Criminal

Economic Offences and their Investigation

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It is to be remembered that economic offences bring about total imbalance in the economy of the country which has the effect of making the lives or majority of people economically weaker and miserable. Such economic offences are even treated worse than murder being committed in this country.

Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fiber of the country’s economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat Vs. Mohanlal Jitamalji Porwal and Another, Supreme Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under:

5… The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest….

Lawline

A table listing various economic offences, the relevant legislations and concerned enforcement authorities is given below.

Economic offences not only inflict pecuniary losses on individuals but also damage the national economy and have security implications as well. The offences of smuggling of narcotic substances, counterfeiting of currency and valuable securities, financial scams, frauds, money laundering and hawala transactions etc. evoke serious concern about their impact on the national security. Local police deals with a considerable number of economic offences falling under the broad category of `cheating’, `counterfeiting’ and `criminal breach of trust’.

Major Statutes

(i) The Indian Stamp Act, 1899 (2 of 1899);
(ii) the Central Excise Act, 1944 (1 of 1944);
(iii) The Industries (Development and Regulation) Act, 1951 (65 of 1951)
(iv) The Prevention of Food Adulteration Act, 1954 (37 of 1954)
(v) The Essential Commodities Act, 1955 (10 of 1955);
(vi) the Companies Act, 2013
(vii) The Securities Contracts (Regulation) Act, 1956 (42 of 1956)
(viii) the Wealth-tax Act, 1957 (27 of 1957);
(ix) the Income-tax Act, 1961 (43 of 1961);
(x) the Customs Act, 1962 (52 of 1962);
(xi) The Competition Act, 2002 (12 of 2003);
(xii) The Foreign Exchange Management Act, 1999 (42 of 1999)
(xiii) The Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986)
(xiv) The Securities and Exchange Board of India Act, 1992 (15 of 1992)
(xv) The Foreign Trade (Development and Regulation) Act, 1922 (22 of 1922)
(xvi) The Prevention of Money-Laundering Act, 2002 (15 of 2003)
(b) Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (52 of 1974)

BULLET 2No person shall be eligible for appointment as a managing or whole-time director or a
manager of a company (2013 or previous Acts) unless he had  been sentenced to imprisonment for any period, or to a fine exceeding one thousand rupees, for the conviction of an offence under any of the following Acts

Lawline

Special Court in Hyderabad

Government of India, Ministry of Home Affairs, in letter No. 2/1/79-Judicial, dated 27th April, 1979 requested the State Government to ear-mark one Court or set up an additional Court in the State of Andhra Pradesh at Hyderabad for dealing exclusively with economic offences covered by certain specified Central Acts and agreed to reimburse to the State Government the recurring expenditure incurred by them for setting up and functioning of such Court. The State Government consulted the High Court and vide letter of the Registrar High Court of Andhra Pradesh in ROC. 2220/E1/79-1, dated 25-7-1979, the High Court recommended for the establishment of a Special Judge’s Court at Hyderabad presided over by an Officer in the cadre of District and Sessions Judge for the trial of economic offences under certain specified Central Acts arising anywhere in the State of Andhra Pradesh. The Government of the State accorded sanction of the setting up of a Special Judge’s Court at Hyderabad vide G.O. Ms. No. 202, Home (Courts. A) Department, dated 27th March, 1980 for the period of one year which sanction is continued year to year. In the proceeding dated 7-6-1980, the High Court specified that the Court of Special Judge sanctioned in the above G.O., shall be treated as a part of the Unit under the control of the Metropolitan Sessions Judge and the Court accordingly has came into existence. Ever since its inception, the Court is being presided over by an officer belonging to the cadre of the District and Sessions Judge.

Special Court of Judicial Magistrate of the First Class to try cases arising under the enactments mentioned in the Annexure hereto, to be known as the Court of the Special Judge for Economic Offences.

1) The Central Excises and Salt Act, 1944.

2) The Imports and Exports (Central) Act, 1947.

3) The Wealth-tax Act, 1957.

4) The Income Tax Act, 1961.

5) The Customs Act, 1962.

6) The Gold (Control) Act, 1963.

7) The Foreign Exchange Regulation Act, 1973.

