11 March 1964
Supreme Court


Case number: Appeal (civil) 254 of 1963






DATE OF JUDGMENT: 11/03/1964


CITATION:  1964 AIR 1552            1964 SCR  (7) 137  CITATOR INFO :  F          1965 SC 654  (5,6,7)  RF         1981 SC 379  (62,68)

ACT: Banking  Companies  Act-Banking Company  under  liquidation- Public  examination of directors ordered-Section 45G of  the Act does not violate Art. 20(3)-Elements of self  incrimina- tion-Acts and omissions of directors need not be criminal-It is  sufficient  if they  are  commercially  unsound-Ordinary public examination-Court has to see only that a prima  facie case  is  established--Constitution of  India,  Art.  20(3)- Banking Companies Act, 1949 (X of 1949), s. 45G.

HEADNOTE: The appellants were directors of Palai Central Bank Ltd.  OD an  application made by the Reserve Bank of India  the  High Court  of  Kerala  ordered the winding up of  the  Bank  and appointed  an  Official  Liquidator who filed  a  number  of reports under s. 45G(1) of Banking Companies Act, 1949.  The appellants  filed  their objections and the  learned  single Judge after hearing the parties made an order directing  the public examination of the appellants under s. 45G(2) of  the Act.   After appealing without success to a  Division  Bench the  appellants filed the present ,appeals on a  certificate granted by the High Court. It was contended on behalf of the appellants that the provi- sion  of  s. 45G(2) in as much as it would compel  a  person ordered  to  be publicly examined to be  a  witness  against himself  is violative of Art. 20(3) of the Constitution  and therefore  bad.  It was further contended that the  acts  or omissions  alleged  as contemplated by s. 45G(1)  should  be acts or omissions which are prohibited by law or enjoined by law and on this basis the reports of the Liquidator have not made   out  a  case  for  public  examination.   The   third contention  was  that the High Court  has  misconstrued  the effect  of the provisions of s. 45G and has refused to  give an opportunity to the appellants. Held:A  person  examined publicly under s. 45G may  in  some cases be compelled to be a witness against himself and  thus



one elementof Art. 20(3) is satisfied.  But it is only  when a person can be said to have been accused of an offence that the   prohibition  prescribed  by  Art.  20(3)  comes   into operation.   If a person who is not accused of any  offence, is compelled to give evidence and it ultimately leads to  an accusation against him, that would not be a case which would attract the provisions of Art. 20(3).  After the examination under s. 45G is over and materials adduced before the  court have  been examined by the court an occasion may or may  not arise  to  take  any  action.  In  such  a  case,  what  may -conceivably  follow cannot said to be existing  before  the order  is passed under s. 45G; an accusation may follow  the enquiry  but an accusation is not in existence at  the  time when  public  examination is ordered.  Hence  the  appellant cannot  be said to have been accused.  Since  the  essential condition  precedent  for the application of Art.  20(3)  is absent in all cases covered by s. 45C it cannot be said that s. 45G is violative of Art. 20(3) of the Constitution. 138 Mallala Suryanarayana v. Vijaya Commercial Bank Ltd. decided on 26-10-61 (C.A. No. 286/59) and a a Narayaulal Bansilal v. Maneck Phiroz Mistry and Anr., A.I.R. 1961 S.C. 29, referred to. (ii) The  acts or omissions contemplated under s.  45G  need not  necessarily be criminal, they may even include acts  or omissions  which  are commercially unsound or  unwise.   The court  has only to see whether the acts or omissions "as  to the  promo tion 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" have led to loss to the banking company.  For this, what the court  can and should do is to read the report submitted  by the  Official  Liquidator,  consider  whether  the   opinion expressed   in  the  report  appears  to  be   prima   facie reasonable,  hear the explanation of the persons  concerned; and find Out Prima facie whether the explanation tendered by the person is sufficient to reject the liquidator’s’ request for  such  person’s public examination and  whether  on  the whole  it  is  just and beneficial to the  interest  of  the banking company that public examination should be held.  The High  Court has dealt with the matter precisely in this  way in the present case and hence the appellants cannot have any grievance. Ex parte George Stapylton Barnes, (1896) A.C. 146, Sir Fazal Ibrahim  Rahimtoola v. Appabhai C. Desai, A.I.R.  1949  Bom. 339  and The Ahmedabad Advance Spinning and Weaving  Co.  v. Lakshmishankar, I.L.R. 30 Bom. 173, distinguished. (iii)     Applying  the above principles and  examining  the reports  submitted  by the Official Liquidator it  is  clear that the courts below have taken into account those  reports and   after  considering  the  objections  raised   by   the appellant,  they have come to the right conclusion that  the appellants should face a public examination.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 254 to  256 of 1963. V.   A. S. Muhammad, for the appellant (in C.A. No. 254/63) J.   B. Dadachanji, 0. C. Mathur and Ravinder Narain,  for the  appellants (in C.A. Nos. 255 and 256 of 1963). M. C.     Setalvad,  Atiqur Rehman, Shureshta Kumari and  K. L. Hathi, for the respondent (in all the appeals). March 11, 1964.  The Judgment of the Court was delivered by



