The commercial assets including bonds, debentures, shares, stocks, checks etc are said to be ‘securities’, the issuer of which is the entity, corporation or company and the authoritative arrangement of a country settles on the qualities of a security. The securities may be symbolized in the form of a certificate, document, electronic mode or book entry. Simply by holding the security, the holder of the Certificates acquires certain rights. Another mode of getting rights is entry of name of the holder in the register maintained by the company or entity.
In order to deal with issues related to transaction in securities, the Central Government enacted The Special Court (Trial of Offenses Relating to Transactions in Securities) Act, 1992 which came into effect on June 6th 1992. The purpose behind the legislation is to constitute a Special Court to tryout offenses concerning securities operations and the subjects related therewith.
The Act defines security which consists of shares, debentures, bonds, mutual funds, commercial securities etc. and securities of the Government and the privileges and interest in such security. The Act empowers the Central Government to appoint Custodian, who shall publish a notification in the Official Gazette regarding the list of persons involved in the offense connected with transaction of securities. The property of such a person shall be attached by publishing the notification.
The custodian is authorized under the Act to terminate a contract entered in relation to the property of the person involved in the offense relating to transaction in securities and after investigation if he is satisfied that such an agreement is entered illegally or contrary to the provisions of the present Act, such property shall be attached. But such an agreement cannot be revoked without following the principles of natural justice.
The Act provides that if a person aggrieved by the notification or revocation ordered by the Custodian shall file a petition before the Special Court within thirty days of such order. On receiving such a petition, the Special Court can pass necessary orders after hearing the parties to the dispute. The Central Government is permitted to constitute a Special Court after publication in the Official Gazette and the presiding officer of the Court shall be a High Court Judge, nominated by the Chief Justice of concerned High Court.
The Act enunciates that the offenses referred in the Act shall be prosecuted only by the Special Court and such offenses if pending before any other court shall be transferred to the Special Court. The Court shall have power to prosecute offenses like conspiracy, abetment or other offenses as prescribed by the Code of Criminal Procedure and undertake warrant cases. The procedure of the Code shall be applied to the Special Courts as well, if they are not in contravention of the Act and the Special Court shall have powers of the Sessions Court and the lawyer practicing before the Court shall have the designation of a Public Prosecutor.
The Act provides for appeal to the Supreme Court by an aggrieved person within thirty days from the decree or order of the Special Court both on the question of law and fact. The Special Court can order the custodian to dispose off the attached property if necessitated. After such disposal, the liabilities of the person shall be settled by paying the taxes and revenues owed to the Central or State Government, debts of bank or other institutions etc.
Any Act done in good faith by the Union or the Custodian shall not be questioned in any Court under the provisions of the legislation. The Act also authorizes the Central Government to formulate rules to implement the stipulations of the Act. The present Act repealed The Special court (Trial of Offenses Relating to Transactions in Securities) Ordinance, 1992.
The Act of 1992 is enacted to constitute a Special Court for the purpose of disposing matters connected with Transaction in Securities. The Code of Criminal Procedure, 1973 also confers power to establish special courts for speedy discarding of cases relating to criminal offenses.