JUDGMENT
Chandra Reddy, Offg. C.J.
1. These appeals arise out of an order of our learned brother SATYANARAYANA RAJU, J. directing public examination of directors, past and present, of a banking company, called the “Vijaya Commercial Bank Limited” (now in liquidation), under section 45G of the Banking Companies Act (X of 1949) and a similar examination of the officers of the bank under section 196 of the Indian Companies Act, 1913.
2. This concern was started in December, 1944, under the provisions of the Indian Companies Act. By order, dated 19th January, 1954, the High Court of Judicature at Madras directed the liquidation of the bank at the instance of one of its creditors. Pursuant to the winding up order, an official liquidator was appointed on the same day. He submitted a preliminary report in January, 1954, and a further report on 28th September, 1956, stating that, in his opinion, loss was caused to the bank by reason of certain acts or omissions of the directors which were set out in his report. On the strength of the report and after considering the several objections raised on behalf of the directors and the officers concerned, the order under appeal was passed on 6th December, 1957.
3. In support of these appeals, the main contention urged is that section 45G of the Banking Companies Act is ultra vires the Constitution of India in that it violates article 20(3) of the Constitution. The contention put forward at the forefront of the argument is that the appellants are deprived of the immunity granted under article 20(3) by reason of section 45G of the Banking Companies Act. To appreciate this submission, it is necessary to refer to the terms of section 45G of the Banking Companies Act and article 20 of the Constitution. Section 45G of the Banking Companies Act is in these word.
“(1) Where an order has been made for the winding up of a banking company, the official liquidator shall submit a report whether in his opinion any loss has been caused to the banking company since its formation by any act or omission (whether or not a fraud has been committed by such act or omission) of any person in the promotion or formation of the banking company or of any director or auditor of the banking company.
(2) If, on consideration of the report submitted under sub-section (1), the High Court is of opinion that any person who has taken part in the promotion or formation of the banking company or has been a director or an auditor of the banking company should be publicly examined, it shall hold a public sitting on a date to be appointed for that purpose and direct that such person, director or auditor shall attend thereat and shall be publicly examined as to the promotion or formation or the conduct of the business of the banking company, or as to his conduct and dealings, in so far as they relate to the affairs of the banking company.”
4. Article 20 of the Constitution reads:
“(1) No person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
(2) No person shall be prosecuted and punished for the same offence more than once.
(3) No person accused of any offence shall be compelled to be a witness against himself.”
5. The stress of the argument on behalf of the appellants is that section 45G of the Banking Companies Act is repugnant to article 20(3) of the Constitution in that it contains a provision enabling a court to compel a director of a banking company to give self-incriminating evidence and consequently the offending section of the Act should be struck down. It is urged that in order to attract the operation of article 20(3), it is sufficient if there is some kind of accusation against a person and not necessarily that he should be charged with a crime. The immunity contemplated by clause (3) of article 20 applies to civil proceedings as well, continues the learned counsel. The basis of this submission is a decision of the Supreme Court of the United States in McCarthy v. Arndstein, and also the judgment of a single Judge of the Calcutta High Court in Calcutta M. & C. Company v. Collector of Customs. In the first of the cases cited above, it was ruled that the provision of the Federal Constitution of the United States giving protection to a witness against self-incrimination covered the examination of a bankrupt for the purpose of obtaining possession of property belonging to his estate. We feel that the case went too far in extending the privilege conferred by the American Constitution in this behalf. The protection referred to is embodied in the Fifth Amendment of the American Constitution which reads:
“No person shall be held to answer for a capital, ………… nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty or property without due process of law; …………….”
6. As pointed out by Willis on the Constitutional Law of the United States, the reason that induced the Judges to extend this prohibition even to civil proceedings is the fact that even before the Fifth Amendment the Legislature should have intended to enlarge this right. In this connection, it is apposite to extract the relevant passage from the treatise at page 518.
