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Issues Involved:
1. Collateral Purpose of Public Examination 2. Violation of Article 20(3) of the Constitution 3. Bar on Incriminating Questions 4. Protection under Section 132 of the Indian Evidence Act Detailed Analysis: I. Collateral Purpose of Public Examination Mr. Bhatt contended that the order for public examination was obtained for a collateral purpose, specifically to fish out evidence to support a misfeasance summons. The court examined the principles laid down by the Supreme Court in Satish Churn Law v. H.K. Ganguli [1962] and concluded that the order for public examination could only be vacated if it was shown to be obtained for a collateral purpose or by misleading the court. The court found no evidence that the order dated 2nd December 1964 was obtained for such purposes. The official liquidator had acted within the framework of the law, and the delay in filing the misfeasance summons was justified due to Mundhra's delayed filing of the statement of affairs. The court rejected the application to vacate the order for public examination. II. Violation of Article 20(3) of the Constitution Mr. Bhatt argued that the notice for public examination violated Article 20(3) of the Constitution as it compelled the directors to be witnesses against themselves. The court referred to several Supreme Court decisions, including Maqbool Hussain v. State of Bombay [1953], Venkataraman v. Union of India [1954], and Narayanlal Bansilal v. M.P. Mistry [1960], to determine the nature of formal accusations. It concluded that formal accusations must be made to a competent court or appropriate police officer. Since the misfeasance summons and the affidavit in support were not served on the directors and were not formal accusations before a competent court, Article 20(3) was not applicable. The court rejected the contention that the notice for public examination was void under Article 20(3). III. Bar on Incriminating Questions Mr. Bhatt contended that the misfeasance summons barred any incriminating questions during the public examination. The court held that since the misfeasance summons and the affidavit did not constitute formal accusations, Article 20(3) was not applicable. The court emphasized that public examination under Section 478 is a "roving inquiry" to discover facts related to the company's conduct and dealings. The court referred to K. Joseph v. Narayanan [1964] and Popular Bank v. Madhava Naik [1965], which clarified that public examination aims to collect evidence and is not limited to predetermined issues. The court rejected the contention that questions related to the misfeasance summons were outside the scope of Section 478 and vexatious. IV. Protection under Section 132 of the Indian Evidence Act Mr. Bhatt argued that if his client was compelled to answer incriminating questions, protection should be afforded under the proviso to Section 132 of the Indian Evidence Act. The court examined Section 478(5) of the Companies Act, which mandates that the person being examined "shall answer all such questions." The court concluded that the provisions of Section 478(5) override Section 132 of the Evidence Act, meaning that answers given during public examination can be used in both civil and criminal proceedings. The court cited English law and the decision in In re Paget [1927], which supported the view that an officer under public examination cannot refuse to answer incriminating questions. The court rejected the contention that protection under Section 132 should be afforded. Conclusion All preliminary objections raised by Mr. Bhatt were rejected. The court directed that the public examination of the directors must proceed.
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