Public examination in company proceedings: broad inquiry, no Article 20(3) bar, and no Evidence Act privilege against answering permitted questions.
Public examination under section 478 of the Companies Act, 1956 is described as a broad, exploratory inquiry, and a challenge to vacate the order failed where no collateral purpose or misleading of the court was shown and the application was delayed without explanation. Article 20(3) was treated as inapplicable because the misfeasance summons and public examination were not a formal accusation of an offence before the competent forum, so incriminating questions were not barred. The proviso to section 132 of the Indian Evidence Act, 1872 was also held unavailable in this context because section 478(5) required answers to questions allowed by the court, with such answers usable in later civil or criminal proceedings.
Issues: (i) Whether the ex parte order directing public examination of the directors should be vacated on the grounds of collateral purpose and gross delay. (ii) Whether the notice for public examination and the questions asked therein were barred by Article 20(3) of the Constitution. (iii) Whether protection under the proviso to section 132 of the Indian Evidence Act, 1872 was available to the directors in public examination.
Issue (i): Whether the ex parte order directing public examination of the directors should be vacated on the grounds of collateral purpose and gross delay.
Analysis: The order for public examination was not shown to have been obtained for a collateral purpose or by misleading the court. Public examination under section 478 of the Companies Act, 1956 is an exploratory and roving inquiry, and some overlap with a misfeasance summons does not make the proceeding collateral or vexatious. The application to vacate the order was also made after an inordinate lapse of time, which remained unexplained.
Conclusion: The challenge to the order for public examination failed and was rightly rejected.
Issue (ii): Whether the notice for public examination and the questions asked therein were barred by Article 20(3) of the Constitution.
Analysis: Article 20(3) applies only where there is a formal accusation of an offence before the competent authority or court. The misfeasance summons and supporting affidavit did not amount to such a formal accusation, and the public examination itself was not an accusation of an offence. The possibility that information elicited might later support proceedings did not attract the constitutional protection against self-incrimination.
Conclusion: Article 20(3) did not invalidate the notice for public examination and did not bar incriminating questions in that proceeding.
Issue (iii): Whether protection under the proviso to section 132 of the Indian Evidence Act, 1872 was available to the directors in public examination.
Analysis: The wording of section 478(5) of the Companies Act, 1956 required the person examined to answer all questions the court allowed, and this special provision was treated as overriding the ordinary protection in section 132 of the Evidence Act in the context of public examination. The answers could therefore be used in subsequent civil or criminal proceedings, and no general claim to privilege against incrimination was available.
Conclusion: No protection under the proviso to section 132 was available in public examination under section 478.
Final Conclusion: All preliminary objections to the public examination were rejected, and the public examination was directed to proceed.
Ratio Decidendi: A public examination under section 478 of the Companies Act, 1956 is a broad investigatory proceeding, and unless the proceeding is shown to have been obtained for a collateral purpose or founded on a formal accusation of an offence before the competent forum, neither Article 20(3) nor the proviso to section 132 of the Indian Evidence Act, 1872 can be used to prevent the examination or the answering of questions permitted by the court.
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