Neville Tuli vs Securities And Exchange Board Of Indi And Anr

CNR No : HCBM010525602025

WP-5242-2025.DOC
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO. 5242 OF 2025

Neville Tuli,
Aged 61 years, Occupation : Entrepreneur
A-6,Green Avenue Street,
Vasant Kunj, New Delhi – 110 070. ..Petitioner
SAINATH
SANJAY
BODKHE
Digitally signed by
SAINATH SANJAY
BODKHE
Date: 2026.07.15
21:54:42 +0530
Versus
1. Securities and Exchange Board of India
(SEBI), SEBI Bhavan,
Plot No. C-4A, G-Block,
Bandra Kurla Complex,
Mumbai – 400 051.
…Respondents
2. State of Maharashtra
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Mr. Vyapak Desai, a/w Mr. Manish Bohra, Mr. Ansh Desai, i/b
Manish Bohra, for the Petitioner.
Mr. Sudeep Pasbola, Senior Advocate, a/w Mr. Chetan Mali,
Mr. Rajan Gurnani, Ms. Janki Patil, Mr. Sachin Mishra
& Mr. Umang Arya, for Respondent No.1 - SEBI.

Mr. D. J. Haldankar, APP for Respondent No.2 - State.
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CORAM : N. J. JAMADAR, J.
th
RESERVED ON : 09 APRIL 2026
th
PRONOUNCED ON : 15 JULY 2026
JUDGMENT:
1. Rule. Rule made returnable forthwith, and, with the
consent of the learned Counsel for the parties, heard finally.
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2. This Petition under Article 227 of the Constitution of India
and Section 528 of the Bharatiya Nagarik Suraksha Sanhita,
2023 (“BNSS, 2023”) poses the following question:
“Is it incumbent upon the Special Court under the
Securities and Exchange Board of India Act, 1992 (“SEBI
Act, 1992”) to give an opportunity of hearing to an
accused under the first proviso to Section 223 of the
BNSS 2023 before taking the cognizance of the offences
punishable under SEBI Act, 1992?”
3. The aforesaid question arises for consideration in the
backdrop of the following facts :-
3.1 The Securities and Exchange Board of India (SEBI)-
Respondent No.1/Complainant is a Regulatory Authority
established under Section 3 of the SEBI Act, 1992. Osian’s
Connoisseurs of Art Pvt Ltd (“Osian’s”) was incorporated under
the provisions of the Companies Act, 2013. The Petitioner -
Accused No.1 was a director of Osian’s.
3.2 Osian’s floated Osian’s Art Fund (“OAF”). OAF was settled
as a private trust under the Indian Trusts Act, 1882, with the
company as a settlor and Oseta Investments Trustee Company
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Pvt Ltd (“Oseta Trustee”) as the trustee in accordance with the
th
Trust Deed dated 10 March 2006.
th
3.3 On 15 April 2013, the Whole Time Member of SEBI
passed an order to the effect that OAF was a collective
investment scheme. The said scheme was operated without
registration, in violation of Section 12(1-B) of the SEBI Act, 1992
and Regulation 3 of the SEBI (Collective Investment Schemes)
Regulations 1999 (CIS Regulation 1999).
3.4 Eventually, after the dismissal of the Appeals preferred by
the company, Respondent No.1 passed an order under Section
11, 11-B read with Section 19 of the SEBI Act, 1992 and
Regulation 65 of the CIS Regulations, 1999 and thereby directed
the company to refund monies to investors with 10% interest
from the date when the amount to the investors first became
due and till the date of the scheme’s closure, within the
stipulated period.
3.5 Appeals preferred by the company against the said order
were dismissed by the Securities Appellate Tribunal and the
Supreme Court.
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3.6 In the wake of the default, in compliance with the
th
directions issued by the Respondent vide order dated 28 May
th
2021, the prosecution notices dated 8 August 2024 were issued
to the Petitioner and co-accused No.2, another director of the
Company.
3.7 In the meanwhile, the Corporate Insolvency Resolution
Process (“CIRP”) was initiated against the company. Thus, on
account of the moratorium under Section 14 of the Insolvency
and Bankruptcy Code, 2016 (“the IBC, 2016”), the complainant
lodged complaint against the Petitioner (A1) and Accused No.2,
the directors of the company for the commission of an offence
punishable under Section 24(2) of the SEBI Act, 1992, before
the Special Court at Mumbai.
3.8 By the impugned order, the learned Judge, Special Court
(SEBI), directed issue of process against the accused for an
offence punishable under Section 24(2) of the SEBI Act, 1992,
opining that there was sufficient ground to proceed against the
accused.