“Extent of the privilege. – A casual reading of the guaranty against self-incrimination would suggest as its obvious meaning that it applies only to oral testimony in a criminal proceeding by the accused defendant himself. However, the common law after 1688 excluded an accused from the witness-stand, and the Fifth Amendment did not overrule this principle of the common law. Hence, the stipulation in the Constitution for his immunity became pointless. Therefore, the Supreme Court, in order to make the constitutional provisions sensible, gave a meaning to the guaranty different from its obvious meaning. In determining the new meaning the court went back to the common law meaning, and lifted the common law doctrines beyond the reach of ordinary legislation. Hence, the distinction between an accused and others was dropped and a new distinction between oral testimony and other evidence was developed. However, after thus reading the common law into the Constitution, the Supreme Court in turn departed from the common law, first in coupling up the Fourth and Fifth Amendments so as to exclude evidence illegally obtained, and again in extending protection to witnesses as well as to the accused.”The passage at page 49 of the American Jurisprudence (Vol. 58) is also instructive in this behalf in that it sets out the limits within which the Fifth Amendment has to be applied, and may be read.
“As already observed, the various constitutions provide that no person shall be compelled in any criminal case to be a witness against himself. This prohibition against compelling a person to take the stand as a witness against himself applies only to criminal, quasi-criminal, and penal proceedings, including a proceeding civil in form for forfeiture of property by reason of the commission of an offence, but not a proceeding in which the penalty recoverable is civil or remedial in nature. It applies to the preliminary hearing of a criminal case before a committing Magistrate, to an investigation by a grand jury, which is a criminal case within the rule, and also to an examination of the accused or cross-examination during an investigation in the jury’s absence as to the voluntariness of a confession. But such a constitutional provision does not preclude compulsory examination of the defendant in other proceedings, so long as his right to refuse to answer questions rending to incriminate him is not infringed. It does not apply, for example, to a remedial proceeding in a probate court to recover embezzled or concealed assets of an estate. Moreover, it is to be noted that some constitutional provisions stipulate that no person shall be a witness against himself; such a provision is stronger than the provision of the Fifth Amendment to the Federal Constitution, and does not limit the right to criminal cases.”
7. It is to be remembered that this constitutional protection originated from the common law of England. The origin and the history of this doctrine are traced by the Supreme Court of India in M.P. Sharma v. Satish Chandra. It was the inquisitorial methods adopted by the Court of Star Chamber in the exercise of its criminal jurisdiction that gave birth to this doctrine (of protection against self-incrimination) which later on developed into various kinds of protections granted to an accused. Both the Fifth Amendment and the principles embodied in article 20 of our Constitution have their source in the common law of England. Therefore, the interpretation as given to this rule in English Courts has also a great bearing on the problem before usIn English law, a bankrupt has to surrender books and papers containing incriminating evidence, which means that the privilege regarding self-incriminating evidence is not extended to him. We do not see how that position differs from the examination of a bankrupt for the purpose of obtaining possession of property. BRANDEIS J. in McCarthy v. Arndstein tried to sustain the distinction between the two by observing thus.
“The books and papers of a business are a part of the bankrupt estate. Section 70A(1). To permit him to retain possession, because surrender might involve disclosure of a crime, would destroy a property right. The constitutional privilege relates to the adjective law. It does not relieve one from compliance with the substantive obligation to surrender property.”
8. We find it difficult to yield assent to this distinction. We feel that the proposition is too broadly stated in McCarthy v. Arndstein, and the constitutional protection envisaged by the Fifth Amendment was unduly extended. That this rule did not command universal approval in American courts is to be seen from the decision in United States of America v. Sullivan. In that case, a person engaged in illicit traffic in intoxicating liquor refused to make a return for income-tax purposes on the ground that it would subject him to a criminal prosecution. HOLMES J. who delivered the opinion of the court overruled the objection on behalf of the assessee remarking.
