For the first two decades of its life, the SEBI Act, 1992 had no dedicated criminal forum of its own. Offences under Section 24 wound their way through ordinary Magistrates and Sessions Courts, and securities prosecutions sat in the same queue as every other criminal complaint. The Securities Laws (Amendment) Act, 2014 changed this decisively by inserting Sections 26A to 26E, creating a bespoke architecture of Special Courts for the speedy trial of securities offences. Section 26A is the cornerstone of that architecture: it empowers the Central Government to establish Special Courts, fixes their composition, and ties their creation to the concurrence of the constitutional head of the High Court. This chapter unpacks the provision, the cluster of sections that orbit it, and the litigation that has tested how far backward the new forum can reach.
Why Section 26A Was Enacted
The SEBI Act began as a regulatory statute, not a penal one. Its enforcement teeth were predominantly civil and administrative: registration, inspection, adjudication of penalties under Section 15-I, and directions under Sections 11 and 11B. Criminal liability did exist under Section 24, which punishes contraventions of the Act, rules and regulations, but the trial machinery was borrowed wholesale from the ordinary criminal courts. As securities scams grew larger and more technical through the 1990s and 2000s, this borrowed machinery proved inadequate. Magistrates unfamiliar with market manipulation, fund diversion and disclosure fraud were processing complex SEBI complaints alongside routine dockets, and the resulting delay blunted deterrence.
The Securities Laws (Amendment) Act, 2014 (Act 27 of 2014), which received Presidential assent on 22 August 2014 and was given effect from 18 July 2013 to replace the earlier Ordinances, answered this problem by carving out a specialist forum. It inserted a fresh cluster, Sections 26A to 26E, modelled on the Special Court mechanism already familiar from other economic and special statutes. The legislative object, stated plainly in the amendment, was the "speedy trial" of offences. For a fuller account of how the 2014 amendments reshaped SEBI's enforcement reach, see our chapter on powers and functions and the broader object and scheme of the Act.
The Text and Structure of Section 26A
Section 26A is titled "Establishment of Special Courts." Sub-section (1) provides that the Central Government may, for the purpose of providing speedy trial of offences under the Act, by notification, establish or designate as many Special Courts as may be necessary. Sub-section (2) fixes the composition: 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 Court within whose jurisdiction the Judge to be appointed is working. Sub-section (3) lays down the eligibility threshold: 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.
Three structural features deserve emphasis for the examination. First, the court is a single-judge forum, not a bench. Second, the appointment is an executive act of the Central Government, but it is constitutionally fettered: the word used is "concurrence," not mere "consultation," of the Chief Justice. Concurrence imports agreement, so the executive cannot install a Judge over the High Court's objection. Third, the judicial pedigree is fixed at the Sessions level, which dovetails with Section 26D, under which the Special Court is deemed to be a Court of Session for procedural purposes.
Establish or Designate: The Dual Mechanism
A point that examiners reward is the distinction between "establishing" a wholly new Special Court and "designating" an existing court as a Special Court. Section 26A permits both. In practice, the Central Government has overwhelmingly used the designation route to avoid creating new infrastructure. By notification dated 21 April 2015, the Central Government designated the 39th Sessions Court, City Civil Court, Greater Mumbai, as the Special Court for the purposes of the SEBI Act. Mumbai was the natural choice given that SEBI's headquarters and the principal stock exchanges are located there.
The designation device means that an existing Sessions Judge, who already satisfies the eligibility condition in Section 26A(3), can be clothed with Special Court jurisdiction. It also explains why Section 26B contains a fallback: where no Special Court has been designated for a particular area, the offence is tried by the Court of Session. The dual mechanism keeps the system functional even where notification has not yet reached every region, while preserving the specialist character of the forum wherever a Special Court is in fact designated.