4. The Accused No.1 has preferred this Writ Petition assailing
the order of taking cognizance and issuance of process primarily
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on the ground that there is a clear breach of the mandatory
requirement of providing an opportunity of hearing to the
accused under the first proviso to Section 223 of the BNSS,
2023, before taking cognizance of the offence, as the
prosecution has been initiated on the basis of a complaint. The
Petitioner asserts, the impugned order of taking cognizance of
the offence without affording an opportunity of hearing to the
proposed accused is in teeth of the statutory mandate contained
in the first proviso to Section 223(1) of the BNSS, 2023 and
non-compliance renders the impugned order null and void.
5. At this juncture, it must be noted that the Petitioner has
assailed the impugned order on other grounds as well. However,
at the time of hearing, the Petitioner confined the challenge to
the impugned order on the score of non-compliance of the
prerequisite for taking cognizance envisaged under the first
proviso to Section 223(1) of the BNSS, 2023, as the said
violation, according to the Petitioner, goes to the root of the
matter.
6. An Affidavit in Reply has been filed on behalf of
Respondent No.1 controverting the contentions in the Petition in
regard to the alleged violation of the statutory prescription.
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Adverting to the provisions contained in the SEBI Act, 1992,
which envisage establishment of Special Court and mode of
taking cognizance of the offence by the Special Court,
Respondent No.1 contends, the complaints before the Special
Court are not governed by the provisions contained in Section
223 of the BNSS, 2023. The Special Court constituted under the
SEBI Act, 1992 is essentially the Court of Sessions and not the
Court of Magistrate, and, thus, the provisions contained in
Section 223 of the BNSS 2023 do not govern the judicial act of
taking cognizance by the Special Court under the provisions of
SEBI Act, 1992.
SUBMISSIONS
7. In the wake of the aforesaid facts and pleadings, I have
heard Mr. Vyapak Desai, the learned Counsel for the Petitioner,
and Mr. Sudeep Pasbola, the learned Senior Advocate for
Respondent No.1, at length. The learned Counsel for the parties
took the Court through the material on record.
8. Mr. Desai, the learned Counsel for the Petitioner,
submitted that the trial of the offences before the Special Court
is governed by the provisions contained in the BNSS, 2023, save
in a case where the SEBI Act, 1992, contains a special
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provision. In the matter of taking of cognizance of the offences
on a complaint, the provisions contained in Chapter XVI of the
BNSS, 2023 are clearly attracted as there is no contrary
provision in the SEBI Act, 1992.
9. Mr. Desai further submitted that, the reliance on the part
of Respondent No.1 on the provisions contained in Sections 26-
A and 26-B of the SEBI Act, 1992 is of no assistance to
Respondent No.1 On the contrary, Section 26-D(1) makes it
explicitly clear that the provisions of the Code of Criminal
Procedure, 1973 (now BNSS, 2023) shall apply to the
proceedings before the Special Court, save as otherwise
provided in that Act. There is no provision in the SEBI Act, 1992
which is in derogation of the provisions contained in Section
223 of the BNSS, 2023, in the matter of taking cognizance of the
offences thereunder.
10. Mr. Desai would urge that, the controversy is no longer res
integra. Even in the case of a complaint filed under Section
44(1)(b) of the Prevention of Money Laundering Act, 2002 (“PML
Act, 2002”), the provisions of which, in the matters of the
establishment of the Special Court and taking of the cognizance
of the offences thereunder by the Special Court, are pari
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materia with the provisions of the SEBI Act, 1992, it has been
held that the provisions of Section 223 of the BNSS, 2023 are
attracted. Reliance was placed by Mr. Desai on the judgment of
the Supreme Court in the case of Kushal Kumar Agarwal Vs
1
Directorate of Enforcement wherein it was enunciated that the
provisions of Chapter XVI containing Sections 223 to 226 of
BNSS, 2023 will apply to a complaint under Section 44 of the
PML Act, 2002.
11. Per contra, Mr. Sudeep Pasbola, the learned Senior
Advocate for Respondent No.1, submitted that SEBI Act, 1992 is
a special statute. Section 26 of the said Act contains an
interdict against taking cognizance of the offiences save on the
complaint made by the Board. Such complaint by the Board, Mr
Pasbola emphasised, is preceded by a detail enquiry by the
Authorities under the SEBI Act, 1992. Having regard to the
object of the SEBI Act, 1992, and the detail enquiry
/investigation proceedings, which precede the filing of the
complaint, the Special Court has been empowered to take
cognizance of the offences under the SEBI Act, 1992, without
pre-cognizance enquiry envisaged by the proviso to Section
223(1) of the BNSS, 2023. Any other view would defeat the
1 .