“It would be an extreme if not an extravagant application of the Fifth Amendment to say that it authorised a man to refuse to state the amount of his income because it had been made in crime.”
9. The learned Judge further observed as follows:
“He could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the Government blank would bring him into danger of the law.”In this context, it would not be out of place to refer to a passage in the treatise on Constitutional Law of the United States by Willis at page 524 which sets out the abuses that might arise out of unduly enlarging the scope of the Fifth Amendment. This is what the learned commentator says.
“Reform needed. – As we have seen, self-incrimination did not at the common law mean what it does to-day. The clause has undoubtedly been expanded too much and is giving too much protection to the accused. It is obstructing the power of the States to obtain necessary evidence. The plea is most frequently raised in case of crimes of a fraudulent or secret nature like bribery, election frauds, gaming, income-tax evasions, extortion, kidnaping, abortion, liquor-selling, keeping houses of illfame, and conspiracies to prevent the administration of justice. It is defeating the administration both of the criminal law and civil law. It does not protect against the third degree where protection is needed, and it does protect against testimony where protection is not needed. It came into the common law by indirection. It is not one of the great forms of liberty. Its presence in the Constitution is an accident. The original intent was evidently to protect the accused in an actual prosecution against him.”
10. The learned author also suggested how to balance between too much expansion of this doctrine and providing the safeguards for the innocent.
11. Mr. Jagannadha Rao has invited our attention to another decision of the Supreme Court of the United States of America in Charles Counselman v. Frank Hitchcock. This is not of much assistance to him. All that was laid down therein was that the constitutional protection envisaged by the Fifth Amendment extended to an investigation by a grand jury of alleged violations of certain Acts of Congress and was not limited to a criminal case pending before a court of law. That the Fifth Amendment applies only to a criminal proceeding is disclosed by the following observations.
“This provision (Fifth Amendment) must have a broad construction in favour of the right which it was intended to secure. The matter under investigation by the grand jury in this case was a criminal matter, to inquire whether there had been a criminal violation of the Inter-State Commerce Act. If Counselman had been guilty of the matters inquired of in the questions which he refused to answer, he himself was liable to criminal prosecution under the Act. The case before the grand jury was, therefore, a criminal case.”
12. Further down in the judgment, BLATCHFORD J. who delivered the opinion of the court remarked:
“But this provision distinctly means a criminal prosecution against a person who is accused and who is to be tried by a petit jury …….”
It is entirely consistent with the language of article 5 that the privilege of not being a witness against himself is to be exercised in a proceeding before a grand jury.”
13. This decision, far from rendering any assistance to the appellants, brings out the distinction between criminal and civil proceedings. In that case, the object of the grand jury was to ascertain whether any crime was committed.
14. Be that as it may, the law as propounded by the highest court in our land is that the immunity does not extend to civil proceedings. We feel that the fact that the answers given by a person might tend to subject him to a criminal prosecution at a future date will not attract the protection envisaged by article 20(3). In other words the fact that the answers might involve a disclosure of crime or that they might form the basis of prosecution in future, would not make any difference. It looks to us that the indentment of this article was to afford some protection to a person involved in a crime, having regard to the predicament in which he would be placed and that is revealed by the juxtaposition of that clause. It was ruled by the Supreme Court in Maqbool Hussain v. State of Bombay, that the proceedings contemplated by article 20 are of the nature of criminal proceedings before a court of law or a judicial tribunal. BHAGWATI J. who delivered the judgment on behalf of the Bench, observed as follows:
“The very wording of article 20 and the words used therein : ‘convicted’, ‘commission of the act charged as an offence’, ‘be subjected to a penalty’, ‘commission of the offence’, ‘prosecuted and punished’, ‘accused of any offence’, would indicate that the proceedings therein contemplated are of the nature of criminal proceedings before a court of law or a judicial tribunal and the prosecution in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute which crates the offence and regulates the procedure.”