8) Companies Profits (Surtax) Act, 1964.

9) The Gift-tax Act, 1958.

10) The Export (Quality Control and Inspection) Act.

11) The Companies Act.

12) Monopolies and Restrictive Trade Practices Act.”

Besides having power to try offences arising under the enactments shown in the annexure as above, the Special Court for economic offences is also empowered to try offences arising out of the following enactments :

1) The Essential Commodities Act, 1955 (S. 12AA The Prevention of Corruption Act, 1988 (Ss. 7 and 13)

3) The Narcotic Drugs and Psychotropic Substances Act, 1985 (S. 36-C).

The Acts enumerated in the annexure to the notification, however, do not have similar provisions. Reference to all the Acts is not necessary except for illustrative purposes. We may refer to S. 61 of the Foreign Exchange Regulation Act, 1973 which says,

“Notwithstanding anything contained in S. 29 of the Code of Criminal Procedure, 1973, it shall be lawful for any metropolitan magistrate and for any magistrate of the first class to pass a sentence of imprisonment for a term exceeding three years or of fine exceeding five thousand rupees on any person convicted of an offence punishable under S. 56.”

The Central Excises and Salt Act, 1944 in S. 29 says,

“Any offence punishable, under S. 24 or S. 27 may be deemed to have been committed within the limits of the jurisdiction of the Magistrate of any place where the offender is found, or to which, if arrested under S. 26 or S. 27, he may be brought.”

The Monopolies and Restrictive Trade Practices Act, 1969, however, contains in S. 56 as follows :-

“56. Jurisdiction of Courts to try offences :-

No Court inferior to that of a Court of Session shall try any offence under this Act.” (the expression “Court of Session” is inserted by Act 30 of 1984)”

Wealth-tax Act says, no Court in inferior to that of a Metropolitan Magistrate or a Magistrate of the first class shall try any offence under this Act (S. 35L).

Lawline

Jurisdiction of Special Court

A Constitution Bench of the Supreme Court in A.R. Antulay Vs. Ramdas Sriniwas Nayak and Another, , considered the provisions of the Criminal Law Amendment) Act 46 of 1952 and various provisions of the Code of Criminal Procedure, 1898 and the Prevention of Corruption Act, 1947 and held as follows :-

“13. Before we proceed further, it is now necessary to take notice of salient provisions of the Criminal Law Amendment Act, 1952. The Act was enacted as its long title shows to amend the Penal Code and the Criminal P.C. 1898 and to provide for a more speedy trial of certain offences. Section 1-A is the dictionary clause. Sections 2, 3, 4 and 5 have been repealed by various amendments. Then comes S. 6. It reads as under :

“6(1) The State Government may, by notification in the official Gazette, appoint as many special Judges as may be necessary for such area or areas as may be specified in the notification to try the following offences, namely :-

(a) an offence punishable under S. 161, S. 162, S. 163, S. 164, S. 165 or S. 165A of the Indian Penal Code of S. 5 of the Prevention of Corruption Act, 1947.

(b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a).

(2) A person shall not be qualified for appointment as special Judge under this Act unless he is, or has been, a Sessions Judge or an Additional Sessions Judge or an Assistant Sessions Judge under the Code of Criminal Procedure, 1898.”

Section 7 confers exclusive jurisdiction on the special Judge appointed under S. 6 to try the cases set out in S. 6(1)(a) and 6(1)(b). Sub-section (2) of S. 7 provides that “Every offences specified in sub-section (1) of S. 6 shall be tried by the Special Judge for the area within which it was committed, or where there are more special Judges than one for such area, by such one of them as may be specified in this behalf by the State Government.” Sub-settion (3) enlarges the jurisdiction of the special Judge not only to try offences set out in S. 6(1)(a) and (b) but also to try offences other than those mentioned therein with which the accused may, under the Criminal P.C. he charged at the same trial. Three things emerge from S. 7. The Special Judge has exclusive jurisdiction to try offences enumerated in S. 6(1)(a) and (b). Where there are more than one special Judge for the same area, the State Government is under an obligation to specify the local jurisdiction of each special Judge, it may be case-wise, it may be area-wise. Sub-section (3) enlarges the jurisdiction to try other offences which have been committed in the course of the same transaction and for which the accused could be charged at the same trial. Then comes S. 8. It reads as under :

8″(1). A special Judge may take cognizance of offences without the accused being committed to him for trial, and in trying the accused persons, shall follow the procedure prescribed by the Code of Criminal Procedure, 1898, for the trial of warrant cases by Magistrates.