2025 SCC OnLine SC 1221
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purpose of the constitution of the Special Court and the object
of expeditious disposal of the prosecutions initiated under the
SEBI Act, 1992, submitted Mr. Pasbola.
12. Special emphasis was laid by Mr. Pasbola on the
provisions contained in Section 26-D(1) of the SEBI Act, 1992
which declares that for the purposes of the provisions contained
in the Code of Criminal Procedure, 1973, the Special Court shall
be deemed to be a Court of Session. The necessary corollary,
according to Mr. Pasbola, is that, the Sessions Court is not
bound by the provisions contained in Section 223 of the BNSS,
2023 which falls under the Chapter dealing with complaints to
Magistrates.
13. To buttress the aforesaid submissions, Mr Pasbola placed
reliance on the judgments of the Supreme Court in the cases of
2
Ajit Kumar Palit Vs State of West Bengal, State of West Bengal
3
Vs Bejoy Kumar Bose and Ors and Sanjabij Tari Vs Kishore S
4
Borcar and Ors
14. Mr. Pasbola submitted that the decision of the Supreme
Court in the case of Sanjabij Tari (Supra) declaring that in a
2 AIR 1963 SC 765.
3
AIR 1978 SC 188.
4
2025 SCC OnLine SC 2069
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complaint for the offence punishable under Section 138 of the
Negotiable Instruments Act, 1881, (“N. I. Act, 1881”), there shall
be no requirement to issue notice to the accused in terms of
Section 223 of the BNSS, 2023 at the pre-cognizance stage,
governs the prosecutions under SEBI Act, 1992, with equal
force.
15. In the light of the aforesaid rival submissions, the core
question that comes to the fore is, whether the provisions
contained in Section 223 of the BNSS, 2023, which is a general
law in the matter of investigation, inquiry and trial of the
offences, would govern the prosecution for the offences under
SEBI Act, 1992 ? or Are there provisions in the SEBI Act, 1992
which regulate the manner of taking cognizance of the offences
punishable thereunder ?
16. To explore an answer to the aforesaid question, it would be
necessary to examine the general applicability of the provisions
of BNSS, 2023 to the prosecutions under special enactments,
the object of the penal provisions under SEBI Act, 1992,
whether there are provisions in the SEBI Act, 1992 which give a
contra indication, and what is the import of those provisions in
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the matter of taking cognizance of the offences punishable
under the SEBI Act, 1992, by the Special court.
17. To begin with, it is necessary to note the provisions
contained in Section 4(2) of the BNSS, 2023 (which corresponds
with Section 4(2) of the Code, 1973). Section 4(2) of the BNSS,
2023, reads as under :-
“(2) All offences under any other law shall be
investigated, inquired into, tried, and otherwise dealt
with according to the same provisions, but subject to
any enactment for the time being in force regulating
the manner or place of investigating, inquiring into,
trying or otherwise dealing with such offences.”
18. A bare textual reading of the aforesaid provision would
indicate that, the provisions of the BNSS, 2023 shall apply to
the investigation, inquiry and trial of all the offences under any
other, law apart from the Bhartiya Nyaya Sanhita, 2023 (IPC,
1860). The application of the provisions of the BNSS, 2023
would, however, be excluded only when a special law prescribes
a special procedure to deal with the investigation, inquiry or the
trial of the offences under such special enactments. In the
absence of any special procedure in the special statute in regard
to a particular matter pertaining to the investigation, inquiry or
trial of a special offence; be it the act of taking cognizance of the
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offence or the trial, the procedure under the BNSS, 2023 shall
apply automatically as a default procedure enshrined by the
general law governing the Criminal Procedure. To put it in other
words, wherever the special enactment does not contain any
provision in regard to a particular matter, the corresponding
provision in the BNSS, 2023 would be attracted to fill in the gap.
19. Keeping in view the aforesaid well recognized position in
law in the matter of application of the general law of procedure,
prescribed under BNSS, 2023, to the matters for which the
special enactment does not make a special or inconsistent
provision, the nature of the change introduced by the BNSS,
2023 in the matter of taking cognizance of the offence on a
private complaint, deserves to be noted.
