Case: Narayanlal Bansilal Vs. Maneck Phiroze Mistry &amp; Another

at all reasonable times.So here the use of this evidence was confined to civil proceedings. But now by the new Act under S. 478 this evidence can be used in all proceedings, thus bringing our provisions in line with the English law, and with regard to the impugned provision of our Companies Act, S. 167 of the English Act on which our Act is based provides also for evidence given in the course of investigation being used against the person, giving the testimony. The only difference between the English Act and our Act is that under the English Act this provision could only be used when the person is examined by Court. In our Act the provision applies whether the person is examined by the Inspector or by the Court. Therefore, wider powers have been taken by the Legislature under our law, and the view of Buckley, to which respect, must be paid, is that this provision is similar to the provision with regard to the Bankruptcy Act and apparently the person who is under examination cannot refuse to answer questions on the ground that the answer may incriminate himself.27. We must not fail to notice one argument which was advanced by Mr. Manecksha which has a bearing both on this aspect of the case and on the next aspect which we will presently consider, that the present provisions are so stringent and according to him so barbarous that they put his client in a worse position than if the police were actually investigating into an offence committed by him. He says that if there was a police investigation, any statements made by him in the course of investigation would not be evidence. He further says that if there was a judicial proceeding, then under S. 132, although he was compelled to answer, protection was given by the provisions of the Act. Now, the answer to that complaint is two-fold. The first is, as we have already stated, that this is not an investigation into an offence, in which case the rights of the accused are safeguarded by the provisions of the Criminal Procedure Code, and, as the Advocate General pointed out, in our opinion under the Companies Act when we come to actual prosecution the Legislature is at pains to provide that assistance should be given by everyone concerned for the purpose of the prosecution except the accused in the proceedings. Therefore, when we reach that stage, the safeguards rightly afforded by our Criminal Procedure Code are given to the person concerned. With regard to the Evidence Act, in terms the Act applies to Judicial proceedings. It does not apply to a proceeding which is not judicial. It is an adjectival law which can be qualified and modified by the substantive law of the country. It undoubtedly happens that in a non-judicial proceeding a person who is being examined cannot claim the privilege of the benefit of S. 132. But even in a judicial proceeding it would be open to the Legislature to provide that the adjectival law should be altered if it can be done undoubtedly consistent with the provisions of Art. 20(3) of the Constitution.28. Having taken all the circumstances into consideration we have come to the conclusion that Art. 20(3) has no application to the facts of this case. There is no accusation in the sense in which we have construed that expression, viz., a formal accusation, and inasmuch as there is no accusation, the compulsion introduced by the provision of the Companies Act which is impugned is not a compulsion which can be struck down by this provision of the Constitution. We may also add that in giving this restricted meaning to the Constitutional safeguard, we have carefully weighed the rights of the individual against the interest of the public and of the State. In our opinion, it is the duty of the Court, to the extent that it can legitimately do without doing violence to the language used by the Constitution makers, to arrive at a solution which, while maintaining the rights of the individual as far as possible, does not overlook the rights which the public and the State are entitled to claim.29. Turning to the third head of Mr. Maneckshas argument, it can to very briefly disposed of. The argument is based on Art. 14. Now, there are very few articles of the Constitution which have received so much attention by different Courts as Art. 14 and it is unnecessary to repeat what has been laid down as the basis of classification which will prevent the application of that Article. What is urged in this case is that there is no equality before the law because a person who is being examined under the provision of the Companies Act does not get the protection which another person is entitled to under S. 132 of the Evidence Act, and it is also said that this particular company or this particular managing agent has been picked out for special treatment and thereby there has been discrimination The latter part of the argument, as Mr. Manecksha fairly conceded, is now conclusively answered in Dalmias case by the Supreme Court in Shri Ram Krishna Dalmia v. Justice Tendolkar, AIR J958 SC 538. That Mr. Manechksha says, is true as far as the challenge to S. 239 is concerned, but he says that the challenge to S. 240(5) still remains and that has not been considered by the Supreme Court.In our opinion, it is impossible to urge that there is discrimination and that there is no proper classification on a rational basis, when an important system of law as the English system recognises these exceptions as pointed out both in Insolvency law and Company Law. Therefore, if our law makes a distinction between the rights of persons who are examined under the provisions of the Company Law and the rights of persons under other laws, it cannot be said that that classification is without a rational basis.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]we have an Inspector appointed under S. 138 of the Act of 1913.He had carried on part of his investigation under S. 140. By reason of this section his appointment is to continue in force and if his appointment could have been made under the Act of 1956 it shall have effect as if it was made under this Act. Now, undoubtedly, under this Act an Inspector could have been appointed under S. 235, and therefore what S. 645 does is by a legal fiction to equate the appointment of the Inspector under S. 138 with his appointment under S. 235. Therefore, we must look upon the Inspector as being appointed under S. 235 if the legal fiction is to have full effect. Then, obviously, it is not necessary to make a fresh appointment. If it was necessary to make a fresh appointment, there was no need for the legal fiction. Therefore the law looks upon the Inspector, the first respondent, as being appointed under S. 235 after the Act of 1956 came into force, and if he is appointed under S. 235 then with the prior approval of Government under S. 239(2) he can exercise the powers under S.our opinion, S. 646 does not furnish any answer to the plain interpretation of S. 645 which, as already pointed out, does cover the case of an Inspector appointed under S. 138 of the old Act. We refuse to read S. 646 as being an exception to the provision made in S. 645 that all appointments made under the old Act should be deemed to be appointments made under the newit is nothing more than a reproduction in substance of S. 6 of the General Clauses Act. Having continued that appointment, according to the Advocate General, the latter part of S. 646 deals with the powers of the inspector and in dealing with that itwide enough to include the powers conferred upon the inspector under the new Act under S. 239. In view of what we have held with regard to the effect of S. 646, it is unnecessary to decide whether the expression "in relation to" is of such wide import as to cover the conferment of power upon an inspector under S.is again unnecessary for us to express any opinion on this argument as, the first answer given by the Advocate General is sufficient to dispose of the first contention of theArt. 