Sections 435 and 436 of the Companies Act 2013: Special Courts and Offences Triable by Special Courts
Sections 435 and 436 form part of Chapter XXVIII of the Companies Act, 2013, which deals with Special Courts. Section 435 provides for establishment or designation of Special Courts for speedy trial of offences under the Act, subject to the statutory exclusion of offences under Section 452. Section 436 deals with jurisdiction, detention, cognizance, connected offences and summary trial before Special Courts.
Section 435 - Establishment of Special Courts
Meaning: Section 435 authorises the Central Government to establish or designate Special Courts so that offences under the Companies Act can be tried speedily. After the 2020 amendment, an offence under Section 452 is expressly excluded from Section 435.
Section 435(1): The Central Government may establish or designate as many Special Courts as may be necessary for speedy trial of offences under the Companies Act, except offences under Section 452.
Section 435(2)(a): For an offence punishable with imprisonment of two years or more, the Special Court consists of a single judge holding office as a Sessions Judge or Additional Sessions Judge.
Section 435(2)(b): For other offences, the Special Court consists of a Metropolitan Magistrate or Judicial Magistrate of the First Class. Appointment is made by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the judge to be appointed is working.
Section 436 - Offences Triable by Special Courts
Section 436 gives the Special Court exclusive trial jurisdiction over offences falling within Section 435(1) and lays down important procedural powers. Its opening non-obstante clause gives the special procedure overriding effect over the general criminal procedure law to the extent of inconsistency.
Section 436(1)(a): territorial jurisdiction
Offences specified in Section 435(1) are triable only by the Special Court established for the area in which the registered office of the company concerned is situated. If more than one Special Court exists for that area, the High Court concerned may specify the appropriate court.
Section 436(1)(b) and (c): detention and custody
The provision regulates the initial production and detention of a person accused or suspected of an offence under the Companies Act and empowers the Special Court to exercise the relevant remand powers after the person is forwarded to it. For post-1 July 2024 procedure, the CrPC references in the enactment must be read with the corresponding BNSS provisions, subject to the statutory savings for pending proceedings.
Section 436(1)(d): cognizance without committal
A Special Court may take cognizance of a Companies Act offence on a police report or on a complaint without the accused first being committed to the Special Court for trial. This removes the ordinary committal stage where the conditions of the section are satisfied.
Section 436(2): trial of connected offences
While trying an offence under the Companies Act, the Special Court may also try another offence with which the accused may lawfully be charged at the same trial under the applicable criminal procedure law.
Section 436(3): summary trial
A Special Court may try summarily an offence under the Companies Act punishable with imprisonment for a term not exceeding three years. If there is a conviction in a summary trial, imprisonment exceeding one year cannot be imposed. If the court considers that a sentence exceeding one year may be necessary, or that summary trial is otherwise undesirable, it must record an order after hearing the parties and proceed with a regular trial in accordance with law.
Meaning and Practical Effect of Sections 435 and 436
The object of these provisions is to create a specialised and speedier criminal trial mechanism for offences under the Companies Act. The level of the judicial officer constituting the Special Court depends on the punishment prescribed for the offence. Section 436 then identifies the appropriate territorial Special Court and confers procedural powers necessary to take cognizance and conduct the trial.
The Supreme Court has considered the post-2018 structure of Section 435 and recognised the statutory distinction between the Special Courts constituted according to the punishment attached to Companies Act offences. For any prosecution, the applicable version of the provision, the date of the alleged offence, the notification designating the Special Court and the transition from CrPC to BNSS should all be checked.
Important Amendments to Section 435
Companies (Amendment) Act, 2017: Section 435 was substituted with effect from 7 May 2018. The substituted provision created the present two-level structure: Sessions Judge or Additional Sessions Judge for offences punishable with imprisonment of two years or more, and Metropolitan Magistrate or Judicial Magistrate of the First Class for other offences.
Companies (Amendment) Act, 2020: Section 435(1) was amended with effect from 22 January 2021 so that offences under Section 452 are excluded from the Special Court mechanism under Section 435.
Official Legal Resources
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