Today, 19th April,The Supreme Court ruled that special courts with sessions judges have the authority to try offenses under the IBC, contrary to the Bombay High Court’s interpretation. This decision expands the scope of courts eligible to hear cases related to the Insolvency and Bankruptcy Code (IBC). The ruling contradicts the earlier understanding that only special courts comprising metropolitan or judicial magistrates could handle IBC complaints.
New Delhi: On Friday, the Supreme Court decided that special courts led by sessions judges have jurisdiction over offences under the Insolvency and Bankruptcy Code (IBC). This ruling came from a Division Bench of Justices BR Gavai and Sandeep Mehta, hearing an appeal challenging a Bombay High Court decision.
The High Court previously stated that only special courts with metropolitan or judicial magistrates could handle IBC complaints.
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The Supreme Court today stated,
“We’ve determined that the Sessions judge possesses jurisdiction. As the case hasn’t been adjudicated on its merits, we are sending it back to the (Bombay) High Court for a new decision,” .
The Bombay High Court issued its order on February 14, 2022.
Justice SK Shinde from the High Court noted that the legislative intent to prevent overburdening special courts with sessions judges with IBC trials.
The High Court’s decision stemmed from a plea filed by two individuals challenging a sessions court’s summons following a complaint from the Insolvency and Bankruptcy Board of India (IBBI) under the IBC. The petition argued that the sessions judge lacked jurisdiction to handle the IBBI’s complaint.
Citing Section 236 of the IBC, which empowers special courts under the Companies Act to handle IBC offenses, the petitioners contended that courts with metropolitan or judicial magistrates were the designated special courts for IBC cases, for a speedy trial.
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The High Court agreed with this interpretation, distinguishing courts with sessions judges for Companies Act offenses and courts with magistrates for other Acts, including the IBC.
The Supreme Court, however, disagreed with this interpretation by the High Court.
Representatives from IBBI included Additional Solicitor General SV Raju, advocates Rashi Rampal, Apoorv Khatore, and Advocate-On-Record (AOR) Vikas Mehta.
The respondents were represented by AOR Amir Arsiwala, advocate Dhaval Deshpande, and the State of Maharashtra’s legal team led by AOR Aaditya Aniruddha Pande and other advocates.