(2) A Special Judge may, with a view to obtaining the evidence of any person supposed to have been directly or in directly concerned in, or privy to, an offence, tender a pardon to such person on condition of his making a full and true disclosure of the whole circumstances within his knowledge relating to the offence and to every other person concerned, whether as principal or abettor, in the commission thereof; and any pardon so tendered shall, for the purposes of Ss. 339 and 339A of the Code of Criminal Procedure, 1898, be deemed to have been tendered under S. 338 of that Code.

(3) Save as provided in sub-section (1) or sub-section (2), the provisions of the Code of Criminal Procedure, 1898, shall so far as they are not consistent with this Act, apply to the proceedings before a special Judge; and for the purposes of the said provisions, the Court of the special Judges shall be deemed to be a court to session trying cases without a jury or without the aid of assessors and the person conducting a prosecution before a special Judge shall be deemed to be a public prosecutor.

(3-A) In particular, and without prejudice to the generality of the provisions contained in sub-section (3), the provisions of the Code of Criminal Procedure, 1898 shall so far as may be, apply to the proceedings before a special Judge, and for the purposes of the said provisions, a special Judge shall be deemed to be a Magistrate.

(4) A special Judge may pass upon any person convicted by him any sentence authorised by law for the punishment of the offence of which such person is convicted. “It may be mentioned that S. 8 does not apply to the State Bengal. This has some relevance to the understanding of some of the decisions bearing on the subject arising from the State of West Bengal. Section 9 provides for the subordination of the special Judge to the High Court of the State in the Matter of appeal, revision and other incidental powers which the High Court exercises over subordinate Courts. Section 10 provided for transfer of certain cases, which were pending at the commencement of the 1952 Act.”

“21) The sheet anchor of the submission was the decision of this Court in H.N. Rishbud and Inder Singh Vs. The State of Delhi, . In that case the question posed Was whether the provision of S. 5-A of the 1947 Act requiring that the investigation into the offences specified therein shall not be conducted by any police officer of a rank lower than a Deputy Superintendent of Police without the specific order of a Magistrate, is directory or mandatory ?

The Court rendered the opinion that S. 5-A is mandatory and not directory and that an investigation conducted in violation thereof bears the stamp of illegality. Thus so far as investigation of a case is concerned, this Court has recorded a definite opinion that investigation by a police officer in contravention of the provision contained in S. 5-A bears the stamp of illegality. What is the effect of this illegality on the outcome of a concluded trial does not arise for our consideration but there are certain observations which were relied upon to urge that a prior investigation under S. 5-A being held to be mandatory and as a special Judge can take cognizance of an offence upon a police report submitted at the end of a valid and legal investigation in consonance with S. 5-A, by necessary implication, taking cognizance of an offence by a special Judge under S. 8(1) of 1952 Act upon a private complaint is excluded. We must frankly say that we find nothing in this judgment even remotely to bear out the submission. Section 5-A is a safeguard against investigation by Police officers lower in rank than designated officers. In this connection at p. 1159 (of SCR) : (at p. 202 of AIR), the Court has observed as under :

“The underlying policy in making these offences by public servants non-cognizable appears to be that public servants who have to discharge their functions often enough in difficult circumstances should not be exposed to the harassment of investigation against them on information levelled, possibly, by persons affected by their official acts, unless a Magistrate is satisfied that an investigation in called for, and on such satisfaction authorises the same. This is meant to ensure the diligent discharge of their official functions by public servants, without fear or favour. When, therefore, the Legislature thought fit to remove the protection from the public servants, in so far as it relates to the investigation of the offences of corruption comprised in the Act, by making them cognizable it may be presumed that it was considered necessary to provide a substituted safeguard from undue harassment by requiring that the investigation is to be conducted normally by a police officer of a designated higher rank.”

