Case Note & Summary
The applicants, original accused in FIR No.II-34/2018 registered at Keshod Police Station, were charged with offences under Sections 4 and 5 of the Gambling Act and Sections 19 and 23(1)(C),(E),(F),(G),(I) of the Securities Contracts (Regulation) Act, 1956 (SCRA). After investigation, a charge-sheet was filed leading to Sessions Case No.20/2019. The applicants were arrested and later enlarged on bail. They filed a discharge application (Exh.12) which was rejected by the learned Additional Sessions Judge, Keshod on 07.02.2023. Aggrieved, they filed a criminal revision application under Section 397 read with Section 401 CrPC (corresponding to Sections 438 and 442 of BNSS) before the Gujarat High Court. The core legal issue was whether the Sessions Court could take cognizance of offences under the SCRA on the basis of a police report. The applicants argued that Section 26 of the SCRA bars cognizance except on a complaint made by the Central Government, State Government, SEBI, a recognized stock exchange, or any person. The State opposed the revision. The High Court examined Section 26 and held that a plain reading indicates that no court can take cognizance of any offence under the Act except on a complaint by the specified authorities. Even if the police officer who lodged the FIR could be considered 'any person', the charge-sheet filed by the police is not a complaint under Section 26. Therefore, the cognizance taken by the Sessions Court was invalid. The court allowed the revision, quashed the order rejecting discharge, and set aside the entire proceedings in Sessions Case No.20/2019. The applicants were discharged from all offences under the SCRA. The court did not address the Gambling Act offences separately, but the quashing of the entire case implies those proceedings also stand terminated.
Headnote
A) Criminal Procedure - Cognizance of Offences - Bar under Special Statute - Section 26 of Securities Contracts (Regulation) Act, 1956 - The court held that no court can take cognizance of any offence punishable under the Securities Contracts (Regulation) Act, 1956 except on a complaint made by the Central Government, State Government, SEBI, a recognized stock exchange, or any person. A police report (charge-sheet) does not constitute a valid complaint under Section 26, and therefore the proceedings based on such cognizance are invalid and liable to be quashed. (Paras 4-6) B) Criminal Procedure - Revision - Quashing of Proceedings - Section 397 read with Section 401 CrPC (Section 438 read with Section 442 BNSS) - The High Court allowed the revision application and quashed the order rejecting discharge as well as the entire proceedings in Sessions Case No.20/2019, holding that the cognizance taken by the Sessions Court on the basis of a police report was without jurisdiction. (Paras 1, 7)
Issue of Consideration
Whether the Sessions Court could take cognizance of offences under the Securities Contracts (Regulation) Act, 1956 on the basis of a police report (charge-sheet) in light of Section 26 of the said Act which mandates that cognizance can only be taken on a complaint made by specified authorities.
Final Decision
The revision application is allowed. The order dated 07.02.2023 passed by the learned Additional Sessions Judge, Keshod below Exh.12 in Sessions Case No.20/2019 is quashed and set aside. Consequently, the entire proceedings of Sessions Case No.20/2019 are quashed. The applicants are discharged from the offences under the Securities Contracts (Regulation) Act, 1956.
Law Points
- Cognizance of offences under Securities Contracts (Regulation) Act
- 1956 can only be taken on a complaint by specified authorities
- not on a police report
- Section 26 SCRA is a bar to taking cognizance on charge-sheet filed by police
- Proceedings based on invalid cognizance are liable to be quashed