15. It is true that their Lordships of the Supreme Court were concerned with the interpretation of article 20(2) of the Constitution, but the passage extracted above applies to the whole of the article. This view was adhered to by the Supreme Court in Venkataraman v. Union of India. In that case, the decision in Maqbool Hussain v. State of Bombay, was referred to as laying down that the words used in article 20(3) afford a clear indication that the proceedings that the article governs are proceedings of a criminal nature.
16. Mr. Chandrasekhara Sastry cited to us another judgment of the Supreme Court in M. P. Sharma v. Satish Chandra, as rendering support to the theory that even civil proceedings fell within the ambit of article 20, if they should expose the party deposing to prosecution at a later stage. We do not find anything in that judgment which lends any colour to this proposition or annotates any proposition different from that contained in Maqbool Hussain v. State of Bombay. That was a case in which the first information report was already lodged with the Inspector-General of Delhi, Special Police Establishment. In such a situation, the question arose whether the search and seizure would interfere with the right of an accused conferred by article 20(3) of the Constitution, and their Lordship answered it in the affirmative, as, in their opinion, article 20(3) was not confined to a criminal case actually pending before a court of law or a judicial tribunal. In fact, JAGANNADHADAS J. who delivered the judgment on behalf of the Bench, made it abundantly clear, that it was a right pertaining to an accused. We may, in this connection, extract the passage in which the learned Judge summed up the position pertaining to this article”Analysing the terms in which this right has been declared in our Constitution, it may be said to consist of the following components. (1) It is a right pertaining to a person ‘accused of an offence’; (2) it is a protection against ‘compulsion to be a witness’; and (3) it is a protection against such compulsion resulting in his giving evidence ‘against himself’. The case with which we are concerned have been presented to us on the footing that the persons against whom the search warrants were issued were all of them persons against whom the first information report was lodged and who were included in the category of accused therein and that therefore they are persons ‘accused of an offence’ within the meaning of article 20(3) and also that the documents for whose search the warrants were issued, being required for investigation into the alleged offences, such searches were for incriminating material.”
17. The last sentence of the passage leaves no room for doubt that the legislative intent was only to give protection to the person who is accused of a crime. To interpret it as applying to all proceedings, civil or criminal, which might at a subsequent period expose the person concerned to prosecution on the basis of answers given by him, is to enlarge the scope of this article and to defeat justice. To stretch this prohibition to civil cases, would be to put a premium on dishonesty. We do not think that this is the purpose underlying article 20 and the intention of the Constitution makers.
18. Coming to the decision in Calcutta M. & C. Company v. Collector of Customs, we find that it was held that the proceedings contemplated by article 20(3) of the Constitution include civil proceedings also. We think that it is not in consonance with the principle enunciated above. It is not necessary for us to met every one of the reasons adduced by the learned Judge in support of his conclusion, since we have already indicated as to why article 20(3) could not be extended to civil proceedings. We are not able to agree with the learned Judge’s reading of the Supreme Court decision in M. P. Sharma v. Satish Chandra. It is also interesting to note that the learned Judge had reached an opposite conclusion in an unreported case referred to in that judgment, and we are not convinced that the reasons given by him for departing from his earlier conclusion are quite sound. In Calcutta M. & C. Co. v. Collector of Customs, acting under section 172 of the Sea Customs Act, 1878, warrants were issued for the search of the premises in which the firm in question was carrying on business and the Customs Authorities made searches and seized and took into their possession certain goods, documents and files, etc. Then they laid information before the police and police investigation was proceeding. The authorities concerned also summoned one of the partners of the firm to appear before them for the purpose stated in the notice issued in exercise of there powers conferred on them under section 171A of the Sea Customs Act. The validity of section 171A of the Sea Customs Act was challenged in so far as it enabled the Customs Authority to ask a person who was accused of an offence to give evidence, and, or to produce documents which are likely to incriminate him. This objection found favour with the learned Judge for the reason that though the Customs Authorities could not in the immediate proceedings before them punish