GAJENDRAGADKAR, C. J.-Two questions of law have been raised, before  us  by  Dr. Seyid Muhammad on behalf  of  K.  Joseph Augusthi, the appellant in Civil Appeal No. 254/ 1963.  Both of them are related to section 45G of the Banking  Companies Act,  1949  (No.  X of 1949) (hereinafter called  the  Act). The  first question raised has reference to the validity  of the  said  section  and the second to  its  true  scope  and effect.  Dr. Seyid Muhammad contends that the answers  given by  the  Kerala  High  Court to  both  these  questions  are erroneous 139 According to him, s. 45 G is unconstitutional inasmuch as it contravenes the fundamental right guaranteed to the citizens of this country by Art. 20(3) of the Constitution.  He  also argues that in making an order for the public examination of the appellant, the High Court has misconstrued the scope and effect of the relevant provisions of the said section. The  appellant Joseph Augusthi was the Managing Director  of the  Palai Central Bank Limited from 26-1-1927 to  8-8-1960; K. George Thomas and George Joseph who are the appellants in the two other appeals Nos. 255 and 256 of 1963 respectively, were the Directors of the said Bank-, the first of them  was the Director from 14-1-1935 to 8-8-1960 and the latter  from 26-1-1927 to 8-8-1960. An application for the winding up of the said Bank was  made before  the  Kerala  High Court by the  Reserve  Bank  under section 38(3)(b)(iii) of the Act.  The said provision justi- fies  the  making of an application by the Reserve  Bank  in case in the opinion of the Reserve Bank, the continuance  of the  banking  company  in question  is  prejudicial  to  the interests  of the depositors.  On the 8th August,  1960,  an order  was  passed on the said  application  appointing  the Official  Liquidator  of  the  High  Court  the  Provisional Liquidator  of  the  Bank.  The order  of  winding  up  then followed on the 5th December, 1960, and on the 8th December, 1960,  an Official Liquidator was appointed under s.  39  of the  Act.  After the Official Liquidator came on the  scene, he  made three reports to the High Court report No.  192  on the 17th August, 1961; report No. 242 on the 29th September, 1961 and report No. 350 on the 4th December 1961.  All these reports  were  made  under  s.  45G(1)  of  the  Act.    The appellants filed their objections on the 23rd November, 1961 to  the first two reports.  The matter was then  ,considered by  the  learned single Judge of the Kerala High  Court  and after  hearing the parties, he made an order  directing  the public examination of the three appellants under s. 45G(2). This  order was challenged by the appellants  by  preferring three  appeals  before a Division Bench of the  High  Court. The Division Bench agreed with the view taken by the learned single   Judge  and  dismissed  the  three   appeals.    The appellants  then applied for and obtained certificates  from the  High  Court and it is with the said  certificates  that they have come to this Court by the present three appeals. The first point which has been argued before us by Dr. Seyid Muhammad  is  that  s. 45G is  unconstitutional  because  it contravenes the fundamental rights guaranteed by Art. 20(3). In  order  to appreciate this argument, it is  necessary  to read s. 45G(1) & (2). 140               "(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:               Provided that no such person shall be publicly               examined   unless   he  has  been   given   an               opportunity to show cause why he should not be               so examined." The  other sub-sections of this section need not  be  cited, because  it  would be enough for our purpose to  notice,  in substance, what their effect is.  Sub-section (3) allows the Official  Liquidator to take part in the examination and  to employ  such  legal assistance as may be sanctioned  by  the High Court, if he is specially authorised by the High  Court in  that  behalf.  Sub-section (4) permits the  creditor  or contributory   to  take  part  in  the  examination   either personally  or by any person entitled to appear in the  High Court.  Sub-section (5) gives authority to the High Court to put  questions  to the person who is  being  examined;  sub- section  (6)  empowers oath to be administered to  the  said person and compels him to answer questions as may be put  to him by the High Court, or as the High Court may allow to  be put  to  him.   Under  sub-section (7),  such  a  person  is entitled  to appear by a lawyer and the lawyer so  appointed shall be at liberty to put to him such questions as the High Court  may deem fit just for the purpose of enabling him  to explain  or  qualify  any answer given by him;  there  is  a proviso to this sub-section which authorises the High  Court to  make  an order of costs in its discretion  in  case  the person under examination is exculpated from any charges made or  suggested against him.  Sub-section (8) deals  with  the procedure  to  be  followed  in  keeping  a  record  of  the examination.   Subsection (9) provides that where after  the examination of the 141 person,the  High Court is satisfied that a person,  who  has been  a Director of the banking company, is not fit to be  a director  of a company, or an auditor, or a partner who  has been  acting  as  such auditor, is not fit  to  be  such  an auditor  or partner, the High Court may make an  order  that that person shall not, without the leave of the High  Court, be  a  director  of,  or in any  way,  whether  directly  or indirectly, be concerned or take part in the management  of, any  company, or, as the case may be, act as an auditor  of, or be a partner of a firm acting as auditors of, any company for such period not exceeding five years as may be specified in the order. Thus, it will be clear that the scheme of s. 45G is first to decide whether, prima facie, there is a, case for the public examination  of  a person; then in deciding  this  question,



