1961 (9) TMI 24 - HC - Companies Law

Summary

Issues Involved:
1. Whether the application is maintainable under section 185 of the Indian Companies Act, 1913.
2. Whether the respondent is in possession of the sums in question belonging to the company.
3. Whether the respondent should be examined in view of the provisions of article 20(3) of the Constitution of India.

Detailed Analysis:

1. Maintainability of Application under Section 185 of the Indian Companies Act, 1913:
Section 185 of the Indian Companies Act, 1913, empowers the court to require any contributory, trustee, receiver, banker, agent, or officer of the company to pay, deliver, surrender, or transfer any money, property, or documents to the official liquidator. The court determined that the application by the official liquidator against the respondent, who was the managing director of the company, to recover Rs. 5,73,100 was maintainable under this section.

2. Possession of Sums by the Respondent:
The official liquidator alleged that the respondent was wrongfully holding several amounts totaling Rs. 5,73,100 belonging to the company. The respondent denied possession of any such sums or property. The court framed this as an issue to be decided based on the evidence presented by both parties.

3. Examination of the Respondent and Article 20(3) of the Constitution:
The respondent sought adjournment of the proceedings until the decision of a pending criminal case against him, arguing that any statement made in the current proceedings could prejudice his defense in the criminal case. He claimed protection under article 20(3) of the Constitution, which states, "No person accused of any offence shall be compelled to be a witness against himself."

- Historical Context and Legal Principles:
The court delved into the historical context and legal principles underlying the privilege against self-incrimination, tracing its roots from English common law to its adoption in American and Indian legal systems. The court emphasized that the privilege is meant to protect individuals from being compelled to incriminate themselves in criminal proceedings.

- Application of Article 20(3):
The court noted that article 20(3) applies to criminal proceedings where a person is accused of an offence. The privilege against self-incrimination does not extend to civil proceedings or to situations where the individual is not compelled to testify. The court cited several precedents, including Sharma v. Satish Chandra, Raja Narayan Bansilal v. Manek Phiroz Mistry, and others, to illustrate the scope and limitations of article 20(3).

- Court's Findings:
The court found that the proceedings under section 185 of the Indian Companies Act, 1913, were civil in nature and did not involve criminal prosecution. The respondent was not being compelled to testify; it was within his discretion to choose whether to appear as a witness. The court emphasized that the protection under article 20(3) is not applicable in this context as the respondent is not being subjected to criminal charges in these proceedings.

- Conclusion:
The court concluded that the respondent could not claim the privilege under article 20(3) in the current proceedings. The application for adjournment (L.M. 89 of 1960) was dismissed, and the court directed that the proceedings under section 185 should continue without delay.

Summary:
The court ruled that the application under section 185 of the Indian Companies Act, 1913, to recover sums allegedly held by the respondent was maintainable. It found that the respondent could not claim protection under article 20(3) of the Constitution in these civil proceedings, as he was not being compelled to testify against himself in a criminal matter. The application for adjournment was dismissed, allowing the proceedings to continue.