the person concerned with more than confiscation or penalty, still it should be held that he was accused of an offence since the authorities would been titled to initiate proceedings before a magistrate which might result in a conviction and a sentence of not exceeding two years or fine or both. We are not here concerned with the justification of the actual decision of the case, since it is stated that the partners of the firm were charged with having committed an offence. Exception can be taken only to the general observations that are contained in the judgment. We may also refer to the judgment of MUKHERJI J. in In re Central Calcutta Bank Ltd., which accords with the view expressed by us aboveWe must also negative the contention of Mr. Chandrasekhara Sastry that the aim of public examination of directors under section 45G of the Banking Companies Act is to find out what crimes have been committed by the directors. It is not so much for the purpose of involving the directors in criminal cases that the official liquidator invokes section 45G of the Banking Companies Act as to try to ascertain the financial position of the concern with the help of the answers that they would give and to realise all the assets of the bank concerned. Even otherwise, as we have already state, article 20(3) of the Constitution would not come into play when the directors are sought to be examined under section 45G and there is no inconsistency or repugnancy between section 45G of the Banking Companies Act and article 20(3) of the Constitution. Section 45G is intra vires of Constitution and was validly enacted by the Legislature and it is not unconstitutional.
19. A special plea was put forward by Mr. Manavala Chowdhari in O.S.A. No. 5 of 1957 that section 45G would not be attracted to the case of a person who has ceased to be a director before the liquidation of the bank. The learned counsel urges that this section applies only to directors who were in office at the time when the Act came into force, which was 30th December, 1953. We think that this argument is inadmissible and is devoid of substance. The point of time with reference to which the applicability of section 45G is to be judged, is the winding up of the concern. This is how the section commences.
“Where an order has been made for the winding up of a banking company ………….”
20. So, the relevant date is the date of there winding up and the continuance in office of a particular director at that time is not quite material. We may also point out that section 45V of the Act clearly brings within the scope of section 45G even ex-directors by enacting thus:
“For the removal of doubts it is hereby declared that any reference in this part to a director, manager, liquidator, officer or auditor of a banking company shall be construed as including a reference to any past or present director, manager, liquidator, officer or auditor of the banking company.”
21. Further, the report to be submitted by the official liquidator would cover all transactions from the inception of the bank. That being so, we do not see how a person could escape liability or could get immunity from being examined under section 45G by the mere accident of his having vacated the office by the time the concern was wound up. It may be that under the old law a director would render himself liable to be examined publicly only if loss was occasioned to the banking company by fraud having been committed. But we are not concerned with the difference between the old and the new law, the only relevant consideration being whether section 45G of the Banking Companies Act would apply to all directors, past and present, irrespective of whether or not they happened to be in office at the time of the liquidation. Therefore, the objection raised on behalf of the director who has filed O.S.A. No. 5 of 1957 is also overruled.
22. We are then left with the cases of an agent of a branch of this bank at Nuzvid and an assistant secretary of the bank at the head office, who are the first and the second appellants respectively in O.S.A. No. 4 of 1957. The point raised by Mr. Krishnamurthy in this behalf is that the applicability of section 45G should be confined only to directors and not to agents of the bank or to an assistant secretary since the section envisages a report (as to whether any loss has been caused to the banking company since its formation by any act or omission) only of persons concerned in the promotion or formation of the banking company or of any director or auditor of the banking company, and that an agent and an assistant secretary who might have come to be associated with the bank at a later stage would not be comprehended within the compass of the section. The learned counsel maintains that the cognate provision in the Indian Companies Act, 1913 (Act VII of 1913), namely, section 196, should be deemed to have been repealed by reason of section 2 of the Banking Companies Act which provides that:
“The provisions of this Act shall be in addition to, and not, serve as hereinafter expressly provided, in derogation of, the Indian Companies Act, 1913 (Act VII of 1913), and any other law for the time being in force.”
