Case: Mallala Suryanarayana Vs. Vijaya Commercial Bank Limited

1. On a report made by the official liquidator, Satyanarayana Raju J. of the High Court of Andhra Pradesh directed a public examination of the appellant along with others under section 45G of the Banking Companies Act, 1949 (10 of 1949). In his report, the official liquidator had stated that he was of opinion that a fraud had been committed by the managing director and other directors of the Vijaya Commercial bank Ltd. which had resulted in heavy loss to the company and its shareholders and creditors. The report set out the list of persons who were either directors or officers of the said banking company. Amongst them was included the name of the appellant. The public examination of the appellant had been ordered with a view to decide the part played by him in the affairs of the company and to determine his liability if necessary to make good the loss alleged to have been incurred by the company      2. In the proceeding before Satyanarayana Raju J., it was urged that section 45G of the Banking Companies Act was ultra vires in that it contravened the provisions of article 20(3) of the Constitution. The said contention was rejected by the learned judge and in the end, an order was passed directing a public examination of the appellant. This order was challenged by the appellant by preferring an appeal under the Letters Patent before a Division Bench of the High Court of Andhra Pradesh. The court of appeal agreed with the view taken by Satyanarayana Raju J. and held that section 45G was valid as it did not contravenes the provisions of article 20(3) of the Constitution. It is this conclusion of the court of appeal that is challenged before us by Mr. Choudhry on behalf of the appellant

Court's reasoning:
3. It is clear that the public examination asked for by the official liquidator in the present case is only to determine the liability of the persons in question, and that being so, the validity of section 45G falls to be judged in the light of the request made by the official liquidator in his reportA similar question under the corresponding provisions of the Indian Companies Act has been considered by this court in raja Narayanlal Bansilal V. Maneck Phiroz Mistry 1961 1 S.C.R. 417; 1960 30 Comp. Cas 644. After hearing Mr. Choudhry, we are satisfied that having regard to the circumstances under which and the object for which the public examination of the appellant has been ordered, his contention that section 45G is ultra vires cannot succeed. The points sought to be raised on behalf of the appellant are covered by the decision of this court, in Raja Narayanlal Bansilals case 1961 1 S.C.R. 417; 1960 30 Comp. Cas 644