The Sibling Sections: 26B to 26E
Section 26A cannot be read in isolation; it is the first of a tightly woven cluster. Section 26B deals with offences triable by Special Courts. It provides that notwithstanding anything in the Code of Criminal Procedure, 1973, all offences under the Act committed prior to the date of commencement of the 2014 Amendment Act, or on or after that date, shall be taken cognizance of and tried by the Special Court established for the area in which the offence is committed or where there are more Special Courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned.
Section 26C governs appeal and revision: the High Court may exercise, so far as may be applicable, all the powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure on a High Court, as if the Special Court were a Court of Session trying cases within the local limits of the High Court. Section 26D applies the Code of Criminal Procedure to proceedings before a Special Court, which is deemed to be a Court of Session, and provides that the person conducting prosecution before it shall be deemed to be a Public Prosecutor. Section 26E is the transitional provision: any offence committed under the Act which is triable by a Special Court shall, until a Special Court is established, be tried by a Court of Session exercising jurisdiction over the area, notwithstanding anything in the Code. Together, these provisions are surveyed alongside SEBI's wider investigation powers.
Cognizance and the Complaint Requirement
The Special Court's jurisdiction is gatekept by Section 26, which deals with cognizance. Before the 2014 amendment, Section 26(1) barred any court inferior to that of a Court of Session from trying offences under the Act, and Section 26(2) barred cognizance save on a complaint by SEBI, the Central or State Government, or in certain cases a recognised stock exchange. The 2014 amendment omitted Section 26(2) and relocated the trial forum into the Special Court regime, while retaining the principle that cognizance is taken only on a written complaint and not on a police report.
This is a defining feature of securities prosecutions and a frequent examination point. SEBI Act offences are not cognizable in the ordinary FIR-and-police-investigation sense; the prosecution is set in motion by a complaint, typically by the Board. The police do not initiate these prosecutions. The Special Court therefore functions as a complaint-driven criminal court, taking cognizance of the offence directly once a valid complaint is filed, rather than waiting for a charge-sheet from an investigating agency.
SEBI v. Classic Credit: The Leading Authority
The most important judicial gloss on the Special Court regime is the Supreme Court's decision in Securities and Exchange Board of India v. Classic Credit Ltd., decided on 21 August 2017. The case arose from prosecutions launched well before the 2014 amendment, and the central question was where they should now be tried once Sections 26A to 26E had taken effect. The Court held that the forum for trial, post the 2014 amendment, is the Special Court, and that the change of forum operates regardless of when the offence was committed.
The reasoning turned on the express language of Section 26B, which speaks of offences committed "prior to the date of commencement" of the Amendment Act as well as those committed on or after it. Reading this together with the settled principle that a change of forum is procedural and therefore presumptively retrospective, the Court concluded that pending matters before Magistrates and Sessions Courts stand transferred to the Special Court. Classic Credit thus confirms that the Special Court enjoys exclusive and retrospective jurisdiction over SEBI Act offences, and that no vested right survives in the older forum.
Retrospective Forum and Direct Cognizance
Two consequences flow from Classic Credit. The first is the retrospective shift of forum. An accused cannot resist transfer to the Special Court by arguing that the offence predates the 2014 amendment, because Section 26B expressly captures pre-commencement offences. The Court treated the relocation as procedural, invoking the familiar rule that litigants have no vested right in a particular forum. Arguments built on A.R. Antulay v. R.S. Nayak to resist such transfer have been held to be of no assistance, because that decision concerned a court acting without jurisdiction, not a legislatively mandated change of forum.
The second consequence is direct cognizance. Because the Special Court is deemed a Court of Session under Section 26D but takes cognizance of a complaint directly, there is no requirement of committal by a Magistrate, which would ordinarily precede a Sessions trial under the Code. The Special Court takes cognizance of the offence on the complaint and proceeds to try it, bypassing the committal stage. This is a significant procedural economy and is precisely the kind of speedy-trial outcome the 2014 amendment sought to achieve.