23. The learned counsel contends that all public examinations in regard to the affairs of a bank are expressly provided for in section 45G and, to that extent, section 196 of the Indian Companies Act has been superseded.
24. To appreciate this contention, it is necessary to extract the provisions of section 196 of the Indian Companies Act. Section 196 reads:
“(1) When an order has been made for winding up a company by the court, and the official liquidator has applied to the court stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company or by any director or other officer of the company, in relation to the company since its formation, the court may, after consideration of the application, direct that any person who has taken any part in the promotion or formation of the company, or has been a director, manager or other officer of the company shall attend before the court on a day appointed by the court for that purpose, and be publicly examined as to the promotion or formation or the conduct of the business of the company, or as to its conduct and dealings as director, manager or other officer thereof.”
25. There are some important difference between section 45G of the banking Companies Act and section 196 of the Indian Companies Act. To attract section 196 of the Indian Companies Act, it is essential that “a fraud should have been committed by any person in the promotion or formation of the company or by any director or other officer of the company ………” before public examination could be ordered, whereas, under section 45G of the Banking Companies Act, it is enough if loss has been caused to the banking company since its formation by any act or omission. Another important difference between the two sections is that while the notes of examination reduced to writing could be used in evidence against the party so deposing in civil proceedings under section 196(7) of the Indian Companies Act, section 45G(8) of the Banking Companies Act in that behalf is more comprehensive in that the notes of evidence could be used against him even in criminal proceedings. It is true that the use of notes of evidence in criminal cases is not specifically excluded by section 196 of the Companies Act, but by necessary intendment that is the effect of it. If the question arises as to whether it is section 196 of the Companies Act 45G of the Banking Companies Act that would be attracted in the case of a director or other person falling under section 45G, surely it is section 45G that prevails in view of the language of section 2 of the Banking Companies Act. But that does not conclude the matter because section 2 specifically lays down that the provisions of the Banking Companies Act shall be not in derogation of the provisions of the Indian Companies Act, but shall be in addition to or supplementary to the latter Act. So long as there is not provision in section 45G to apply to the officers of the company, it cannot be said that there is any repugnancy or inconsistency between section 196 of the Indian Companies Act and section 45G of the Banking Companies Act. Since section 45G is silent as regards the officers of the banking company, we have to look to section 196 of the Indian Companies Act. It means that it is the latter provisions that applies to the officers of the concernMr. Krishnamurthy then fell back upon the definition of “an officer” in section 2(11) of the Companies Act which defines an officer as including any director, managing agent, manager or secretary but, save in sections 235, 236 and 237, does not include an auditor. It is argued that an agent of a branch and assistant secretary would not answer the description of “an officer” within the purview of section 2(11). We find it very difficult to give effect to this contention. It is to be noted that this is an inclusive definition and does not exhaust all persons that come within the ambit of it. To hold that an assistant secretary or an agent of a bank is not an officer is to deprive the expression of its full content. The word “officer” is of wide connotation and includes assistant secretaries or agents of all the branches.
26. In Buckley’s Companies Act, twelfth edition, page 681, the following passage occurs:
“The word ‘officer’ is not to be confined to a person who has in some way or other control over the assets of the company. A person who by the terms of his appointment is made and called an officer, who is appointed by the company, paid by the company, and whose function is to act on behalf of the company, to check the directors, and whose appointment is made, not on a special occasion for a special limited purpose, but under regulations governing the constitution of the company, is an officer.”
27. For these reasons we cannot uphold this objection also.
28. It follows that the order of Mr. Justice SATYANARAYANA RAJU is a correct one and does not call for interference. The appeals are therefore dismissed with costs. Advocate’s fee Rs. 100 in each case.
29. These original side appeals having been set down this day for being mentioned the court made the following ordersThe official liquidator is permitted to draw out costs from the estate in the first instance and thereafter to recover the same from the appellant.