Company investigation powers upheld where saved appointments continued under the new Act and constitutional challenges failed.

Saving provisions under the Companies Act, 1956 preserved an inspector's appointment made under the repealed Indian Companies Act, 1913, so the inspector could exercise the investigative powers conferred by the new Act. Compulsory attendance, evidence, and document production under section 240 did not breach article 20(3) because a company investigation is a fact-finding inquiry and not a criminal proceeding against a person already accused of an offence. Sections 239 and 240 also survived article 14 scrutiny, as companies and their management formed a distinct class and the investigative scheme had a rational relation to controlling corporate irregularities and abuses.

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Issues: (i) Whether an inspector appointed under section 138(4) of the Indian Companies Act, 1913 could, after the repeal of that Act, exercise powers under sections 239 and 240 of the Companies Act, 1956; (ii) Whether compulsion to attend, give evidence, and produce documents under section 240 infringed article 20(3) of the Constitution of India; (iii) Whether sections 239 and 240 offended article 14 of the Constitution of India.

Issue (i): Whether an inspector appointed under section 138(4) of the Indian Companies Act, 1913 could, after the repeal of that Act, exercise powers under sections 239 and 240 of the Companies Act, 1956.

Analysis: The saving provisions in the Companies Act, 1956 preserved orders, appointments, and proceedings made under a previous company law. Section 645 treated such appointments and proceedings as if made under the new Act, and section 646 was held to be an additional saving provision rather than a proviso limiting section 645. The inspector's appointment under the old Act therefore continued by legal fiction under the new Act, and the wider investigative powers in the new Act were available to him.

Conclusion: The objection to jurisdiction failed and was against the appellant.

Issue (ii): Whether compulsion to attend, give evidence, and produce documents under section 240 infringed article 20(3) of the Constitution of India.

Analysis: The protection in article 20(3) applies only where a person is accused of an offence and is compelled to be a witness against himself. An investigation under the Companies Act into the affairs of a company is a fact-finding inquiry into management and irregularities, not a criminal proceeding commenced against a formally accused person. Although such an inquiry may later lead to prosecution, that possibility does not change its character at the investigatory stage. On that basis, the requisite element of an existing accusation was absent.

Conclusion: Section 240 did not violate article 20(3), and the challenge failed.

Issue (iii): Whether sections 239 and 240 offended article 14 of the Constitution of India.

Analysis: Companies and those managing them form a distinct class because the management of corporate affairs affects shareholders, creditors, and other stakeholders. The investigative safeguards and obligations imposed by the provisions were directed to that special situation and had a rational relation to the object of controlling corporate irregularities and abuses. The classification was therefore held to be based on intelligible differentia and not to amount to hostile discrimination.

Conclusion: Sections 239 and 240 were not violative of article 14, and the challenge failed.

Final Conclusion: The statutory powers of investigation were upheld, and the writ petition was rejected.

Ratio Decidendi: A saving provision preserving appointments and proceedings under a repealed company law can continue an inspector's authority under the successor Act, and article 20(3) is not attracted unless a formal accusation of an offence exists at the stage of compulsion.

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