SPECIAL COURT TRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT 1992

THE SPECIAL COURTTRIAL OF OFFENCES RELATING TO TRANSACTIONS IN SECURITIES) ACT, 1992

ACT No. 27 OF 1992

18thAugust, 1992

An Act to provide the establishment of a Special Court for thetrial of Offences relating to transactions in securities and for mattersconnected therewith or incidental thereto.

BE it enacted by Parliament inthe Forty–third Year of the Republicof India as follows: –

1.Short title and commencement: (1) This Act may be called theSpecial Court(Trial of Offences Relating to Transactions in Securities) Act, 1992.

(2) It shall be deemed to havecome into force on the 6th day of June, 1992.

2.Definitions: In this Act, unless thecontext otherwise requires, –

(a) "Code" means theCode of Criminal Procedure, 1973(2 of 1974):

(b) "Custodian" meansthe custodian appointed under sub–section (1) of section 3;

(c) "securities"includes –

(i) shares, Scripps, stocks,bonds, debentures, debenture stock, units of the Unit Trust of India or anyother mutual fund or other marketable securities of a like nature in or of anyincorporated company of other body corporate;

(ii) Government securities; and

(iii) rights or interests insecurities;

(d) "Special Court" means the Specialcourt established under sub–section (1) of section 5.

3.Appointment and functions of Custodian:(1) TheCentral Government may appoint one or more Custodians as it may deem fit forthe purposes of this Act.

2) The Custodian may, on beingsatisfied on information received that any person has been involved in any offencerelating to transactions in securities after the 1st day of April, 1991 and onand before the 6th June, 1992, notify the name of such person in the OfficialGazette.

(3) Notwithstanding anythingcontained in the Code and any other law for the time being in force, on andfrom the date of notification under sub–section (2), any property,movable or immovable, or both, belonging to any person notified under that sub–sectionshall stand attached simultaneously with the issue of the notification.

(4) The property attached undersub–section (3) shall be dealt with by the Custodian in such manner asthe Specula court may direct.

(5) The Custodian may takeassistance of any person while exercising his powers or for discharging hisduties under this section and section 4.

4.Contracts entered intofraudulently may be cancelled: (1) If the Custodian is satisfied, after such inquiry as he maythink fit, that any contract or agreement entered into at any time after the1st day of April 1991 and on and before the 6th June, 1992 in relation to anyproperty of the person notified under sub–section (2) of section 3 hasbeen entered in to fraudulently or to defeat the provisions of this Act, he maycancel such contract or agreement and on such cancellation such property shallstand attached under this Act:

Provided that no contract oragreement shall be cancelled except after giving to the parties to the contractor agreement a reasonable opportunity of being heard.

(2) Any person aggrieved by anotification used by sub–section (2) of section 3 or any cancellationmade under sub–section (1) of section 4 or any other order made by theCustodian in exercise of the powers conferred on him under section3 or 4 mayfile a petition objecting tot he same within thirty days of the assent to theSpecial Court (Trial of Offences Relating to Transactions in Securities) Bill,1992 by the President before the Special Court where such notification,cancellation or order has been issued before the date of assent to the SpecialCourt (Trial of Offences Relating to Transactions in securities) Bill, 1992 bythe President and where such notification, cancellation or order has beenissued on or after that date, within thirty days of the issuance of suchnotification, cancellation or order, as the case may be; and the Special courtafter hearing the parties, may make such order as it deems fit.

5.Establishment of Special Court: (1) The central Governmentshall, by notification in the Official Gazette, establish a Court to be calledthe Special court.

(2) The Special court shallconsist of ¹ [one or more sitting Judges]of the High Court nominated by the Chief Justice of the High Court within thelocal limits of whose jurisdiction the Special court is situated, with theconcurrence of the Chief Justice of India.

² [(3) When the offence of the Judge of the Special Court if vacantby reason of absence or leave, the duties of the office shall be performed bysuch Judge of the High Court within the local limits of whose jurisdiction theSpecial Court is situated as the Chief Justice of that High Court may, with theoccurrence of the Chief Justice of India, nominate for the purpose and theJudge so appointed shall have all the jurisdiction and powers of ³ [a Judge of the Special Court] including the powers to pass finalorders.]

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1. Substituted for the words"a sitting Judge" by the SpecialCourt (Trial of Offences Relating to Transactionsin Securities) Amendment Act, 1997 (6 of 1997) Section 2 (a).

2. Inserted the Special Court(Trial of Offences Relating to Transactions in Securities) Amendment Act, 1994(24 of 1994) Section 2.

3. Substituted for the words"the Judge of the SpecialCourt" by the Special Court (Trial of Offences Relatingto Transactions in Securities) Amendment Act, 1997 (6 of 1997) Section 2 (b).