20. Section 223 of the BNSS, 2023 corresponds to Section 200
of the Code, 1973. A significant change brought about by the
first proviso to Section 223(1) of the BNSS, 2023 is that, it
heralded a departure from the well ingrained rule of criminal
jurisprudence that, the accused has no right of audience before
the Court takes cognizance and issues process against the
accused. The law which prevailed before the introduction of the
proviso to Section 223(1), by and large, did not recognize a right
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of hearing at a pre-cognizance stage. The first proviso to Section
223(1) marked a paradigm shift by enshrining the right of
hearing at a pre-cognizance stage. It mandates that, no
cognizance of an offence on the basis of a complaint shall be
taken by the Magistrate without giving the accused an
opportunity of being heard. The first proviso is peremptory in
nature. Thus, once the manner of taking cognizance of the
offence, is found to be governed by Section 223 of BNSS, 2023,
then there can be no escape from the mandate of the first
proviso to Section 223(1) of BNSS, 2023.
21. At this juncture, it is necessary to note, the Parliament
considered it appropriate to provide an opportunity of hearing to
the accused at a pre-cognizance stage, with a view to ensure
that, the accused are not made to suffer the ordeal of facing the
prosecutions by resorting to private complaint mechanism,
indiscriminately.
22. At this stage, the object of the provisions contained in the
SEBI Act, 1992, deserves to be appreciated. The SEBI Act, 1992
has been enacted to protect the interest of investors in securities
and to promote the development of, and to regulate, the
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securities market and for matters connected therewith or
incidental thereto.
5
23. In the case of SEBI v. Ajay Agrawal , the Supreme Court
observed that, the SEBI Act, 1992 is preeminently a social
welfare legislation seeking to protect the interests of the
common men, who are small investors. While interpreting the
provisions of a social welfare legislation, it is the paramount
duty of the Court to adopt such an interpretation as to further
the purpose of law and, if possible, eschew the interpretation
which frustrates the law.
24. To achieve the aforesaid object, by successive amendments
to SEBI Act, 1992, the Parliament has conferred powers on the
authorities under the SEBI Act, 1992, enhanced the
punishment and penalties for the violation of the provisions of
the Act and incorporated measures to protect the interest of the
investors. A brief resume of the relevant provisions of the SEBI
Act, 1992, may be apposite.
25. Section 24(2) of the SEBI Act, 1992 punishes the failure to
pay the penalty imposed by the Adjudicating Officer or the
Board or failure to comply with any directions or orders passed
5
2010(3) SCC 765
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by the authorities under the SEBI Act, 1992. It reads as
under :-
“24. Offences- (1)……….
(2) If any person fails to pay the penalty imposed by
the adjudicating officer or the Board or fails to comply
with any directions or orders, he shall be punishable
with imprisonment for a term which shall not be less
than one month but which may extend to ten years or
with fine, which may extend to twenty-five crore
rupees or with both.”
26. Section 26 of the SEBI Act, 1992 provides for the
cognizance of offences by the Courts, as under :-
“[26. Cognizance of offences by Courts. - (1) No Court
shall take cognizance of any offence punishable
under this Act or any rules or regulations made
thereunder, save on a complaint made by the Board.
27. Section 26-A of the SEBI Act, 1992, envisages the
establishment of the Special Courts. It reads as under :-
[26-A. Establishment of Special Courts. - (1) The
Central Government may, for the purpose of providing
speedy trial of offences under this Act, by notification,
establish or designate as many Special Courts as may
be necessary.
(2) A Special Court shall consist of a single Judge
who shall be appointed by the Central Government
with the concurrence of the Chief Justice of the High
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Court within those jurisdiction the Judge to be
appointed is working.
(3) A person shall not be qualified for appointment as
a Judge of a Special Court unless he is, immediately
before such appointment, holding the office of a
Sessions Judge or an Additional Sessions Judge, as
the case may be.
28. Section 26-D of the SEBI Act, 1992, which bears upon the
applicability of the provisions of the general law contained in
BNSS, 2023 to the prosecutions for the offences under the SEBI
Act, 1992, reads as under :-
“26-D. Application of Code to proceedings before
Special Court. - (1) Save as otherwise provided in
this Act, the provisions of the Code of Criminal
Procedure, 1973 (2 of 1974) shall apply to the
proceedings before a Special Court and for the
purposes of the said provisions, the Special Court
shall be deemed to be a Court of Session and the
person conducting prosecution before a Special court
shall be deemed to be a Public Prosecutor within the
meaning of clause (u) of Section 2 of the Code of
Criminal Procedure, 1973 (2 of 1974).
……...”
