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TMI Blog1960 (8) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... was the Managing Agent of the company as well as its promoter, and that it was suspected that under a fictitious name of Bansilal Uchant Account the company was advancing money to the several firms owned by the appellant which were ostensibly purchased from the company's funds. The report further stated that between the years ending in September, 1942 and 1951 about Rs. 19,200 were paid for Harpur Farm and Rs. 39,300 for Bhavanipur Farm, and accounts disclosed that the Uchant Account was chiefly operated upon for purchasing such lands out of the funds of the company though the purchase in fact was for an on behalf of the appellant. The Registrar also added that he had reason to believe that the Managing Agent was utilising the property of the company in some cases for his personal gain, and concluded that, in his opinion, a case had been made out for an investigation under s. 138. 2. On receiving this report, on November 1, 1955, the Central Government passed an order under s. 138(4) of the said Act (Ex. B) appointing the first respondent Maneck P. Mistry, who is a Chartered Accountant, as an inspector to investigate the affairs of the company from the date of its incorporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be sufficient for out purpose to set out the purport of one of them. The first notice called upon the appellant to attend the office of respondent 1 on the date and at the time specified for the purpose of being examined on oath in relation to the affairs of the company, and to produce before respondent 1 all the books of accounts and papers relating to the said company as mentioned in the notice. The appellant was further told that in default of compliance with the requisition aforesaid necessary legal steps would be taken without further reference to him. The notice contains a list of twelve items describing the several documents which the appellant was required to produce before respondent 1. 4. After these notices were served on the appellant he filed a petition (No. 201 of 1957) in the Bombay High Court and prayed that the High Court should issue a writ of certiorari or any other appropriate direction, order or writ under Art. 226 of the Constitution calling upon respondent 1 to produce the records of the case relating to the notices in question and to set aside the said notices, the proposed examination of the appellant and the interim report made by him. It further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the new Act the impugned notices issued by him would be without authority and jurisdiction. In dealing with this question it is necessary to examine the broad features of the relevant sections of the two Acts. 6. We will begin with the old Act. Section 137 of the old Act deals with investigation by the Registrar. Section 137(1) provides that where the Registrar on perusal of any document which a company is required to submit to him is of opinion that any information or explanation is necessary in order that such document may afford full particulars of the matter to which it purports to relate he may, by a written order, call on the company to furnish in writing the necessary information or explanation within the time to be specified in the order. Section 137(5) requires the Registrar to make a report in writing to the Central Government if no information is supplied to him within the specified time, or if the information supplied to him appears to him to disclose an unsatisfactory state of affairs, or does not disclose a full and fair statement of the relevant matters. Thus s. 137(1) to (5) deal with the investigation which the Registrar is empowered to make on a perusal of the doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and to administer an oath to him. Section 140(3) provides that if a person refuses to produce a book or a document or to answer any question he shall be liable to a fine not exceeding Rs. 50 in respect of each offence. Section 141 provides that on the conclusion of an investigation the inspectors shall report their opinions to the Central Government, and shall forward a copy of their report to the registered officer of the company; and it also provides that a copy of the said report can be delivered at their request to the applicants for the investigation. Then we have s. 141A which deals with the institution of prosecutions. Section 141A(1) provides that if from any report made under s. 138 it appears to the Central Government that any person has been guilty of any offence in relation to the company for which he is criminally liable the Central Government shall refer the matter to the Advocate-General or the Public Prosecutor. Section 141A(2) lays down that if the law officer who is consulted under (1) considers that there is a case in which prosecution ought to be instituted he shall cause proceedings to be instituted accordingly. That in brief is the scheme of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it provides that in such a case the inspector may certify the refusal under his hand to the court, and the court may thereupon enquire into the case, hear witnesses who may be produced against or on behalf of the alleged offender, consider any statement which may be offered in defence, and punish the offender as if he had been guilty of contempt of the court. Section 240 (4) deals with a case where the inspector thinks it necessary for the purpose of his investigation that the person whom he has no power to examine on oath should be examined, and it provides that in such a case he may apply to the court, and the court may, if it thinks fit, order that person to attend and be examined on oath before it on any matter relevant to the investigation. This sub-section provides for the procedure to be followed in examining such a witness. Section 240(5) lays down that notes of any examination under sub-s. (2) or (4) shall be taken down in writing, and shall be real over to or by, and signed by, the person examined, and may thereafter be used as evidence against him. Having thus made elaborate provisions of for the production of documents and evidence in the course of the investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1897, with respect to the effect of repeals. In other words, though s. 6 of the General Clauses Act will generally apply, its application will be subject to the provisions contained in Sections 645 to 657; this position is not disputed. 