¹ [5A.Distribution of cases amongst Judges of Special Court: Where the Special Court consists of two ormore Judges, the Chief Justice of the High Court within the local limits ofwhose jurisdiction the Special Court is situated may, from time to time, bygeneral or special order, make provisions as to the distribution of casesamongst the Judges and specify the matters which may be dealt with by each ofsuch Judge]

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1. Inserted by the Special Court(Trial of Offences Relating to Transactions in Securities) Amendment Act, 1997(6 of 1997) Section 3.

6.Cognizance of cases byspecial Court: The Special Court shalltake cognizance of or try such cases as are instituted before it or transferredto it as hereinafter provided.

7.Jurisdiction of Special Court: Notwithstanding anythingcontained in any other law, any prosecution in respect of any offence referredto in sub–section (2) of section 3 shall be instituted only in the Special Court andany prosecution in respect of such offence pending in any court shall standtransferred to the Special Court.

8.Jurisdiction of Special Court as tojoint trails: The Special Court shallhave jurisdiction to try any person concerned in the offence referred to in sub–section(2) of section 3 either as a principal conspirator or abettor and all otherOffences and accused Persians as can be jointly tried therewith at one trial inaccordance with the Code.

9.Procedure and Powers ofSpecial Courts: (1) TheSpecial Court shall, in the trial of such cases, follow the procedureprescribed by the Code for the trial of warrant cases before a magistrate.

(2) Save as expressly providedin this Act, the provisions of the code shall, in so far as they are notinconsistent with the provisions of this Act, apply to the proceedings beforethe Special Court and for the purposes of the said provisions of the Code, theSpecial Court shall be deemed to be a court of Session and shall have all thepowers of a Court of Session, and the person conducting a prosecution beforethe Special Court shall be deemed to be a Public Prosecutor.

(3) The Special Court may pass upon any personconvicted by it any sentence authorised by law for the punishment of theoffence of which such person is convicted.

(4) While dealing with anyother matter brought before it, the SpecialCourt may adopt such procedure as it may deem fitconsistent with the principles of natural justice.

¹ [9A.Jurisdiction, powers,authority and procedure of Special Court in civil matters: (1) On and from the commencement of theSpecial Court (Trial of Offences Relating to Transactions in Securities)Amendment Act, 1994, the Special Court shall exercise all such jurisdiction,powers and authority as were exercisable, immediately before such commencement,by any civil court in relation to any matter or claim–

(a) relating to any propertystanding attached under sub–section (3) of section 3;

 

(b) arising out of transactionsin securities entered into after the 1st day of April, 1991, and on or beforethe 6th day of June, 1992, in which a person notified under sub–section(2) of section 3 is involved as a party, broker, intermediary or in any othermanner.

 

(2) Every suit, claim or otherlegal proceeding (other than an appeal) pending before any court immediatelybefore the commencement of the Special Court (Trial of Offences Relating toTransactions in Securities) Amendment Act, 1994, being a suit, claim orproceeding, the cause of action whereon it is based is such that it would havebeen, if it had arisen after such commencement, within the jurisdiction of theSpecial Court under sub–section (1), shall stand transferred on suchcommencement to the Special Court and the Special Court may, on receipt of therecords of such suit, claim or other legal proceeding, proceed to deal with it,so far as may be, in the same manner as a suit, claim or legal proceeding fromthe stage which was reached before such transfer or from any earlier stage ordefendant novo as the Special Court may deem fit.

 

(3) On and from thecommencement of the Special Court(Trial of Offences Relating to Transactions in Securities) Amendment Act, 1994,no court other than the SpecialCourt shall have, or be entitled to exercise, anyjurisdiction, power or authority in relating to any matter or claim referred toin sub–section (1).

 

(4) While dealing with casesrelating to any matter or claim under this section, the Special Court shall notbe bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of1908), but shall be guided by the principles of natural justice, and subject tothe other provisions of this Act and of any rules, the Special Court shall havepower to regulate its own procedure.

 

(5) Without prejudice to theother powers conferred under this Act, the Special Court shall have, for thepurposes of discharging its functions under this section, the same powers asare vested in a civil court under the Code of Civil Procedure, 1908 (5 of1908.), while trying a suit, in respect of the following matters, namely:–

 

(a) summoning and enforcing theattendance of any person and examining him on oath;

 

(b) requiring the discovery andproduction of documents;

 

(c) receiving evidence onaffidavits;

 

(d) subject to the provisionsof sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872.), requisitioning any publicrecord or document or copy of such record or document from any office;

 

(e) issuing commissions for theexamination of witnesses or documents;

 

(f) reviewing its decisions;

 

(g) dismissing a case fordefault or deciding it ex parte;

 

(h) setting aside any order ofdismissal of any case for default or any order passed by it ex parte; and

 

(i) any other matter which maybe prescribed by the Central Government under sub–section (i) of section14.

 

9B.Powers of the Special Court inarbitration matters: (1) The Special Court shall have the jurisdiction andpowers of a Court conferred under the Arbitration Act, 1940 (10 of 1940.) to decide any question formingthe subject matter of a reference relating to any matter or claim mentioned insub–section (1) of section 9A.