29. Whether the aforesaid provisions, provide a special
procedure in the matter of taking cognizance of the offences ?
Section 26 of the SEBI Act, 1992 which deals with the
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cognizance of the offences only governs the mode of initiation of
the prosecution for the offences punishable under SEBI Act,
1992 and that mode is a complaint made by the Board. What is
interdicted by Section 26 is the other modes of taking
cognizance of the offences, as provided in Section 210 of the
BNSS 2023 (Section 190 of the Code, 1973), than that of a
complaint by the Board itself. The special provision in regard to
the mode of taking cognizance of the offence by the Code, only
on a complaint made by the Board, does not deal with the
manner of taking cognizance.
30. Section 26-A envisages the establishment of Special courts
for the purpose of providing speedy trial of the offences under
the SEBI Act, 1992. Sub-section (3) of Section 26-A provides
that, a person shall not be qualified for appointment as a judge
of a Special Court unless he is, immediately before such
appointment, holding the office of a Sessions Judge or an
Additional Sessions Judge, as the case may be. Section 26-A is,
thus, plainly restricted to the aspect of establishment of the
Special Courts and the qualification of the person to preside
over the Special Courts.
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31. Section 26-D of the SEBI Act, 1992 expressly makes the
provisions of the Code, 1973 (now BNSS, 2023) applicable to the
proceedings before a Special Court and further declares that, for
the purposes of the said provisions, the Special court shall be
deemed to be a Court of Session.
32. On its plain reading, Section 26-D makes the provisions of
the Code, 1973 applicable to the proceedings before a Special
Court unless, there is a contrary provision in the SEBI Act,
1992, itself. Thus, although sub-section (1) of Section 26-D
begins with an inbuilt saving clause by using the expression,
‘save as otherwise provided in this Act’ yet there is no provision
in the SEBI Act, 1992, which delineates a special procedure in
the matter of manner of taking cognizance of the offences under
the SEBI Act, 1992. Nor Section 26-D begins with a usual non
obstante clause ‘notwithstanding anything contained in the
Code of Criminal Procedure, 1973’ generally employed by the
legislature where the departure is sought to be made from the
general law.
33. A correct reading of Section 26-D of the SEBI Act, 1992
would indicate that, for the purpose of proceedings before a
Special Court, the Special Court shall be deemed to be a Court
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of Session. Save the aforesaid, there is nothing in Section 26-D
to suggest that, the rest of the provisions of BNSS, 2023, in
regard to taking cognizance of the offences do not apply to the
complaints under the SEBI Act, 1992.
34. Evidently, the Parliament has consciously used the non
obstante clause in the provisions contained in the SEBI Act,
1992, wherever it intended to give overriding effect to the
particular provision over the provisions of the Code of Criminal
Procedure, 1973. Thus, under Section 24-A, the composition of
offences has been permitted notwithstanding anything
contained in the Code, 1973. Likewise, under Section 26-B,
notwithstanding anything contained in the Code, 1973, all
offences under the said Act committed prior to the date of
commencement of the Securities Laws (Amendment) Act, 2014
or on or after the date of such commencement, shall be taken
cognizance of and tried by the Special Court. In contrast,
Section 26-D begins with only an inbuilt saving clause ‘Save as
otherwise provided in this Act’.
35. If the provisions contained in Section 26 are read, in the
aforesaid context, the fact that it does not begin with a non
obstante clause qua the Code, 1973, assumes significance.
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Section 26 only provides that, the cognizance of the offence can
only be taken on a complaint made by the Board. It could, thus,
be seen that, wherever the Parliament intended to give
overriding effect to the provisions of the SEBI Act, 1992, such
intent was made explicit by employing a non obstante clause.
The rule of interpretation expressed in the maxim, “Expressio
Unius Est Exclusio Alterius” which means, ‘where a statute
specifies certain exceptions, the absence of other exceptions
implies they were not intended’, may thus be attracted to
discern the legislative intent, in the case at hand.
36. In the light of the aforesaid resume of the provisions
contained in SEBI Act, 1992, the submissions canvassed on
behalf of the parties deserve to be appreciated.
37. I find it difficult to accede to the submission of Mr. Pasbola
that, Section 26-D of the SEBI Act, 1992 provides a mechanism
for the manner of taking cognizance of the offences. The reliance
placed by Mr. Pasbola on the decisions in the cases of Ajit
Kumar Palit (supra) and State of W.B. Vs. Bejoy Kumar Bose
(supra) , to buttress the submission that, the Special Court is
empowered to take cognizance on the complaint without
providing an opportunity of hearing to the accused, as
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envisaged by Section 223 of the BNSS, 2023, appears
inapposite.