give  an  opportunity  to the person  concerned;  if  it  is decided  to  hold a public examination of the  said  person, proceed  to  hold  that  examination;  if  suggestions  made against  the  person examined are found to  be  unwarranted, make  an  order of costs in his favour; and  if  the  person concerned  is  found to have been responsible  for  acts  or omissions which caused loss to the banking company, to  make a  penal  order disqualifying such person from acting  as  a director  or an auditor as indicated by subsection (9).   It is  in the light of this scheme that the argument about  the contravention of Art. 20(3) falls to be examined. Article 20(3) provides that no person accused of any offence shall  be compelled to be a witness against himself. it  may be  conceded that when a person is compelled to submit to  a public  examination,  that itself. prima facie,  looks  like pillorying him in the public gaze.  It is also true that  s. 45G(6) compels the person to answer questions which the High Court  may put to him, or which the High Court may allow  to be  put to him, and it is quite likely that in  cases  where public  examination is ordered to be held, some  suggestions and  even  some charges may be levelled against  the  person examined  by reference to his acts or omissions in  relation to  the  promotion,  formation or  conduct  of  the  banking company   of  which  he  was  a  director  or  an   auditor. Therefore,  there is no difficulty in holding that a  person examined  publicly  under  s. 45G may,  in  some  cases,  be compelled  to  be  a witness  against  himself.   Thus,  one element of Art. 20(3) is satisfied-, but the question  still remains whether the other essential element is satisfied  or not. Article  20(3) guarantees to every citizen  the  fundamental right  not to be compelled to be a witness against  himself, provided  the person who is being compelled in that way,  is accused  of any offence.  In other words, it is only when  a person can be said to have been accused of any offence  that the   prohibition  prescribed  by  Art.  20(3)  comes   into operation.   If a person who is not accused of any  offence, is compelled to give 142 evidence,  and  evidence  taken from  him  under  compulsion ultimately  leads to an accusation against him,  that  would not  be  a case which would attract the provisions  of  Art. 20(3).  The main object of Art. 20(3) is to give  protection to  an  accused person not to be  compelled  to  incriminate himself  and that is in consonance with the basic  principle of  criminal  law accepted in our country  that  an  accused person  is entitled to rely on the presumption of  innocence in  his  favour  and cannot be compelled  to  swear  against himself.   Therefore,  unless  it is  shown  that  a  person ordered to be publicly examined under s. 45G is, before,  or at  the  time when the order for examining him  publicly  is passed, an accused person, Art. 20(3) will not apply. What  then is the position with regard to a  person  against whom  an  order for public examination is made by  the  High Court as done against the appellants?  All that has happened at  the  relevant time is that the official  liquidator  has submitted reports indicating that in his ’opinion, loss  has been caused to the banking company under liquidation by  the acts or omissions of the appellants, and the High Court,  on considering   the  reports  and  taking  into  account   the explanation  ,given  by  the  appellant,  has  come  to  the conclusion  that, prima facie, a case has been made out  for their  public  examination.  In such a case, how can  it  be said  that the appellants have been accused of any  offence? The  whole object of the enquiry is to collect evidence  and



