Special Courts under Companies Act-2013

Need of Special Courts:

Slowing down of trials of offences and delaying judgments affects the interest
of the related parties of companies. Scams happening over the last few
decades in the corporate world have increased the need of setting up of
Special Courts. Companies Act, 2013has provided spa e for “pe ial Court
inserting a new section in the Act.

Section 435 deals with the provision of Establishment of Special court. It states that the Central Government may, for the
purpose of providing speedy trial of offences under this Act, notify for the establishment or directly designate to set up as
many Special Courts as may be necessary.

Constitution of Special Court:

A Special Court Shall Consist of Single Judge who shall be appointed by central government with the concurrence of the
chief justice of High Court within whose jurisdiction the judge to be appointed is working.

A person being appointed as a Special Court Judge may be holding office of Session judge or an Additional Session Judge
immediately before such appointment.

Offences trialed by Special Court:

Section 436of the companies Act 2013 states,

1. Notwithstanding anything contained in the code of criminal procedure 1973(COCP),

a. All offences under this Act shall be trailble only by Special Court established in the area in which the
registered office of the company in relation to which the offence is committed, is situated.

b. Where a person accused of or suspected of the commission of offence under this Act, it will be
forwarded to the magistrate under section 167(2), (2a) of the COCP 1973. Such Magistrate may
authorize the detention of such person in custody as he thinks fit for the period not exceeding 15
days in whole, where such magistrate is a judicial magistrate.

c. When trying an offence under this Act, the Special Court may also try offence other than an offence under this Act with
which the accused may under the COCP 1973 be charged at the same trial.

www.bcshettyco.com
-----------------------------------------------Special Court/New Companies Act 2013------------------------------------
2. The Special Court would have the liberty to try summary proceedings for the offences punishable with imprisonment for a
term not exceeding 3 years, although it may order for more based on regular trials.

Scope for Appeal and Revision:

Section 437 provides,

If Special Court is within the local limits of the Jurisdiction of High Court, then whenever
the Court of Session is trying cases, in such case High Court has the power of Appeal and
Revision. The Special Court shall be deemed to be Court of Session and provision of COCP
1973 shall apply to the special court (Section 438 Application of codes).

Offences to be non-cognizable: Section 439

This section provides that every offence except those offences referred to in Sub – section (6) of section 212 shall be
deemed to be non-cognizable within the meaning of the said code.

Court shall take the offence as cognizable only on receipt of complaint made by

 Registrar
 Shareholder of the company, or
 Person authorized by central government.

Expert Reco e datio or Mediatio a d Co ciliatio : sectio 442

Ce tral Go er e t is authorized to ai tai a pa el of e perts to e alled as Mediation
a d Co iliatio for ediatio et ee parties during pendency of any proceedings before
central government or TRIBUNAL or APPLETE TRIBUNAL.

Companies Act 2013 vide section 443 provides that, company prosecutors are appointed by
central government and central government may appoint any number of company prosecutors, who
shall have the same privileges as that of public prosecutors within the special court.

Offences Cognizable:

 Providing misleading or false information on Incorporation.

 Misstatement in Prospectus
 Fraudulently inducing a person to invest money
 Personating for acquisition of securities
 Destruction of documents

www.bcshettyco.com
-----------------------------------------------Special Court/New Companies Act 2013------------------------------------
Conclusion:
The new provision made in Companies Act 2013 with regard to Special court is a boon and all concerned parties
can hope for speedy settlement of cases. Since it is made exclusively for Companies, and for the specific
offences, it could be more effective and efficient than general Session Courts. It helps in better enforcement of
Corporate Governance.

The secretarial consulting team at B C Shetty &Co can help you in effectively following the guidelines of the said
Act and attain 100% compliance of the law as well as enhance your credibility.

We are happy to help you:

Contact:

Ankith Shetty +91 9980731897

ankit@bcshettyco.com

Disclaimer: information contained herein is for informational purposes only and should not be considered for
any particular instance or individual or entity. We have obtained information from publicly available sources,
there can be no guarantee that such information is accurate as of the date it is received or it will continue to
be accurate in future. No one should act on such information without obtaining professional advice after
thorough examination of particular situation.

www.bcshettyco.com
-----------------------------------------------Special Court/New Companies Act 2013------------------------------------