38. In the case of Ajit Kumar Palit (supra) , the Supreme Court
was confronted with the question of proper construction of
Sections 4 and 5 of the West Bengal Criminal Law Amendment
(Special Courts) Act, 1949 (“West Bengal Amendment Act,
1949”). The said Act was enacted to provide for the speedy trial
of the offences specified in the Schedule appended thereto.
Interpreting the provisions of the West Bengal Amendment Act,
1949, and the provisions of the Code of Criminal Procedure,
1898, the Supreme Court observed that, as soon as a Special
Judge receives the orders of allotment of the case, passed by the
State Government, it becomes vested with jurisdiction to try the
case and when it receives the record from the Government, it
can apply its mind and issue notice to the accused and, thus,
start the trial of the proceedings assigned to it by the State
Government.
39. I am afraid the aforesaid decision advances the cause of
the submission on behalf of the complainant. The decision in
the case of Ajit Kumar Palit (supra) , is distinguishable for
reasons more than one. First, Section 4(1) of the West Bengal
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Amendment Act 1949, began with a non obstante clause. It
provided that, notwithstanding anything contained in the Code
of Criminal Procedure, 1898, or in any other law, the offences
specified in the Schedule shall be triable by the Special Court,
only. Sub-section (2) gave power to the State Government to
distribute the cases amongst the Special Courts. Second,
Section 26 of the SEBI Act, 1992, as noted above, provides only
specified mode of taking cognizance. Third, Section 26-D of the
SEBI Act, 1992 makes the provisions of the Code of Criminal
Procedure, 1973, specifically applicable to the proceedings
under the SEBI Act, 1992, save as otherwise provided in that
Act.
40. The decision in the case of State of W.B. Vs. Bejoy Kumar
Bose (supra), which held that, no valid objection could be taken
against the Special court taking cognizance on the written
complaint without complying with the provisions of Section 200
CrPC, also turned upon the special provisions contained in the
said statute. The observations in Paragraph Nos. 8 to 10 are
instructive and, hence, extracted below :-
“8. The above decision of this Court could have
concluded the matter, but it is pointed out by Mr.
A. K. Sen appearing on behalf of the respondent
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that in view of the amendment of Section 5(1) of
the Act by the West Bengal Act XXIV of 1960
introducing the words “in the manner laid down
in Clauses (a) and (b) of Sub-section (1) of Section
190 of the CrPC, 1973”, the legal position has
completely changed. He submits that it is now
obligatory for the Special Judge to examine the
complainant raider Section 200, CrPC, prior to
taking cognizance of the offence. Since in the
present case, proceeds the argument of Mr. Sen,
the Special Judge took cognizance merely on the
complaint of the Sub-Inspector of Police without
proceeding in accordance with Section 200,
Cr.P.C. the entire proceedings are vitiated.
9. We are unable to accede to the above
submission of Mr. Sen. It is true that the
amendment has introduced the manner of taking
cognizance in accordance with Section 190(1)(a) &
(b), Cr.P.C. appearing in Chapter XV of the
Criminal Procedure Code, 1973 but the legislature
in the amendment at the same time, has
advisedly omitted to include Section 200, Cr.P.C.
and the other provisions of the next Chapter
which is Chapter XVI dealing with “complaints to
Magistrates”.
10. It is clear that under Section 4(2) of the Act,
the allotment by the State Government to the
Special Judge of a case involving of scheduled
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offences vests the ncessary jurisdiction in the
special Judge to proceed to trial and is, therefore,
equivalent to that Court’s taking cognizance of the
offence (See Ajit Kumar Palit’s case (supra).
Because of the amendment of Section 5(2) in
1960, it may be now open to the Special Judge to
apply his judicial mind to the complaint apart
from allotment of the case in order to come to a
decision as to whether he is satisfied on the
material laid before him at that stage to take
cognizance of the offence and proceed to trial. If
he chooses to examine the complainant or any
witnesses before issuing process against any
accused, there is nothing in law to prevent him
from doing so. If he does not do so and is satisfied
on perusal of the complaint after allotment of the
case by the Government that an offence has been
disclosed against definite persons, no valid
objection could be taken against his taking
cognizance on the written complaint without
complying with the provision of Section 200,
Cr.P.C. No grievance can be made then that the
Special Judge has not examined the complainant
under Section 200, Cr.P.C. prior to issuing of
process.”
