Companies Act Section 436

Companies Act, Section 436: Offences Triable Only by Special Courts

Section 436 of the Companies Act, 2013 specifies that certain offences committed under the Act will be handled exclusively by the Special Courts established under Section 435. 

This provision ensures that criminal prosecution for corporate offences is carried out efficiently, by courts specifically equipped with the necessary judicial expertise and authority.

The section overrides the general procedural rules under the Code of Criminal Procedure, 1973 (CrPC) wherever required, guaranteeing faster and more specialized handling of company-related criminal matters.

1. Exclusive Jurisdiction of Special Courts

All offences referred to in Section 435(1), which involve criminal liability under the Act, must be tried only by a Special Court. The relevant Special Court is determined based on:

The territorial jurisdiction where the registered office of the company is located. If multiple Special Courts exist in the same jurisdiction, the High Court will specify which Special Court will hear the case.

This ensures clear jurisdiction and eliminates confusion in filing criminal complaints.

2. Detention Powers When Accused is Forwarded by Magistrate

Before the accused is brought before the Special Court, police may initially present the person before a Magistrate as per CrPC Section 167. In such situations:

A Judicial Magistrate may authorize detention up to 15 days. An Executive Magistrate may authorize detention up to 7 days.

However, if the Magistrate believes continued detention is unnecessary, he must forward the accused to the Special Court with proper jurisdiction. 

This ensures quick transfer of cases to specialized judicial authority.

3. Powers of the Special Court After Accused is Forwarded

Once the accused is produced before the Special Court:

The Special Court can exercise all powers of a Magistrate under CrPC Section 167. Including authorization of detention and judicial oversight of the investigation.

This avoids delays typically caused by procedural transitions between different courts.

4. Cognizance of Offences Without Committal

Normally, serious offences require committal proceedings before a Sessions Court can take cognizance. However, Special Courts established under this Act:

Can directly take cognizance of offences. Based on the police report, or a complaint lodged before the court.

This removes unnecessary procedural steps and accelerates the trial process.

5. Power to Try Additional Offences

If during the trial under the Companies Act, the accused is also charged with other offences under the CrPC framework.

Then the Special Court may try those additional offences in the same trial. This facilitates comprehensive justice without splitting the case into different courts.

6. Trial for Minor Offences

Special Courts may conduct summary trials for offences under the Companies Act that are punishable with imprisonment of up to three years. Advantages of summary trial:

Faster proceedings, Simplified procedure, Quicker delivery of justice.However, to ensure fairness, the law provides safeguards:

If the accused is convicted, imprisonment cannot exceed one year in summary trial.

If the Special Court feels that sentence may exceed one year, or the case complexity demands a full trial. 

Then it must record its reasons, convert the trial into a regular trial, recall and rehear witnesses as required.

This strikes a balance between speed and judicial thoroughness.

7. Importance of Section 436 in Enforcement of Corporate Law

This section emphasizes fast prosecution of corporate offenders, greater effectiveness in dealing with fraud and criminal misconduct.

Consistency in legal outcomes, reduced procedural delays, and increased deterrence against economic crimes.

By concentrating jurisdiction in Special Courts, the law reinforces a specialized criminal justice system for corporate accountability.