14. It is now necessary to consider s. 645. It reads thus : Nothing in this Act shall affect any order, rule, regulation, appointment, conveyance, mortgage, deed, document or agreement made, fee directed, resolution passed, direction given, proceeding taken, instrument executed or issued, or thing done, under or in pursuance of any previous companies law; but any such order, rule, regulation, appointment, conveyance, mortgage, deed, document, agreement, fee, resolution, direction, proceeding, instrument or thing shall, if in force at the commencement of this Act, continue to be in force, and so far as it could have been made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act, shall have effect as if made, directed, passed, given, taken, executed, issued or done under or in pursuance of this Act. 15. The effect of this section is clear. If an inspector has been appointed under the relevant section of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perhaps not be accurate to suggest that having regard to the provisions of s. 645, s. 646 is wholly redundant. It would be possible to take the view that cases falling under s. 138(1) of the old Act are intended to be covered by s. 646 as they would not be covered by s. 645. In regard to the case of a banking company covered by s. 138(1) s. 646 will come into operation and that may be one of the reasons for which s. 646 was enacted. It may be that the case of the banking company may also be covered by s. 35 of the Banking Companies Act 10 of 1949, but since s. 138 (1) applied to the said case until the old Act was repealed the Legislature may have, as a matter of caution, thought it necessary to provide for the continuance of the operation of s. 138 by enacting s. 646. However that may be, we feel no difficulty in holding that s. 646 should not be construed as a proviso to s. 645 but as an additional saving provision. The words used in s. 645 are so clear, and the policy and object of enacting the said provision are in our opinion so emphatically expressed, that it would be unreasonable to hold that s. 646 was intended to provide for such a radical exception to s. 645. Where the Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no person shall be compelled in any criminal case to be a witness against himself . It would be noticed that in terms the Amendment refer to a criminal case, and yet it has received a very broad and liberal interpretation at the hands of the Supreme Court of the United States of America. It has been held that the said constitutional protection is not confined only to criminal cases but it extends even to civil proceedings (Vide : McCarthy v. Arndstein 1924 69 L. Ed. 158 As observed by Mr. Justice Blatchford in Charles Counselman v. Frank Hitchcock (1892) 35 L. Ed. 1110 it is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself. It would doubtless cover such cases but it is not limited to them. The object was to insure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself had committed a crime. The privilege is limited to criminal matters, but it is as broad as the mischief against which it seeks to guard . 20. In support of his plea that a liberal interpretation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deal with the merits of the appellant's case in the present appeal. In Maqbool Hussain v. The State of Bombay 1983 ECR 1598 D (SC) this Court had occasion to consider the scope and effect of the constitutional guarantee provided by Art. 20(2). A person against whom proceedings had been taken by the Sea Customs Authorities under s. 167 of the Sea Customs Act and an order for confiscation of goods had been passed was subsequently prosecuted before the Presidency Magistrate for an offence under s. 23 of the Foreign Exchange Regulations Act in respect of the same act. It was urged on his behalf that the proceedings taken against him before the Sea Customs Authorities was a prosecution and the order of confiscation passed in the said proceedings was a punishment, and so it was argued that the constitutional guarantee afforded by Art. 20(2) made his subsequent prosecution under s. 23 of the Foreign Exchange Regulation Act invalid. This plea was rejected. In dealing with the merits of the plea this Court had to consider the meaning of the words prosecuted and punished used in Art. 20(2). Article 20(2) provides that no person shall be prosecuted and punished for the same offence more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic Service Commission the appellant was dismissed by an order passed by the President. The order of dismissal was passed on September 17, 1953. Soon thereafter on February 23, 1954, the police submitted a charge-sheet against him charging him with having committed offences under Sections 161/165 of the Indian Penal Code and s. 5(2) of the Prevention of Corruption Act. The validity of the subsequent prosecution was challenged by the appellant on the ground that it contravened the constitutional guarantee enshrined in Art. 20(2). The appellant's plea was, however, rejected on the ground that the proceedings taken against him before the commissioner under the Inquiries Act did not amount to a prosecution. The relevant provisions of the said act were examined, and it was held that in an inquiry under the said Act there is neither any question of investigating an offence in the sense of an act or omission punishable by any law for the time being in force nor is there any question of imposing punishment prescribed by the law which makes that act or omission an offence. Mukherjea, J., as he then was, who delivered the judgment of the Court, has referred to the earlier decision in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... content of the said guarantee to its barely