Important Point
So far as criminal proceedings are concerned even if the accused is not notified still the Special Court, functioning under the provisions of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, will have jurisdiction u/s 7 to deal with the offences alleged to have been committed by such an accused if the two basic requirements of Section 3(2) are satisfied.

Headnote:Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992-Sections 3, 7- Jurisdiction - Complainant, uncle filed this criminal complaint alleging that accused, his nephew had committed offence of criminal breach of trust and dishonest misappropriation of securities-Complainant entrusted the accused with the task of selling off his shares-Accused instead of returning the sale consideration arising out of the transaction to the complainant had allegedly misappropriated the amount-Neither the complainant nor the accused is a notified person-Whether an accused who is not a notified person can be proceeded against before the Special Court?-(Yes) - Whether offence alleged is relating to the transaction in securities?-(Yes)-Whether Special Court functioning under the Act has jurisdiction to entertain and try the criminal case filed by complainant?-(Yes).
       Held, on a conjoint reading of sub-section (2) of Section 3 and Section 7 of the Act the moot question arises whether an accused who is not a notified person can be proceeded against before the Special Court if it is alleged that - (i) he is involved in any transaction in securities; and (ii) and such involvement of the accused arises during the relevant period, i.e., from 01st April 1991 to 06th June 1992. So far as these two requirements for application of Section 7 read with sub-section (2) of Section 3 of the Act are concerned there is no dispute between the parties as in the complaint it is clearly alleged that the accused was entrusted with the work of selling off the complainant’s shares in the company concerned and that the accused had allegedly carried out the said transaction during the relevant period and had realised the proceeds by the sale of these shares between December 1991 and January 1992. It is also not in dispute that shares would fall within the definition of ‘securities’ as mentioned in Section 2 clause (c). (Para 8)
       Further held, so far as criminal proceedings are concerned even if the accused is not notified still the Special Court will have jurisdiction under Section 7 to deal with the offences alleged to have been committed by such an accused if the earlier mentioned two basic requirements of Section 3 sub-section (2) are satisfied. As the aforesaid two basic requirements of Section 3 sub-section (2) read with Section 7 are allegedly satisfied in the present case and on which there cannot be any dispute it must be held that the Special Court at Bombay had jurisdiction to entertain and try the present criminal case against the appellant. (Para 10)

Judgment

S.B. Majmudar, J.-Leave granted.

2. We have heard learned counsel for the parties. The short question involved in this appeal is as to whether the Special Court, functioning under the provisions of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (hereinafter referred to as ‘the Act’), has jurisdiction to entertain and try the criminal case filed by respondent-complainant against the appellant-accused. The Special Court consisting of learned Single Judge of the High Court of Bombay has held that the proceedings are within its jurisdiction. The appellant-accused has challenged the said decision in the present appeal. A few introductory facts leading to these proceedings are required to be noted at the outset.

Background Facts

3. The respondent-complainant is the uncle and the appellant-accused is his nephew. It is the case of the respondent-complainant who is aged about 85 years that he is an architect by profession. That accused is the son of his brother, that is, his nephew. He filed a criminal complaint under Section 409 of the Indian Penal Code (‘IPC’ for short). We will refer to the respondent as the complainant and the appellant as the accused in the latter part of this judgment. The complainant’s case is that he and his daughter Ms. Feroza Parvez Driver held shares numbering 1200 of Great Eastern Shipping Company Limited. The complainant has no son and the accused being his nephew and close relative, he handed over the shares with transfer forms to the accused for arranging the sale thereof through reliable broker and to pay the sale proceeds to the complainant. This was done somewhere in the month of December 1991. It is the case of the complainant that he signed and executed various transfer forms, so also his said daughter Ms. Feroza to facilitate the transfer thereof in the name of prospective buyer.

4. The complainant further proceeds to state that he expected the accused to pay him the sale proceeds of the said shares in due course. However, for quite a long time there was no response from the accused. The complainant on various occasions made enquiries with the accused about the sale of the said shares. However, the accused, according to the complainant, put off and shirked the matter saying that the time was not opportune for the sale of the shares. Thereafter, the accused began to avoid the complainant. The complainant, therefore, felt that something was a miss and enquired with M/s. Tata Consultancy Services who were Share Registrars of M/s. Great Eastern Shipping Co. Ltd. about the shares and on 02nd January 1993 the complainant was replied that the shares in question were already sold out. The complainant also came to know the name of the sub-broker through whom the said shares were sold, i.e., Mr. Paresh B. Patel who was originally named as accused No. 2 in the complaint. The complainant then made enquiry with the said sub-broker and from him he came to know that the accused had already arranged the sale of the said shares. The complainant thereafter enquired with the accused and confronted him with the information which the complainant had gathered. The accused also executed certain writings admitting the receipt of the shares from the complainant, sale thereof, etc. He also promised to pay the sale proceeds to the complainant. However, he did not do so.

5. It is in these circumstances that the complainant has filed this complaint with a case that the accused had committed offence of criminal breach of trust and dishonest misappropriation of the securities. The complaint was filed by the complainant before the Special Court both against the appellant as well as accused No. 2 Paresh B. Patel. However no charge is framed by the Special Court against accused No. 2. Hence he is out of picture. The complaint, therefore, survives only against the present appellant, accused No. 1 who is now the sole accused. It may be noted that the complaint was filed by the respon

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1998 Supreme(SC) 69

Cases Referred (2)