This observation will leave no room for doubt that the safeguard incorporated in S. 5-A is one against investigation by police officer of a rank lower than the designated rank and that the Magistrate can permit investigation by police officer of lower rank. It was however, urged that the three vital stages relevant to initiation of proceedings in respect of offences enumerated in S. 6(1)(a) and (b) have been clearly delineated in this judgment when at page 1162 (of SCR) (at pp. 203-4 of AIR) it is observed, ‘trial follows cognizance and cognizance is preceded by investigation.’ This is the basic scheme of the Code in respect of cognizable offences, but that top Where in respect of a cognizable offence, the informant approaches an officer in charge of a police station. When in the case of a cognizable offence, a Police Officer on receipt of information of an offence, proceeded under Chapter XII, he starts with investigation and then submits his report, called the police report, upon which cognizance is taken, and then follows the trial. And these three stages in that chronology are set out with regard to an investigation by an officer in charge of a police station or a police officer entitled to investigate any particular offence. This sentence cannot be read in isolation or torn out of the contest to lend support to the submission that in no case cognizance can be taken without prior investigation under S. 5-A. In fact the Court proceeded to make it abundantly clear that a defect or illegality in investigation, however serious, has no direct bearing on the competence or the procedure relating to cognizance or trial’. The Court examined the scheme of Ss. 190, 193 and 195 – 199 of the Criminal P.C. and observed : that ‘the language of S. 190 is in marked contrast with that of the other sections of the group under the same heading i.e., Ss. 193 and 195 – 199. These latter sections regulate the competence of the court and bar its jurisdiction in certain cases excepting in compliance therewith, S. 190 does not’. The Court concluded by observing that ‘where the cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the precedent investigation does not vitiate the result, unless miscarriage of justice has been caused thereby’. Having minutely read this judgment on which firm reliance was placed on behalf of the appellant, we find nothing in it to come to the conclusion that an investigation under S. 5-A is a condition precedent before cognizance can be taken of offences triable by Special Judge. Reliance next was placed upon the decision of this Court in the The State of Madhya Pradesh Vs. Mubarak Ali, . This Court held that S. 5-A was inserted in the 1952, Act to protect the public servants against harassment and victimization. If it was in the interest of the public that corruption should be eradicated, it was equally in the interest of the public that honest public servants should be able to discharge their duties free from false, frivolous and malicious accusations. To achieve this object, Ss. 5-A and 6 introduced the following two safeguards : (1) no Police Officer below the rank of a designated police officer, shall investigate any offence punishable under S. 161, S. 165 or S. 165A of the Penal Code or under sub-section (2) of S. 5-A of the 1947 Act without the order of a Presidency Magistrate and (2) no court shall take cognizance of offences hereinabove enumerated except with the previous sanction, of the appropriate Government. The Court held that these statutory safeguards must be complied with, for they were conceived in public interest and were provided as a guarantee against frivolous and vexatious prosecutions. The Court further observed that the Legislature was prepared to believe an officer of an assured status implicitly and it prescribed an additional guarantee that in the case of police officers below the rank, the previous order of a Presidency Magistrate or a Magistrate of the First Class as the case may be. Comes thereafter a pertinent observation that ‘the Magistrate’s status gives assurance to the bona fides of the investigation’. This would rather show that Legislature while on the one hand conferred power on the police officers of the designated rank to take upon themselves the investigation of offences committed by public servants, it considered intervention of the Magistrate as the real safeguard when investigation was permitted by officers lower in the rank than the designated officers. In other words, the Court was a safeguard and it ought to be so because the judicially trained mind is any day a better safeguard than any police officer of any rank. In The State of Uttar Pradesh Vs. Bhagwant Kishore Joshi, , the observation of the Court in The State of Madhya Pradesh Vs. Mubarak Ali, was affirmed. In S. N. Bose v. State of Bihar (1968) 3 SCR 565 : AIR 1968 SC 1292 : 1968 Cri LJ 1412, this court held that the order of the Magistrate giving permission to the Inspector of Police to investigate the case did not give any reasons and there was thus a violation of S. 5-A. Yet this illegality committed in the course of an investigation does not affect the competence and jurisdiction of the Court for trial and where cognizance of the case has in fact been taken and the case has proceeded to termination the invalidity of the preceding investigation does not vitiate the result unless miscarriage of justice has been caused thereby, and in reaching this conclusion reliance was placed on the case of H.N. Rishbud and Inder Singh Vs. The State of Delhi, In P. Sirajuddin, etc. Vs. State of Madras, etc., , it was held that the Criminal P.C. is an enactment designed inter alia to ensure a fair investigation of the allegations against a person charged with criminal misconduct. This is undeniable but has hardly any relevance. Some guidance is given to the Enquiry Officer and the means to be adopted in investigation of offences. This has no bearing on the issue under discussion. Reference was also made to Gulabbai Vs. Board of Revenue and Others , which does not advance the case at all. Having carefully examined these judgments in the light of the submissions made, the only conclusion that unquestionably emerges is that S. 5-A is a safeguard investigation of offences committed by public servants, by petty or lower rank police officer. It has nothing, to do directly or indirectly with the mode and method of taking cognizance of offences by the Court of Special Judge. It also follows as a necessary corollary that provision of S. 5-A is not a condition precedent to initiation of proceedings before the Special Judge who acquired power under S. 8(1) to take cognizance of offence enumerated in S. 6(1) (a) and (b), with this limitation alone that it shall not be upon commitment to him by the Magistrate.”

