1964 (8) TMI 39 - SC - Companies Law

Whether the order for public examination was void as offending article 20(3) of the Constitution which says that No person accused of any offence shall be compelled to be a witness against himself. ? Held that - Section 45G of the Banking Companies Act did not offend clause (3) of article 20 of the Constitution and no order 4ot public examination under it could violate that clause as there could be no accusation in a proceeding under the section resulting in an order for public examination. For the purpose of action under section 545 ot the Companies Act and section 45J of the Banking Companies Act it is not essential that a public examination should first be held either under section 478 of the Companies Act or section 45G ofthe Banking Companies Act. Therefore, public examination under section 478 of the Companies Act and section 45G of the Banking Companies Act have no concern with proceedings under section 545 of the Companies Act and section 45J of the Banking Companies Act. A prayer for action under section 545 of the Companies Act and section 45 J of the Banking Companies Act cannot hence amount to accusation under article 20(3) for the purposes of orders for public examination under section 478 of the Companies Act or section-45G of the Banking Companies Act. Appeal allowed.

Summary

Issues:
- Interpretation of sections 478, 531, 538, 539, 541, 545 of the Companies Act and sections 45C, 45G, 45H, 45J of the Banking Companies Act.
- Validity of the order for public examination under section 478 of the Companies Act and section 45G of the Banking Companies Act.
- Compliance with Article 20(3) of the Constitution regarding self-incrimination.
- Distinction between accusations and allegations in legal proceedings.

Analysis:

The judgment concerns an application for public examination of nine bank officers in a winding-up proceeding. The liquidator sought examination under various sections of the Companies Act and the Banking Companies Act, alleging fraud, misfeasance, and misappropriation. The single judge initially restricted the application to one section but later allowed public examination under section 478 of the Companies Act. The central issue was whether this order violated Article 20(3) of the Constitution, protecting against self-incrimination. The single judge held no violation occurred as the officers were not accused of any offense. However, the appellate bench reversed this decision, considering the accusations in the application. They left open the question of whether the examination order could violate Article 20(3) without accusations.

The Supreme Court relied on a recent judgment to resolve the issue, stating that an order under section 45G of the Banking Companies Act does not breach Article 20(3) as it aims to collect evidence, not accuse individuals. The Court emphasized that allegations in such proceedings are not accusations. The Court rejected attempts to distinguish the case based on the application of different sections, affirming that the essence of the sections remained the same regarding accusations. The Court also dismissed arguments about prayer (d) in the application, clarifying that it did not affect the examination order and was irrelevant to the self-incrimination issue.

Ultimately, the Court allowed the appeals, overturning the appellate bench's decision and reinstating the single judge's order for public examination. The Court emphasized that the purpose of public examination under the relevant sections was not to accuse but to gather evidence, ensuring that such proceedings did not violate the constitutional right against self-incrimination. The judgment highlighted the distinction between accusations and allegations in legal proceedings, clarifying that accusations arise only after specific orders are made, not during preliminary examinations.