 

(2) Every suit or otherproceeding (other than an appeal) in relating to any matter or claim referredto in sub–section (1) of section 9A pending before any Court and governedby the Arbitration Act, 1940 (10 of 1940.), immediately before the date ofcommencement of the Special Court (Trial of Offences Relating to Transactionsin securities) Amendment Act, 1994 shall transferred on that date to theSpecial Court.

 

Explanation: For thepurposes of this section, the expressions "Court" and"reference" shall have respectively the same meanings as definedunder clauses (c) and (e) of section 2 of the Arbitration Act, 1940 (10 of 1940.)]

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1. Sections 9A and 9B insertedby the Special Court (Trial of Offences Relating to Transactions in Securities)Amendment Act, 1994 (24 of 1994) Section 3.

10.Appeals: (1) Notwithstanding anythingin the Code ¹ [or the Code of CivilProcedure, 1907 (5 of 1908) or the ArbitrationAct, 1940 (19 of 1940)], an appeal shall lie from any judgement ² [, decree], sentence or order, not being interlocutory order, ofthe Special Court to the Supreme Court both on facts and on law.

(2) Except as aforesaid, noappeal or revision shall lie to any court form any judgement ² [, decree], sentence or order of the Special court.

(3) Every appeal under thissection shall be preferred within a period of thirty days from the date of anyjudgement, sentence or order of the Special Court:

Provided that the Supreme Courtmay entertain an appeal after the expiry of the said period of thirty days ifit is satisfied that the appellant had sufficient cause for not preferring theappeal within the period of thirty days.

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1. Inserted by the SpecialCourt (Trial of Offences Relating to Transactions in Securities) Amendment Act,1994 (24 of 1994) Section 4 (a).

2. Inserted by the SpecialCourt (Trial of Offences Relating to Transactions in Securities) Amendment Act,1994 (24 of 1994) Section 4 (b).

11.Discharge of liabilities: (1) Notwithstanding anythingcontained in the Code and any other law for the time being in force the Specialcourt may make such order as it may deem fit directing the custodian for thedisposal of the property under attachment.

(2) The following liabilitiesshall be paid or discharged in full, as far as may be, in the order as under: ––

(a) all revenues, taxes, ceasesand rates due from the persons notified by the Custodian under sub–section(2) of section 3 to the Central Government or any State Government or any localauthority;

(b) all amounts due from theperson so notified by the Custodian to any bank or financial institution ormutual fund;

(c) any other liability as maybe specified by the Special Court from time to time.

¹ [11A.Power to punish for contempt: The Special Court shallhave, and exercise, the same jurisdiction, powers and authority in respect ofcontempt of itself as a High Court has and may exercise and, for this purpose,the provisions of the Contempt of Courts Act, 1971 (70 of 1971), shall have effect subject tothe modifications that–

(a) the references therein to aHigh Court shall be construed as including a reference to such Special Court;

(b) the references to theAdvocate–General in section 15 of the said Act, shall be construed inrelation to the Special Court, as a reference to the Attorney General or theSolicitor–General or the Additional Solicitor–General]

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1. Inserted by the SpecialCourt (Trial of Offences Relating to Transactions in Securities) Amendment Act,1994 (24 of 1994) Section 5.

12.Protection of action takenin good faith: (1) Nosuit, procession or other legal proceeding shall lie against the CentralGovernment or the Custodian for anything which is in good faith done orintended to be done under this Act.

(2) No suit or other legalproceeding shall lie against the Central Government or any of its officers orother employees for any damage caused or likely to be caused by anything which isin good faith done or intended to be done under this Act.

13.Act to have overridingeffect: The provisions of this Actshall have effect notwithstanding anything inconsistent therewith contained inany other law for the time being in force or in any instrument having effect byvirtue of any law, other than this Act, or in any decree or order of any court,tribunal or other authority.

14.Power to make rules: (i) The Central Governmentmay, by notification in the Official Gazette, make rules for carrying out theprovisions of this Act.

(2) Every rule made by theCentral Government under this Act shall be laid, as soon as may be after it ismade, before each House of Parliament, while it is in session, for a totalperiod of thirty days which may be comprised in one session or in two or moresuccessive sessions, and if, before the expire of the session immediatelyfollowing the session or the successive sessions aforesaid, both House agree inmaking any modification in the rule or both Houses agree that the rule shouldnot be made, the rule shall thereafter have effect only in such modified formor be of no effect, as the case may be; so, however, that any such modificationor annulment shall be without prejudice to the validity of anything previouslydone under that rule.

15.Repeal and savings: (1) The Special court (Trialof Offences Relating to Transactions in Securities) Ordinance, 1992 (Ord.10 of1992) is hereby repealed.

(2) Notwithstanding suchrepeal, anything done or any action taken under the said Ordinance, shall bedeemed to have been done or taken under the corresponding provisions of thisAct.

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