“25. It was urged that there is inherent evidence in other provisions of the 1952 Act and the Criminal P.C. which would buttress the submission that the Special Judge cannot take cognizance upon a private complaint. Even if S. 8(1) confers specific power of taking cognizance of offences without the necessity of the accused being committed for trial and prescribes the procedure for trial of warrant cases by Magistrates to be adopted by a Special Judge, it is necessary to determine with accuracy whether a Special Judge is a Magistrate or a Sessions Judge. After referring to S. 8(3) which provides that save as provided in sub-section (1) or sub-section (2), the provisions of the Criminal P.C. 1898 shall be far as they are not inconsistent with the 1952 Act apply to the proceedings before a special Judge; and for the purposes of the said provisions, the Court of a Special Judge shall he deemed to be a Court of Session trying cases without a jury or without the aid of assessors and the person conducting a prosecution before a Special Judge shall be deemed to be a Public Prosecutor; it was urged that for the purpose of procedure to be followed by a Special Judge in the trial of the case before him, he is a Magistrate as provided in S. 8(1) but not Sessions Judge because no Sessions Court can take cognizance of offences without commitment while a Special Judge has to take cognizance of offences without accused being committed to him for trial yet the provisions of sub-secs. (2) and (3) leave no one in doubt that for all other purposes he is to be treated as a Sessions Judge or a Court of Sessions. Proceeding along it was urged that if a Special Judge has all the trappings of the Court of Sessions, he cannot take cognizance as provided by S. 190, Cr. P.C. because it confers power on Magistrate to take cognizance of any offence in any one of the three modes therein prescribed. Therefore, it was submitted that a private complaint cannot be entertained.”

