The Court mandates an opportunity of hearing for the accused under Section 223 of the Bharatiya Nagarik Suraksha Sanhita, 2023 before taking cognizance of offences.
In a significant ruling, the Bombay High Court has set aside the order of the Special Court under the Securities and Exchange Board of India Act, 1992 (SEBI Act) that had taken cognizance against Neville Tuli without providing him an opportunity to be heard, as mandated by the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The decision, delivered by Justice N. J. Jamadar, reinforces the procedural rights of the accused under the new legal framework.
The case arose when SEBI identified Osian's Art Fund as a collective investment scheme operating without registration, in violation of the SEBI Act. Following the failure of appeals and compliance by Osian's, SEBI initiated prosecution against Tuli and another director. However, the Special Court issued the process without hearing the accused, prompting Tuli to challenge the order.
The High Court examined whether the Special Court's actions aligned with the procedural requirements of the BNSS, 2023, specifically Section 223, which mandates a hearing before cognizance is taken. The Court emphasized that the absence of a special procedure in the SEBI Act for taking cognizance implies the applicability of the BNSS provisions. The judgment clarifies that compliance with Section 223 is not merely procedural but substantive, as it forms part of the accused's right to a fair trial under Article 21 of the Constitution.
Justice Jamadar's ruling underscores the importance of procedural fairness, stating that any cognizance without adhering to the mandated hearing process is void. The Court directed the Special Court to provide Tuli with an opportunity of hearing before proceeding further, setting a precedent for similar cases under special legislation.
The decision aligns with the Supreme Court's interpretations in cases involving the Prevention of Money Laundering Act, confirming the applicability of BNSS provisions to special statutes unless explicitly excluded. This ruling is a reaffirmation of the judiciary's commitment to uphold the rights of the accused in line with constitutional protections.
Bottom line:-
The Special Court under the SEBI Act, 1992 cannot take cognizance of offences without providing an opportunity of hearing to the accused, as mandated under the first proviso to Section 223(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023.
Statutory provision(s):
- Securities and Exchange Board of India Act, 1992 Section 24(2)
- Bharatiya Nagarik Suraksha Sanhita, 2023 Section 223
- Bharatiya Nagarik Suraksha Sanhita, 2023 Section 4
- Bharatiya Nagarik Suraksha Sanhita, 2023 Section 528
- Article 21 of the Constitution of India
Neville Tuli v. Securities and Exchange Board of India, (Bombay) : Law Finder Doc id # 2941327