41. The Supreme Court took note of the fact that, Sections 4
and 5 of the West Bengal Criminal Law Amendment (Special
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Courts) Act, 1949 envisaged a special procedure for taking
cognizance of the offence. That is not the case at hand.
42. Reliance on the judgment in the case of Sanjabij Tari
(supra) , also does not advance the cause of the submission on
behalf of the complainant. It is pertinent to note, Section 142 of
the N. I. Act, 1881 begins with a non-obstante clause and
provides that, notwithstanding anything contained in the Code
of Criminal Procedure, 1973, no Court shall take cognizance of
any offence punishable under Section 138 of the N. I. Act, 1881
except upon a complaint in writing made by the payee or the
holder in due course of the cheque within the stipulated period
and no Court inferior to that of Metropolitan Magistrate or a
Judicial Magistrate, First Class, shall try any offence punishable
under Section 138 of the N. I. Act.
43. In that context, approving the view of Karnataka High
6
Court in the case of Ashok Vs. Fayaz Aahmad , the Supreme
Court observed that, it was in agreement with the view of the
Karnataka High Court that, the Act, 1881 is a special
enactment, and there is no need for the Magistrate to issue
summons to the accused before taking cognizance of the
6
MANU/KA/1743/2025
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complaint. Thus, there was no requirement to issue summons
to the accused in terms of Section 223 of the BNSS, 2023 i.e. at
a pre-cognizance stage.
44. In contrast to this, in the cases of Kushal Kumar Agarwal
7
(supra) , and Parvinder Singh Vs. Directorate of Enforcement ,
arising out of the provisions contained in PML Act, 2002, the
Supreme Court has emphasized the applicability of the
provisions contained in the proviso to Section 223(1) of the
BNSS, 2023 to the complaints filed under PML Act, 2002.
45. Section 43 of the PML Act, 2002 provides for the
constitution of the Special Courts. It provides that the Special
Court shall be a Court of Session which has been designated by
a notification issued by the Central Government. Section 44 of
the PML Act, 2002, inter alia , provides that notwithstanding
anything contained in the Code, 1973 :-
(b) a Special Court may, [ *] upon a complaint
made by an authority authorised in this behalf
under this Act take [cognizance of offence under
section 3, without the accused being committed to
it for trial]:
7
2026 SCC OnLine SC 903
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[Provided that after conclusion of investigation, if
no offence of money-laundering is made out
requiring filing of such complaint, the said
authority shall submit a closure report before the
Special Court; or] …...
46. Section 46 of the PML Act, 2002 makes the provisions of
the Code, 1973 applicable to the proceedings before the Special
Court, save as otherwise provided in that Act. Section 65 of the
PML Act, 2002 makes the provisions of the Code, 1973
applicable to the proceedings under the PML Act, 2002 in so far
as they are not inconsistent with the provisions of the PML Act,
2002.
47. The question of application of the provisions of the Code,
1973 to the complaints under PML Act, 2002, arose before the
Supreme Court, in the case of Tarsem Lal Vs. Directorate of
8.
Enforcement The Supreme Court after an elaborate
consideration, summarized the conclusions as under :-
“33.1 Once a complaint under Section 44(1)(b) PMLA is
filed, it will be governed by Sections 200 to 205 CrPC as
none of the said provisions are inconsistent with any of the
provisions of PMLA;
33.2 If the accused was not arrested by ED till filing of the
complaint, while taking cognizance on a complaint under
Section 44(1)(b), as a normal rule, the court should issue a
8
( 2024) 7 SCC 61
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summons to the accused and not a warrant. Even in a
case where the accused is on bail, a summons must be
issued ;
33.3 After a summons is issued under Section 204 CrPC
on taking cognizance of the offence punishable under
Section 4 PMLA on a complaint, if the accused appears
before the Special Court pursuant to the summons, he
shall not be treated as if he is in custody. Therefore, it is
not necessary for him to apply for bail. However, the
Special Court can direct the accused to furnish bond in
terms of Section 88 CrPC;
33.4 In a case where the accused appears pursuant to a
summons before the Special court, on a sufficient cause
being shown, the Special Court can grant exemption from
personal appearance to the accused by exercising power
under Section 205 CrPC;”
(emphasis supplied)
48. In the case of Kushal Kumar Agarwal (supra) , the question
of applicability of the first proviso to Section 223(1) of the BNSS,
2023, warranting an opportunity of hearing to the accused in a
PMLA prosecution complaint, was posed before the Supreme
Court and it was answered as under :-
“5. This Court has taken a consistent view that a complaint
filed by the Enforcement Directorate under Section 44(1)(b)
of the PMLA will be governed by Sections 200 to 204 of the
CrPC. This view has been taken by this Court in the cases of
Yash Tuteja v. Union of India and Tarsem Lal v. Enforcement
Directorate. Therefore, the provisions of Chapter XVI,
containing Sections 223 to 226, will also apply to a
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WP-5242-2025.DOC
complaint under Section 44 of the PMLA. As the complaint
st
has been filed after 1 July, 202, Section 223 of the BNSS
will apply to the present complaint.