“27. It is, however, necessary to decide with precision and accuracy the position of a Special Judge and the Court over which he presides styled as the Court of a special judge because unending confusions have arisen by either assimilating him with a Magistrate or with a Sessions Court. The Prevention of Corruption Act, 1947 was enacted for more effective prevention of bribery and corruption. Years rolled by and experience gathered showed that unless a special forum for the trial of such offences as enumerated in the 1947 Act is created, the object underlying the 1947 Act would remain a distant dream. This led to the enactment of the Criminal Law Amendment Act, 1952. The Statement of Objects and Reasons accompanying the Bill refers to the recommendations of the Committee chaired by Dr. Bakshi Tek Chand appointed to review the working of the Special Police Establishment and to make recommendations for improvement of laws relating to bribery and corruption. To take the cases of corruption out of the maze of cases handled by Magistrates, it was decided to set up special Courts. Section 6 conferred power on the State Government to appoint as many special judges as may be necessary with power to try the offences set out in Clauses (a) and (b). Now if at this stage a reference is made to S. 6 of the Criminal P.C. which provides for constitution of Criminal Courts, it would become clear that a new Court with a new designation was being set up and that it has to be under the administrative and judicial superintendence of the High Court. As already pointed out, there were four types of Criminal Courts functioning under the High Court. To this list was added the Court of a Special Judge. Now when a new Court which is indisputably a Criminal Court, because it was not even whispered that the Court of special judge is not a Criminal Court, is set up, to make it effective and functionally oriented, it becomes necessary to prescribe its powers, procedure, status and all ancillary provisions. While setting up a Court of a special Judge keeping in view the fact that the high dignitaries in public life are likely to be tried by such a Court, the qualification prescribed was that the person to be appointed as special Judge has to be either a Sessions Judge, Additional Sessions Judge or Assistant Sessions Judge. These three dignitaries are above the level of a Magistrate. After prescribing the qualification, the Legislature proceeded to confer power upon a special judge to take cognizance of offences for the trial of which a special Court with exclusive jurisdiction was being set up. If a special Judge has to take cognizance of offences, ipso facto the procedure for trial of such offences, has to be prescribed. Now the Code prescribes different procedures for trial of cases by different Courts. Procedure for trial of a case before a Court of session is set out in Chapter XVIII; trial of warrant cases by Magistrate is set out in Chapter XIX and the provisions therein included catered to both the types of cases coming before the Magistrate, namely, upon police report or otherwise than on a police report. Chapter XX prescribes the procedure for trial of summons cases by Magistrates and Chapter XXI prescribes the procedure for summary trial. Now that a new criminal Court was being set up, the Legislature took the first step of providing its comparative position in the hierarchy of Courts under S. 6 Cr. P.C., by bringing it on level more or less comparable to the Court of Session, but in order to avoid any confusion arising out of comparison by level, it was made explicit in S. 8(1) itself that it is not a Court of Sessions because it can take cognizance of offences without commitment as contemplated by S. 193, Cr. P.C. Undoubtedly in S. 8(3) it was clearly laid down that subject to the provisions of sub-secs. (1) and (2) of S. 8, the Court of special Judge shall be deemed to be a Court of Sessions trying cases without a jury or without the aid of assessors. Incontra-distinction to the Sessions Court this new Court was to be a Court of original jurisdiction. The Legislature then proceeded to specify which out of the various procedures set out in the Code, this new Court shall follow for trial of offences before it. Section 8(1) specifically says that a special judge in trial of offences before him shall follow the procedure prescribed in the Criminal P.C. for trial of warrant cases by Magistrates. The provisions for trial of warrant cases by the Magistrate are to be found in Chapter XXI of 1898 Code. A glance through the provisions will show that the provisions therein included catered to both the situations namely, trial of a case initiated upon Police report (Section 251-A) and trial of cases instituted otherwise than on police report (Sections 252 to 257). If a special Judge is enjoined with a duty to try cases according to the procedure prescribed in foregoing provisions he will have to first decide whether the case was instituted upon a police report or otherwise than on police report and follow the procedure in the relevant group of sections. Each of the Ss. 251A – 257 of 1898 Code which are in pari materia with sections 238 – 250 of 1973 Code refers to what the Magistrate should do. Does the special Judge therefore, become a Magistrate ? This is the fallacy of the whole approach. In fact, in order to give full effect to Session 8(1), the only thing to do is to read Special Judge in Ss. 238 – 250 wherever the expression ‘Magistrate’ occurs. This is what is called legislation by incorporation. Similarly, where the question of taking cognizance arises, it is futile to go in search of the fact whether for purposes of S. 190 which conferred power on the Magistrate to take cognizance of the offence, special Judge is a Magistrate ? What is to be done is that one has to read the expression ‘special Judge’ in place of Magistrate, and the whole thing becomes crystal clear. The Legislature wherever it, found the grey area clarified it by making specific provision such as the one in sub-section (2) of S. 8 and to leave no one in doubt further provided in sub-section (3) that all the provisions of the Criminal P.C. shall so far as they are not inconsistent with the Act apply to the proceedings before a special Judge. At the time when the 1952 Act was enacted what was in operation was the Criminal P.C., 1898. It did not envisage any Court of a Special Judge and the Legislature never wanted to draw up an exhaustive Code of Procedure for this new Criminal Court which was being set up. Therefore, it conferred power (taking cognizance of offences), prescribed procedure (trial of warrant cases by a Magistrate), indicated authority to tender pardon (S. 338) and then after declaring its status as comparable to a Court of Session proceeded to prescribe that all provisions of the Criminal P.C. will apply in so far as they are not inconsistent with the provisions of the 1952 Act. The net outcome of this position is that a new Court of original jurisdiction was set up and whenever a question arose as to what are its powers in respect of specific question brought before it as Court of original criminal jurisdiction, it had to refer to the Criminal P.C. undaunted by any designation claptrap. When taking cognizance, a Court of Special Judge enjoyed the powers under S. 190. When trying cases, it is obligatory to follow the procedure for trial of warrant cases by a Magistrate though as and by way of status it was equated with a Court of Session. The entire argument inviting us to specifically decide whether a Court of a special judge for a certain purpose is a Court of Magistrate or a Court of Session revolves round a mistaken belief that a special Judge has to be one or the other, and must fit in in the slot of a magistrate or a Court of Session. Such an approach would strangulate the functioning of the Court and must be eschewed. Shorn of all embellishment, the Court of a special Judge is a Court of original criminal jurisdiction. As a Court of original criminal jurisdiction in order to make it functionally oriented some powers were conferred by the statute setting up the Court. Except those specifically conferred and specifically denied, it has to function as a Court of original criminal jurisdiction not being hide-bound by the terminological status description of Magistrate or a Court of Sessions. Under the Code it will enjoy all powers which a Court of original criminal jurisdiction enjoys save and except the ones specifically denied.”

