Companies Act Section 440

Companies Act, Section 440:Transitional Provisions for Trial of Offences Until Special Courts Are Established

Section 440 of the Companies Act, 2013 provides important transitional arrangements to ensure that prosecution of offences under the Act does not get delayed during the period when Special Courts are yet to be established under Section 435. 

The aim is to maintain continuity and effectiveness in criminal enforcement even during the transitioning phase of judicial reforms.

1. Temporary Jurisdiction of Regular Criminal Courts

Until a Special Court is properly established and operational:

Offences under the Companies Act that are meant to be tried by Special Courts.

Shall be tried by the appropriate existing court based on the nature of the offence. Accordingly:

For serious offences (punishable with imprisonment of two years or more) trial will be held before a Court of Session.

For other offences trial will be conducted by a Metropolitan Magistrate or Judicial Magistrate First Class, depending on the local jurisdiction.

This arrangement applies notwithstanding anything to the contrary under the Code of Criminal Procedure, 1973 (CrPC).

2. Purpose of the Transitional Arrangement

This ensures that criminal trials under the Companies Act do not suffer delays.

Prosecutions continue seamlessly until Special Courts take over.

Offenders are not able to evade legal accountability due to procedural vacancy, Enforcement of corporate criminal law remains uninterrupted.

It reflects the legislative intent to prioritize speedy justice and enable smooth shift to the new Special Court system.

3. High Court’s Power of Transfer Remains Intact

The provision concludes with a critical safeguard:

The High Court retains its power under Section 407 of CrPC to transfer any case or category of cases that is being tried by a Sessions Court or Magistrate under this transitional regime. This ensures judicial flexibility where:

Fair trial requires shifting the case, and administrative efficiency demands redistribution of workload. Proper jurisdiction or security concerns warrant transfer.

Thus, while temporary courts handle the cases, supervisory power of the High Court ensures proper administration of justice.

4. Significance of Section 440

The section plays a key role in supporting a smooth transition to the Special Court framework.

Eliminating legal vacuum during operational changes.

Reinforcing continued enforcement of company-related criminal law.

Preserving rights of stakeholders and protecting public interest.

It ensures that procedural changes do not become a shield for corporate wrongdoers.