20(3), as Mr. Manecksha has rightly pointed out, that limitation does not appear. The protection against this compulsion under our Constitution is general. It is not confined to any particular criminal case as would appear if Art. 20(3) were to be read by itself. But in construing Art. 20(3) we must adopt certain canons of construction. The first and the obvious one is to read the Article as a whole and not to divorce Cl. (3) of that Article from the rest of it. The second is that we must not overlook the fact that the Constitution makers in India had knowledge not only of the American Constitution but also the principles of English common law and also the exceptions engrafted upon those principles. Finally, we must give to this Article an interpretation which is for the greatest good of thethis case there is no doubt that the compulsion against which Article 20(3) affords protection is present because, as we have pointed out when we were looking at the scheme of the Act, under Section 240(5) there is provision for an obligation on the part of any person examined by an inspector or by the Court to answer questions put to him and the possibility of those answers being used in evidence against him and it is also clear that the he answers could be used in evidence against him although the answers may be of an. incriminatingis true, as pointed out by Mr. Manecksha in the various documents to which reference has already been made, that the appellant was charged with having misappropriated the funds of the company and having committed an offence under the Companies Act and also under the Indian Penal Code. In the sense that there was an allegation that he had done or omitted to do something which was against the law, undoubtedly he was accused of an offence. But it would be stretching the language too far to suggest that there was any formal accusation against the appellant. Nor would it be true to say that the accusation was either before a criminal Court or tribunal or was with reference to a criminal proceeding. Nor would it be true to suggest, looking to the provisions of the Criminal Procedure Code, that this accusation in the normal course would result in prosecution. It is fallacious to suggest that the only object of the inquiry and the only purpose of the report was to launch a prosecution under S. 242 of the Companies Act. It was left to the discretion of the Central Government under S. 242 to launch or not to launch a prosecution, and, as we shall point out in another context, the report of the Inspector and the inquiry held by him serve under the Companies Act many more important purposes than the mere prosecution of a defaulting managing agent or a defaultingAdvocate General has taken us through the provisions of the Public Servants (Inquiries) Act, 1850, and that Act does suggest from the language used in the various sections with regard to the framing of the charge and the person against whom the inquiry is being held as being described as an accused, that the inquiry was more or less similar to a criminal proceeding. It is also true that we do not find any provision in that Act which makes the accused a compellable witness, and therefore the element of compulsory testimonial which we find in the Companies Act is absent and to that extent no question with regard to Art. 20(3) would arise when an inquiry is being held against a publicis clear on an examination of the provisions of the Companies Act that the scope and nature of the inquiry is not investigation into an offence. The scope and nature of the inquiry is investigation into the affairs of the company. It is equally clear that the report is not made for the purpose of a prosecution being launched by the Central Government and that the function of the Inspector is to express an opinion on the way the affairs of the company are conducted in order that appropriate action may be taken which action may take different forms like applications under the different sections of the Companies Act to which reference has been made or a prosecution under S. 242 of the Companiesthe answer to that complaint isThe first is, as we have already stated, that this is not an investigation into an offence, in which case the rights of the accused are safeguarded by the provisions of the Criminal Procedure Code, and, as the Advocate General pointed out, in our opinion under the Companies Act when we come to actual prosecution the Legislature is at pains to provide that assistance should be given by everyone concerned for the purpose of the prosecution except the accused in the proceedings. Therefore, when we reach that stage, the safeguards rightly afforded by our Criminal Procedure Code are given to the person concerned. With regard to the Evidence Act, in terms the Act applies to Judicial proceedings. It does not apply to a proceeding which is not judicial. It is an adjectival law which can be qualified and modified by the substantive law of the country. It undoubtedly happens that in aproceeding a person who is being examined cannot claim the privilege of the benefit of S. 132. But even in a judicial proceeding it would be open to the Legislature to provide that the adjectival law should be altered if it can be done undoubtedly consistent with the provisions of Art. 20(3) of the Constitution.28. Having taken all the circumstances into consideration we have come to the conclusion that Art. 20(3) has no application to the facts of this case. There is no accusation in the sense in which we have construed that expression, viz., a formal accusation, and inasmuch as there is no accusation, the compulsion introduced by the provision of the Companies Act which is impugned is not a compulsion which can be struck down by this provision of the Constitution. We may also add that in giving this restricted meaning to the Constitutional safeguard, we have carefully weighed the rights of the individual against the interest of the public and of the State. In our opinion, it is the duty of the Court, to the extent that it can legitimately do without doing violence to the language used by the Constitution makers, to arrive at a solution which, while maintaining the rights of the individual as far as possible, does not overlook the rights which the public and the State are entitled toour opinion, it is impossible to urge that there is discrimination and that there is no proper classification on a rational basis, when an important system of law as the English system recognises these exceptions as pointed out both in Insolvency law and Company Law. Therefore, if our law makes a distinction between the rights of persons who are examined under the provisions of the Company Law and the rights of persons under other laws, it cannot be said that that classification is without a rational basis.