 "IBC insolvency bankruptcy process fraud companies case")
The Supreme Court on Friday said special courts with sessions judges can try offences under the Insolvency and Bankruptcy Code (IBC), thus overturning the Bombay High Court order which said that only special courts consisting of metropolitan or judicial magistrates are empowered to hear complaints under the IBC.
Justices BR Gavai and Sandeep Mehta gave the order on an appeal against the Bombay High Court order of 14 February 2022. "We have held that the Sessions judge has the jurisdiction. Since the matter has not been decided on merits, we remand the matter to the (Bombay) High Court for a fresh decision," they said.
The High Court had observed that the objective of the legislature was not to burden a special court comprising a sessions judge with trials under the IBC.
This was on a petition filed by two individuals who attacked a sessions court order issuing summons to them following a complaint filed by the Insolvency and Bankruptcy Board of India (IBBI), a statutory body under the IBC. The petition said the sessions judge did not have the jurisdiction to entertain the complaint filed by the IBBI.
The plea said that as per Section 236 of the IBC (trial of offences by special court), special courts under the Companies Act were empowered to try offences under the IBC as a court of sessions.
It also said that the objective behind Section 236 was a speedy trial of offences.
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They said that by amending Section 435 of the Companies Act, after Section 236 of the IBC, the legislature intended that for a speedy trial of offences under the IBC, the courts with metropolitan magistrates or judicial magistrates are courts deemed to be special courts. Only these courts could try cases under the IBC, the petitioners had said.
The High Court said that courts consisting of sessions judges were to try offences under the Companies Act, whereas courts of magistrates were to try offences under Acts other than the Companies Act (including IBC).
The High Court said the proceedings initiated by the IBBI in the sessions court were not sustainable.
