Public examination under winding-up law is evidentiary, not accusatory, so Article 20(3) protection is not triggered.
Public examination under winding-up provisions was treated as an evidentiary process aimed at collecting material and determining whether any act or omission caused loss to the company or bank, not as a proceeding that itself accused the persons concerned of an offence. On that basis, allegations of fraud or references to prosecution did not attract Article 20(3) where they were immaterial to the public examination order. The same reasoning was applied to section 478 of the Companies Act, 1956 and section 45G of the Banking Companies Act, 1949. The order for public examination was therefore upheld, the appellate order was set aside, and the single judge's order was restored.
Issues: Whether an order directing public examination under section 478 of the Companies Act, 1956 and section 45G of the Banking Companies Act, 1949 was void as offending Article 20(3) of the Constitution of India because the persons concerned were said to be accused of offences by reason of allegations in the winding-up application, including a prayer for prosecution.
Analysis: The public examination provisions were held to be directed to collecting evidence and ascertaining whether any act or omission caused loss to the company or bank, and not to adjudicating an accusation of an offence. The earlier ruling that a proceeding under section 45G of the Banking Companies Act, 1949 does not offend Article 20(3) was treated as governing the present controversy as well. Allegations of fraud or other offences, so far as they were immaterial to an order for public examination, could not amount to accusations within Article 20(3). The same reasoning was applied to section 478 of the Companies Act, 1956. The reference to prosecution and summary trial under section 545 of the Companies Act, 1956 and section 45J of the Banking Companies Act, 1949 did not alter the position for the purpose of public examination, since those prayers were independent of the public examination provisions and had no bearing on whether there was an accusation in the relevant proceedings.
Conclusion: Article 20(3) was not attracted, and the order for public examination was valid.
Final Conclusion: The appeals succeeded, the appellate order was set aside, and the order of the single judge was restored.
Ratio Decidendi: A statutory proceeding for public examination under winding-up provisions, whose object is to collect evidence and not to determine criminal liability, does not amount to an accusation of an offence for the purpose of Article 20(3) of the Constitution of India.
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AI Drafter ✕
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