“29. Once the position and power of the Court of a special Judge in the hierarchy of Criminal Courts under the High Court is clearly and unambiguously established, it is unnecessary to roam into an enquiry examining a large number of decisions laying down in the context of each case that the Court of a special Judge is a Court of Session and the contrary view taken in some other decisions. Reference to those judgments would be merely adding to the length of this judgment without achieving any useful purpose.”

In R.S. Nayak Vs. A.R. Antulay, , a Constitution Bench of the Supreme Court took the view that cognizance taken of the offences failing under the Prevention of Corruption Act against A. R. Antulay, who was besides being a member of the Maharashtra Legislative Assembly was also the Chief Minister of the Maharashtra State, was valid but directed for the withdrawal of the case from the Court of the Special Judge, Greater Bombay and directed for the transfer of the same to the High Court of Bombay with a request to the Chief Justice to assign the case to a sitting judge of the High Court.

In A.R. Antulay Vs. R.S. Nayak and Another, the Supreme Court, however, took the view that S. 7(1) of the Criminal Law (Amendment) Act, 1952 created a condition which is sine qua non for the trial of offences under S. 6(1) of the Act. The condition being that notwithstanding anything contained in the Code of Criminal Procedure or any other law, the offence shall be triable by Special Judges only and concluded by majority that the Supreme Court could not confer jurisdiction on the High Court to try any case when it did not possess such jurisdiction under the Scheme of the 1952 Act.

Lawline

Taking Bail for Economic Offences

Special Court of Economic Offences being a Court having jurisdiction throughout the State is alone empowered to take cognizance of the offences which are referable to the special enactments in the Annexure to the notification under which the Special Court has been created and to act for all purposes in Chapter XXXIII of the Code of Criminal Procedure including for granting anticipatory bail;

 Jurisdiction of the regular Court of Session to the extent of the offences under the Acts which are mentioned in the annexure to the notification creating the Special Court of Economic Offences is excluded. Persons apprehending arrest for the offences under any of such Acts can move the Special Court of Economic Offences for anticipatory bail and not the regular Court of Session.