literal import . He, therefore, held that the phrase to be a witness means nothing more than to furnish evidence, and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes. He also pointed out that the phrase was to be a witness and not to appear as a witness and so the protection afforded was not merely in respect of testimonial compulsion in the court room but may well extend to compel testimony previously obtained from him. The conclusion of the Court on this part of the construction was thus stated. The constitutional guarantee is available to a person against whom a formal accusation relating to the commission of an offence has been leveled which in the normal course may result in prosecution; whether it is available to other persons in other situations does not call for a decision in this case . Since the First Information Report had been recorded against the petitioners in that case it followed that the first test that a formal accusation relating to the commission of an offence must have been leveled was satisfied. The question which was them considered was whether there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e strongly pressed into service. This Court, however, rejected the appellant's arguments and held that the prosecution did not suffer from any infirmity. On the facts it was found that though the offence had in fact been already committed by the appellant, he had in fact not been accused of it at the stage when the currency notes were produced by him; it was also held that it could not be said that he was compelled to produce the said currency notes, because he might easily have refused to produce them, and so there was no occasion for him to invoke the constitutional protection against self-incrimination. 25. What then is the result of these decisions ? They show that in determining the complexion and reach of its respective sub-clauses the general scheme of Art. 20 as a whole must be considered, and the effect of the inter-action of the relevant words used in them must be properly appreciated. Thus considered the constitutional right guaranteed by Art. 20(2) against double jeopardy can be successfully invoked only where the prior proceedings on which reliance is placed must be of a criminal nature instituted or continued before a court of law or a judicial tribunal in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a result of the investigation made by the inspectors it may be discovered that the affairs of the company disclose not only irregularities and malpractices but also commission of offences, and in such a case the report would specify the relevant particulars prescribed by the circular in that behalf. If, after receiving the report, the Central Government is satisfied that any person is guilty of an offence for which he is criminally liable, it may, after taking legal advice, institute criminal proceedings against the offending person under s. 242(1); but the fact that a prosecution may ultimately be launched against the alleged offender will not retrospectively change the complexion or character of the proceedings held by the inspector when he makes the investigation. Have irregularities been committed in managing the affairs of the company; if yes, what is the nature of the irregularities ? Do they amount to the commission of an offence punishable under the criminal law ? If they do who is liable for the said offence ? These and such other questions fall within the purview of the inspector's investigation. The scheme of the relevant sections is that the investigation begins br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Commissioner or his inspector to examine into and report on the affairs of the society . Thus it is clear that the examination of, or investigation into, the affairs of the company cannot be regarded as a proceeding started against any individual after framing an accusation against him. Besides it is quite likely that in some cases investigation may disclose that there are no irregularities, or if there are they do no amount to the commission of any offence; in such cases there would obviously be no occasion for the Central Government to institute criminal proceedings under s. 242(1). Therefore, in our opinion, the High Court was right in holding that when the inspector issued the impugned notices against the appellant the appellant cannot be said to have been accused of any offence; and so the first essential condition for the application of Art. 20(3) is absent. We ought to add that in the present case the same conclusion would follow even if the clause accused of any offence is interpreted more liberally than was done in the case of M. P. Sharma 1978 (2) ELT 287 (SC) because even if the expression accused of any offence is interpreted in a very broad and liberal way it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alidity of the impugned notices on any ground relatable to, or based on, the said report. The challenge is founded on the broad and general ground that s. 240 offends against Art. 20(3). 29. We may incidentally add that it was in support of his argument based on the Registrar's report that Mr. Sastri sought to rely on the decision of the Calcutta High Court in Collector of Customs v. Calcutta Motor and Cycle Co. AIR 1958 Cal 682. In that case certain notices had been issued under s. 171A of the Sea Customs Act to certain persons to appear before the customs officials and to produce certain documents. The High Court took the view that it appeared from the accusations made in the search warrants at the instance of the customs authorities and those made in one of the notices by the customs authorities themselves, that the accusations of criminal offences could not be excluded ; and so it was held that the requirements of Art. 20(3) were satisfied and the protection under the said article was available to the persons concerned. In our opinion this decision does not assist the appellant. It proceeded on the finding that accusations of criminal offences could be held in substance to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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