Public examination in voluntary winding-up rejected where statutory safeguards for compulsory liquidation were not satisfied.

Public examination of a director or ex-director under section 196 of the Companies Act, 1913 was treated as an extraordinary power confined to compulsory winding-up, where the official liquidator had first made the required fraud-based report. Those jurisdictional safeguards were held absent in voluntary liquidation, and section 216 was construed only as enabling incidental matters in aid of a voluntary liquidator, not as a source for public examination. The wider reading accepted in the Bombay decision was rejected, and the statutory scheme was held not to permit public examination in a voluntary winding-up.

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Issues: Whether, in a voluntary winding-up, a public examination of a director or ex-director could be ordered under section 196 of the Companies Act, VII of 1913, by resort to section 216 of the same Act.

Analysis: Section 196 was held to be an extraordinary power available only where the company was being wound up by the Court and only after the official liquidator had made the requisite report stating, in substance, that fraud had been committed. Section 177B(2) supplied the further-report safeguard that formed the basis of jurisdiction under section 196. Those safeguards were treated as absent in a voluntary liquidation. Section 216 was construed as enabling the Court, at the instance of a voluntary liquidator, to determine matters akin to enforcing calls, staying proceedings, or other similar incidental matters, and not to invoke the extraordinary machinery of public examination. The wider construction accepted in the Bombay decision was rejected.

Conclusion: An order for public examination could not be made in a voluntary winding-up under section 196 read with section 216, and the objection to jurisdiction succeeded.

Final Conclusion: The appeal failed because the statutory scheme confined public examination to compulsory winding-up cases where the prescribed report-based safeguards were satisfied.

Ratio Decidendi: Jurisdiction to direct public examination under the Companies Act arose only upon compliance with the statutory preconditions tied to compulsory winding-up and the official liquidator's fraud-based report, and those preconditions could not be displaced by section 216 in a voluntary winding-up.

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