Lawline

Sl. No. –  Economic crimes Acts / Legislation  –  Enforcement authorities


Other major offenses

1. Tax evasion Income Tax Act  [Prosecution by the Central Board of Direct Taxes]
2. Illicit trafficking in contraband goods (smuggling) Customs Act 1962, COFEPOSA, 1974 [Prosecution  by Collectors of Customs]
3. Evasion of Excise Duty Central Excise Act, 1944  by Collectors of Central Excise
4. Cultural object’s theft Antiquity and Art Treasures Act, 1972 by  Police/State CB-CID/CBI
5. Money laundering Foreign Exchange Regulations Act, 1973; Money Laundering Act, 2002  by Directorate of Enforcement
6. Foreign contribution manipulations Foreign Contribution (Regulation) Act, 1976; by Police/CBI
7. Land grabbing/Real estate frauds IPC by Police/State CB-CID/CBI
8. Trade in human body parts Transplantation of Human Organs Act, 1994 by Police/State CB-CID/CBI
9. Illicit drug trafficking Narcotic Drugs and Psychotropic Substances Act 1985 & NDPS Act, 1988 by NCB/ Police/State CB-CID/CBI
10. Fraudulent bankruptcy Banking Regulation Act, 1949 by Police, CBI
11 Corruption and bribery of public servants Prevention of Corruption Act, 1988  by State/Anti Corruption Bureaux/ Vigilance Bureaux/CBI
12. Bank frauds  by IPC Police/State Vigilance/CB-CID/CBI
13. Insurance frauds by  IPC Police/State Vigilance/CB-CID/CBI
14. Racketeering in employment IPC Police/State  by CB-CID/CBI
15. Illegal foreign trade Import & Export (Control) Act,1947 by Directorate General of Foreign Trade/CBI
16. Racketeering in false travel documents Passport Act, 1920/IPC  by Police/State CB-CID/CBI
17. Credit cards fraud IPC by Police/State CB-CID/CBI
18. Terrorist activities IPC & related Acts by Police/State CB-CID/CBI
19. Illicit trafficking in arms Arms Act,1959  by Police/State CB-CID/CBI
20. Illicit trafficking in explosives Explosives Act, 1884 & Explosive Substances Act, 1908 by Police/State CB-CID/CBI
21. Theft of intellectual property Copyright Act, 1957 by  Police/State CB-CID/CBI
22 Computer crime/software piracy Copyright Act, 1957/I.T.Act, 2000 by Police/State CB-CID/CBI
23. Stock market manipulations IPC by Police/State CB-CID/CBI
24. Company frauds Companies Act, 1956/IPC MRTP Act, 1968 by Police/CBI/SFIO

Devider

Offence by Companies

whether the offences under the Companies Act are to be characterised as “economic offences” specified in the Common Cause judgment to be continued even beyond the time stipulated in directions 1 and 2, therein.

The jurisdiction to try the offences under the Companies Act is conferred on the Special Court for Economic Offences apparently by way of a certain policy decision. The designation of the court as the Special Court for Economic Offences does not determine its jurisdiction and its jurisdiction is determined on the basis of provisions made conferring jurisdiction under various enactments, and the Companies Act is one such enactment. Merely because the offences under the Companies Act are tried by the Special Court for Economic Offences it cannot follow that all offences tried by that court are economic offences. This is all the more so with reference to the decision in Common Cause, A Regd. Society, New Delhi Vs. Union of India (UOI) and Others[AIR 1999 SC 3434 ], . In Common Cause case [1998] 94 Comp Cas 776, the Supreme Court identified various offences in relation to which after the expiry of a specified time, the proceedings are to be closed or the accused discharged as the case may be. In para. 4 of the judgment, the Supreme Court carved out exceptions and it reads as follows (page 780) :

“Directions (1) and (2) made hereinabove shall not apply to cases of offences involving (a) corruption, misappropriation of public funds, cheating, whether under the Indian Penal Code, Prevention of Corruption Act, 1947, or any other statute ; (b) smuggling; foreign exchange violation and offences under the Narcotics Drugs and Psychotropic Substances Act, 1985 ; (c) Essential Commodities Act, 1955, Food Adulteration Act, Acts dealing with Environment or any other economic offences ; (d) offences under the Arms Act, 1959, the Explosive Substances Act, 1908, the Terrorists and Disruptive Activities Act, 1987 ; (e) offences relating to the Army, Navy and Air Force ; (f) offences against public tranquillity ; (g) offences relating to public servants ; (h) offences relating to coins and Government stamp ; (i) offences relating to elections; (j) offences relating to giving false evidence and offences against public justice ; (k) any other type of offences against the State ; (l) offences under the taxing enactments and (m) offences of defamation as defined in Section 499 of the Indian Penal Code.” (emphasis supplied)

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