The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

Summary of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992
Purpose
• Establishes a Special Court for the speedy trial of offences related to transactions in securities.
Key Provisions
1. Establishment & Composition
• Established by: Central Government through notification.
• Composition: Consists of one or more sitting Judges of the High Court.
2. Jurisdiction
• Exclusive: Over offences related to securities transactions committed between April 1, 1991, and June 6, 1992.
• Joint Trials: Can try all related offences and accused jointly.
3. Custodian
• Appointment: By the Central Government.
• Powers:
• Notify persons involved in securities offences, leading to automatic attachment of their properties.
• Manage attached properties as directed by the Special Court.
4. Procedure & Powers of Special Court
• Procedure: Follows the Code of Criminal Procedure (CrPC), 1973, for warrant cases.
• Powers: Deemed a Court of Session with all its powers, including passing any sentence authorized by law.
5. Appeals
• Direct Appeal: To the Supreme Court on matters of fact and law (excluding interlocutory orders).
• Time Limit: 30 days, extendable by the Supreme Court for sufficient cause.
6. Discharge of Liabilities
• Priority Order:
1. Revenues, taxes, and government dues.
2. Bank and financial institution dues.
3. Other liabilities as specified by the Special Court.
4. Protection & Overriding Effect
• Protection: Actions taken in good faith under this Act are protected from legal proceedings.
• Overriding Effect: This Act overrides any inconsistent provisions in other laws.
8. Amendments (Highlighted in Context)
• Expansion of Jurisdiction: To civil matters related to attached securities and arbitration through amendments (e.g., Section 9A & 9B).
• Arbitration Matters: Special Court’s powers in arbitration as per amendments.

Legislative History:

The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

Act Title The Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992

Act Number 27 of 1992

Act ID (India Code) 1992-27

Presidential Assent Date August 18, 1992

Enforcement Date June 6, 1992

Nodal Ministry Ministry of Finance

Precedent & Historical Rationale

1. The 1992 Securities Scam & Systemic Irregularities:

o Following investigations by the Reserve Bank of India (RBI), massive multi-crore fraud and large-scale irregularities were uncovered in government and other securities transactions. These were executed by certain stockbrokers (notably Harshad Mehta) in collusion with employees of various public and private sector banks and financial institutions.

2. Need for Speedy Recovery and Prosecution:

o Ordinary judicial procedures were ill-equipped to handle the complex, voluminous financial crimes and ensure the prompt attachment and recovery of diverted public funds. A dedicated legal framework was urgently required to punish the guilty, restore public confidence, and safeguard the integrity of India's financial system.

Parliamentary Trajectory & Enactment

• Formulation: Initially promulgated as an Ordinance by the President on June 6, 1992, to immediately establish a Special Court and empower a Custodian to attach properties of "notified parties".

• Parliamentary Passage: Introduced as a Bill to replace the Ordinance, it was deliberated and passed by both Houses of Parliament during the Monsoon Session of 1992.

• Presidential Assent: Received Presidential Assent on August 18, 1992.

• Enforcement: Enforced on June 6, 1992.

• Source: Official Records of Parliament, India Code, and Ministry of Finance (Department of Financial Services).