural fairness or the receipt of the entire material collected during investigation and produced at the stage under Section 173 of Cr.P.C. in order to give him a reasonable idea about the accusations likely to be faced during trial before the Sessions Court. In support of these contentions the learned counsel for the accused referred to the added provision of Section 11C to the SEBI Act with effect from 29/10/2002 regarding investigation and it was 16 contended that the scheme of Section 11C is on the lines of the provisions of Sections 164, 165, 175 of Cr.P.C. and such powers of investigation were not provided under the SEBI Act of 1992. (k) The accused had, on the day the complaint was filed by the authorised officer, a vested right of forum and that cannot be taken away by the amended provision of Section 26(2) of the SEBI Act, by holding that the said amendment is retrospective in nature. The 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 Corporation of A.P. Vs. Chi. Prabhakar & ors. [2004 (5) SCC 551] [2004 (5) SCC 551] [2004 (5) SCC 551] (2) Rosy & anr. Vs. State of Kerala & anr. [2000 [2000 [2000 (2) (2) (2) SCC 230] SCC 230] SCC 230] (3) Paranjothi Udiyar & ors. Vs. State & 17 ors. [1976 Cri.L.J. 598] [1976 Cri.L.J. 598] [1976 Cri.L.J. 598] (4) Kamal Krishna De Vs. State & anr. [1977 [1977 [1977 Cri.L.J. Cri.L.J. Cri.L.J. 1492] 1492] 1492] (5) Devarapalli Lakshminarayana Reddy and ors. Vs. V. Narayana Reddy & ors. [1976 (3) SCC [1976 (3) SCC [1976 (3) SCC 252] 252] 252] (6) R.S. Nayak Vs. A.R. Antulay [AIR 1984 [AIR 1984 [AIR 1984 SC SC SC 684] 684] 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 18 learned Metropolitan Magistrate but to commit the pending complaint to the Sessions Court under Section 209 of Cr.P.C. The words of the Act are unambiguous and they cover all trials of offences irrespective of whether they were filed before the amendment or after and whether they are punishable with imprisonment upto one year or ten years. He further submitted that if the Legislature wanted to have the cases filed before the amendment or in respect of offences committed prior to the said amendment should be tried by the Metropolitan Magistrate, the same could have been mentioned in the section itself and, therefore, it is not permissible for the Courts to add any words in the language of the statute and the statute must receive the interpretations based on the plain words used by the Legislature. While admitting that the sentence to be awarded in the abovementioned complaints shall be as per unamended Section 24 i.e. a sentence upto one year or upto three years or fine or both, there is no reason which stops the Sessions Court to proceed with the trial of the committed complaints as per the procedure applicable to the summons cases under Chapter XX or the warrant cases under Chapter XIX, notwithstanding the fact that the trial before the Sessions Court is dealt with under 19 Chapter XVIII of the Cr.P.C. Mr.Ponda referred to Schedule I to Cr.P.C. and pointed out that some warrant cases for the offences under IPC are triable by the Sessions Court and there is no jurisdictional bar for trial of the complaints by the Sessions Court as summons cases or warrant cases. As per Mr.Ponda the accused have a vested right for trial but they do not have any such right for selecting a forum. The right of fair and speedy trial is envisaged under Article 21 of the Constitution but at the same time the accused cannot choose a forum or insist that he / she must be tried by a specific Court. Referring to the amendment to Section 26 of the SEBI Act, it was contended by Mr.Ponda that the same is procedural in nature and, therefore, it must have a retrospective effect in asmuchas all the pending cases as on 29/10/2002 or filed thereafter in respect of the offences that have taken place prior to the said date are required to be committed to the Sessions Court which must try the said complaints and the Court of Metropolitan Magistrate or the Court of Judicial Magistrate, First Class will have 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 and Management Services Ltd. 20 Vs. Securities and Exchange Board of India [Manu/DE/9209/2006] [Manu/DE/9209/2006] [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 guarantied under Articles 14 and 21 of the Constitution and the observations in the case of A.R. Antulay Vs. R.S. Nayak [1988 (2) SCC 602] [1988 (2) SCC 602] [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 are an obiter and they do not lay down any specific principles regarding the retention of forum. The learned counsel further urged that a right to appeal is a vested right but such is not the case when it comes to the remedy of revision in criminal jurisprudence and, therefore, the plea that the accused are 21 deprived of the remedy of revision under Section 397 of Cr.P.C. before this Court on committal of the complaints to the Sessions Court cannot be accepted and on that ground there is no reason to hold that the complaints are required to be tried by the Court before whom they were presented. As per Mr.Ponda, the law laid down in the case of Rosy Vs. State of Kerala (Supra) and Transmission Corporation of A.P. and ors. vs. Chi. Prabhkar and ors. (Supra) does not support the case of the accused that the complaints are required to be tried by the learned Metropolitan Magistrate only and that they cannot be committed to the Sessions court under Section 209