6. The proviso to sub-section (1) of Section 223 puts an
embargo on the power of the Court to take cognizance by
providing that no cognizance of an offence shall be taken by
the Magistrate without giving the accused an opportunity of
being heard.
7. In this case, admittedly, an opportunity of being heard
was not given by the learned Special Judge to the appellant
before taking cognizance of the offence on the complaint.
th
Only on that ground, the impugned order dated 20 April,
2024, will have to be set aside.”
(emphasis supplied)
49. In a recent pronouncement in the case of Parvinder Singh
(supra) , the Supreme Court again considered the applicability of
the first proviso to Section 223(1) of the BNSS, 2023 to a
prosecution complaint under PML Act, 2002. The Supreme
Court upon construction of the proviso to Section 223(1)
enunciated that, though Chapter XVI of the BNSS, 2023 lays
down the procedural law dealing with complaints made to a
Magistrate, the first proviso to Section 223(1) of the BNSS, 2023
is substantive in nature, as it does not merely regulate the
manner in which the proceedings are to be conducted, rather it
confers a right upon the accused to be heard before taking
cognizance which forms a part of the right of an accused to a
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fair trial enshrined under Article 21 of the Constitution of India.
Thus, the word, “shall” occurring in the first proviso has to be
construed to be mandatory in nature, which enures to the
benefit of an accused. Resultantly, cognizance of an offence
taken by a Court without due compliance of the aforesaid
proviso would be void ab initio.
50. The Supreme Court after extensively referring to the
decisions in the cases of Tarsem Lal (supra) and Kaushal Kumar
Agarwal (supra ), concluded that, Sections 200 to 205 of the
Code, 1973 (now Sections 223 to 228 of BNSS, 2023) would be
applicable to proceedings under PML Act, 2002. Non-compliance
with the first proviso to Section 223(1) of the BNSS, 2023
vitiates the order taking cognizance, and the same cannot be
sustained in the eyes of law.
51. This Court does not find that, there is a significant textual
difference in the provisions contained in PML Act, 2002 and
SEBI Act, 1992 in the matter of the manner of taking cognizance
of the offences. In the absence of any contrary intent evincible
from the SEBI Act, 1992, the first proviso to Section 223(1)
would also govern the complaint for the offences punishable
under the SEBI Act, 1992.
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52. The conspectus of aforesaid consideration is that, the
question framed above is required to be answered in the
affirmative. The Special Court cannot take cognizance of the
offences punishable under the SEBI Act, 1992, without
compliance of the peremptory requirement of providing an
opportunity of hearing to the accused, as provided under the
first proviso to Section 223(1) of the BNSS, 2023.
53. Resultantly, the order of taking cognizance of the offence
punishable under Section 24(2) of the SEBI Act, 1992, cannot
be sustained. The impugned order, therefore, deserves to be
quashed and set aside. The learned Judge, Special Court (SEBI)
is now required to provide an opportunity of hearing to the
accused and, thereafter, pass an appropriate order in
accordance with law.
54. Hence, the following order :-
: : O R D E R : :
I) The Writ Petition stands allowed.
II) The impugned order of taking cognizance
and issuance of process against the accused
stands quashed and set aside on the sole
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WP-5242-2025.DOC
ground of non-compliance with the proviso to
sub-section (1) of Section 223 of the BNSS,
2023.
III) The learned Judge, Special Court is
requested to provide an opportunity of hearing
to the petitioner before passing an order as
regards taking cognizance of the offence
punishable under Section 24(2) of the SEBI Act,
1992, in accordance with law.
IV) For the said purpose, the petitioner shall
rd
appear before the Special Court on 03 August,
2026. No separate notice be issued to the
petitioner – accused.
V) By way of abundant caution, it is clarified
that, this Court has not entered into the merits
of the matter and all contentions of all the
parties are expressly kept open for
consideration by the Special Court.
V) Rule made absolute in the aforesaid
terms.
No costs.
[N. J. JAMADAR, J.]
SAINATH, PA 32/32
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