Special Court and Adjudication: The Kejriwal Line
A securities wrongdoer often faces two parallel proceedings: an adjudication before SEBI's adjudicating officer leading to monetary penalty under Section 15-I, and a criminal prosecution before the Special Court under Section 24. The relationship between these tracks is governed by the Supreme Court's decision in Radheshyam Kejriwal v. State of West Bengal, (2011) 3 SCC 581. Although decided under the Foreign Exchange Regulation Act, its principles are routinely applied to SEBI prosecutions.
The Court held that adjudication and criminal prosecution can be launched simultaneously and are independent in nature; a decision in adjudication is not a condition precedent to prosecution. Crucially, however, where the accused is exonerated in the adjudication proceeding on merits, and the exoneration amounts to a clear finding that the very allegation is not sustainable, continuance of a criminal prosecution on the same facts would be an abuse of process. Mere technical or benefit-of-doubt exoneration does not have this effect. This nuanced test directly shapes what the Special Court must consider when an accused, relying on a favourable SEBI order, seeks discharge from prosecution.
Discharge Before the Special Court
The Kejriwal principle has been refined in the SEBI context by the Bombay High Court, the High Court whose jurisdiction covers the designated Mumbai Special Court. The High Court has held that discharge from criminal prosecution under the SEBI Act cannot be claimed merely because an adjudicating officer did not impose a penalty or pass adverse directions. Regulatory non-action is not the same as an affirmative finding of innocence. Exoneration in the regulatory proceeding bars criminal prosecution only where there is a clear and categorical finding of innocence on the merits.
For the Special Court, this draws a workable line. An accused who points merely to administrative silence or a lenient regulatory outcome has not made out a case for discharge. Only a reasoned regulatory finding that the conduct alleged simply did not occur, or did not amount to a violation, will engage the abuse-of-process bar from Kejriwal. The Special Court must therefore scrutinise the substance of the SEBI order, not its bare result, before deciding whether a prosecution can be allowed to continue.
Appeal, Revision and Supervisory Control
Section 26C answers the question of where appeals from a Special Court go. Because the Special Court is treated as a Court of Session, the High Court within whose territory it functions exercises the appellate and revisional powers conferred by Chapters XXIX and XXX of the Code of Criminal Procedure. An order of conviction or acquittal by the Special Court is therefore amenable to the ordinary criminal appellate and revisional jurisdiction of the High Court, just as a Sessions Court order would be.
This is conceptually distinct from the appellate route in SEBI's civil and adjudicatory stream, where appeals lie to the Securities Appellate Tribunal under Section 15T and thence to the Supreme Court under Section 15Z. The criminal stream and the regulatory stream thus run on separate appellate tracks: the Special Court feeds into the High Court's criminal side, while the adjudicating officer and SEBI's orders feed into the SAT. Keeping these two ladders distinct is a common source of confusion and a reliable examination trap.
Procedure, Public Prosecutor and the Code
Section 26D stitches the Special Court into the general criminal procedure. It provides that the provisions of the Code of Criminal Procedure, 1973 apply to proceedings before a Special Court, which is deemed to be a Court of Session, and that the person conducting the prosecution is deemed to be a Public Prosecutor. The practical effect is that the Special Court enjoys the powers of a Court of Session, including in matters of trial procedure, recording of evidence, framing of charge and sentencing, while the prosecution is conducted by a person clothed with the status and obligations of a Public Prosecutor.
This deeming has consequences for ancillary matters such as bail and the manner of trial. Because the Special Court is a Court of Session, the trial follows the warrant-trial and sessions-trial framework of the Code rather than the summons procedure of a Magistrate. The deeming also means that wherever the Code requires an act to be done by or before a Court of Session, that requirement is satisfied by the Special Court, which provides certainty about applicable procedural norms without the legislature having to spell each one out.
