1997 (5) TMI 365 - HC - Companies Law

Summary

Issues Involved:
1. Validity of Section 9A of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992.
2. Jurisdiction of the Special Court under Section 9A.
3. Constitutionality of the Special Court's jurisdiction over civil matters related to securities transactions.

Detailed Analysis:

1. Validity of Section 9A of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992:

The petitioner questioned the validity of Section 9A of the Act, arguing that it was beyond the scope and purpose for which the Special Court was constituted. The petitioner contended that Section 9A defeated the very object of the Special Court, which was to ensure speedy recovery of funds and punishment of offenders involved in securities transactions. The Court examined the Statement of Objects and Reasons for the Act, which highlighted the need to address large-scale irregularities and malpractices in securities transactions. The Court found that Section 9A was introduced to grant the Special Court jurisdiction over civil matters related to attached properties and transactions in securities within a specified period. The Court upheld the validity of Section 9A, stating that it was within the legislative competence of Parliament.

2. Jurisdiction of the Special Court under Section 9A:

The petitioner argued that the claim by Fairgrowth Financial Services Ltd. did not fall within the jurisdiction of the Special Court. The Court noted that Section 9A vested the Special Court with the jurisdiction, powers, and authority of a Civil Court concerning matters or claims related to attached properties and securities transactions within the specified period. The Court emphasized that a Court of limited jurisdiction could decide upon its own jurisdiction, and if it decided wrongly, a Superior Court could review the jurisdictional facts. The Court suggested that the petitioner could raise the jurisdictional objection before the Special Court, which would then decide whether to take it up as a preliminary issue or along with other issues in the proceeding.

3. Constitutionality of the Special Court's jurisdiction over civil matters related to securities transactions:

The petitioner contended that the transaction between the petitioner and the first respondent was a money-lending transaction, a subject in the State List of the Seventh Schedule of the Constitution of India. The petitioner argued that Parliament did not have the power to legislate on money-lending, which was not included in the Union or Concurrent Lists. The Court clarified that Section 9A did not pertain to money-lending but rather to the jurisdiction, powers, authority, and procedure of the Special Court in civil matters. The Court referred to items in the Concurrent List, such as administration of justice, civil procedure, and jurisdiction of Courts, which were within the legislative competence of both Parliament and State Legislatures. The Court concluded that Section 9A was a valid exercise of legislative power by Parliament, and the Special Court's jurisdiction over civil matters related to securities transactions was constitutional.

Conclusion:

The writ petition was dismissed, affirming the validity and constitutionality of Section 9A of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992. The Court upheld the jurisdiction of the Special Court over civil matters related to attached properties and securities transactions within the specified period. The related writ appeal was also dismissed as infructuous.