The Transitional Provision and the Fallback Forum
Section 26E is the transitional safety valve. It provides that until a Special Court is established, an offence triable by the Special Court shall be tried by the Court of Session exercising jurisdiction over the area, notwithstanding anything in the Code of Criminal Procedure. The provision ensures continuity: the absence of a notified Special Court in a given region does not create a jurisdictional vacuum, because the ordinary Court of Session steps in as the default forum.
Read together with Section 26B, which channels offences to the designated Special Court "where there are more Special Courts than one" with the concerned High Court specifying which one will try the case, the scheme is internally complete. Where a Special Court exists, it has exclusive jurisdiction; where several exist for one area, the High Court allocates; and where none exists yet, the Court of Session carries the burden under Section 26E. This layered design is what allowed the 2014 regime to come into force seamlessly even before Special Courts were notified across the country.
Exam Pointers and Common Traps
Several distinctions recur in judiciary and CLAT-PG papers. Remember that the Special Court is a single-judge forum, not a bench, and that the eligibility floor is a sitting Sessions Judge or Additional Sessions Judge, fixed at the time immediately before appointment. The appointing authority is the Central Government, but the High Court's role is one of concurrence, not mere consultation, which is a stronger constitutional safeguard. Do not confuse the criminal appellate route under Section 26C, which runs to the High Court, with the regulatory appellate route to the Securities Appellate Tribunal under Section 15T.
On the cases, anchor your answer in Classic Credit for the retrospective shift of forum and direct cognizance without committal, and in Radheshyam Kejriwal for the adjudication-versus-prosecution relationship, qualified by the rule that only exoneration on merits bars prosecution. Recall the 21 April 2015 notification designating the 39th Sessions Court, Greater Mumbai, as the Special Court, since named-notification questions are common. For the surrounding institutional framework, revisit our chapters on the powers and functions of SEBI and the investigation powers that feed into a prosecution, and return to the SEBI Act hub to see how the Special Court fits the whole statutory scheme.
Frequently asked questions
Who can be appointed a Judge of a Special Court under Section 26A?
A person who, immediately before appointment, is holding the office of a Sessions Judge or an Additional Sessions Judge. The appointment is made by the Central Government with the concurrence of the Chief Justice of the High Court within whose jurisdiction the Judge is working. The Special Court is a single-judge forum.
Is the Chief Justice's role consultation or concurrence?
Concurrence. Section 26A(2) requires the Central Government to obtain the concurrence of the Chief Justice of the relevant High Court. Concurrence imports agreement, so the executive cannot appoint a Special Court Judge over the High Court's objection, a stronger safeguard than mere consultation.
Can offences committed before the 2014 amendment be tried by the Special Court?
Yes. Section 26B expressly covers offences committed prior to the commencement of the Securities Laws (Amendment) Act, 2014 as well as after it. In SEBI v. Classic Credit Ltd. (21 August 2017) the Supreme Court held that the Special Court is the forum for trial post-amendment and that pending matters stand transferred to it, the change of forum being procedural and retrospective.
Does the Special Court need a Magistrate to commit the case before trial?
No. Although the Special Court is deemed a Court of Session under Section 26D, it takes cognizance of a complaint directly. Following Classic Credit, the committal stage that would ordinarily precede a Sessions trial is dispensed with, which serves the speedy-trial object of the 2014 amendment.
Does exoneration by SEBI in adjudication bar criminal prosecution before the Special Court?
Only if it is exoneration on merits. Under Radheshyam Kejriwal v. State of West Bengal, (2011) 3 SCC 581, adjudication and prosecution are independent and can run simultaneously, but a clear finding of innocence on merits makes continued prosecution an abuse of process. The Bombay High Court has held that mere non-imposition of penalty is not such a finding.
Where do appeals from a Special Court lie?
To the High Court. Under Section 26C, because the Special Court is treated as a Court of Session, the High Court exercises appellate and revisional powers under Chapters XXIX and XXX of the Code of Criminal Procedure. This criminal route is distinct from the regulatory appeal to the Securities Appellate Tribunal under Section 15T.