decide  whether  any acts or omissions caused  loss  to  the banking company.  It may be that as a result of the enquiry, the court may reach the conclusion that the alleged acts  or omissions  did not cause any loss; in such a  case,  nothing further  has  to be done.  On the other hand, it  is  likely that the opinion formed by the liquidator may be  vindicated and the court may come to the conclusion that some or all of the acts or omissions on which the liquidator’s opinion  was based  did  cause loss to the banking company; and  in  that case,  some  action  may conceivably be  taken  against  the persons  examined in addition to the action contemplated  by s.  45G(9).   That,  however,  only  means  that  after  the examination  is  over and the material  adduced  before  the court has been examined by the court, an occasion may or may not  arise  to take any action.  In such a  case,  what  may conceivably follow cannot be said to be existing before  the order  is passed under s. 45G; an accusation may follow  the enquiry, but an accusation was not in existence at the  time when  the  public  examination  was  ordered;  and  so,  the appellants  cannot  contend that they were  accused  of  any offence  at  the  time  when  the  order  for  their  public examination was passed by the High Court.  The accusation of any  offence  which  is  an  essential  condition  for   the application  of Art. 20(3) is a condition precedent for  the application of the principle prescribed by the said Article, and  since this essential condition is lacking in all  cases covered by sec- 143 tion  45G, it is difficult to sustain the argument that  the said  section contravenes Art. 20(3).  Therefore, we do  not think  Dr. Seyid Muhammad is right in contending that s. 45G is  invalid on the ground that it contravenes Art. 20(3)  of the  Constitution.  It appears that in the case  of  Mallala Suryanarayana  v.  The Vijaya Commercial Bank  Ltd.(1),  the same view I has been expressed by this Court, though it  may be  added  that this question does not appear to  have  been then elaborately argued. In this connection, we may refer to a decision of this Court in Raja Narayanlal Bansilal v. Maneck Phiroz Mistry and Anr. (2), where a somewhat similar provision contained in s.  240 of  the old Companies Act fell to be considered and  it  was held that it did not contravene Art. 20(3) of the  Constitu- tion. That takes us to the question of the construction of s. 45G. Dr.  Seyid Muhammad contends that s. 45G requires  that  the acts  or omissions alleged against a person should  be  acts which  are  prohibited by law, or omissions in  relation  to acts  the  performance of which is enjoined by law,  and  he suggested  that if this interpretation is put on  the  words "acts  or omissions", it would appear that the reports  made by the liquidator in the present case have not made out  any case  for the public examination of the appellants.  We  are not impressed by this argument.  It is significant that  the acts  or  omissions to which s. 45G(1) refers  need  not  be fraudulent acts or omissions, because, in terms, the section provides that the act or omission would attract s. 45G(1) if it  has led to any loss to the banking company  even  though fraud  may not have been committed by such act or  omission. The context also shows that what the Court has to  consider, is  whether any act or omission on the part of the  director or the auditor of the banking company has caused any loss to the  company.   Now,  such  an  act  or  omission  need  not necessarily  be  criminal;  it  may  even  include  acts  or omissions which are commercially unsound or unwise.  In this connection, it may be recalled that s. 478 of the  Companies



Act  which deals with a similar problem, requires  that  the report  of  the  Official  Liquidator  should  disclose  his opinion  that  a,  fraud has been committed.   To  the  same effect  is the provision contained in s. 268 of the  English Companies Act (11 & 12 Geo. 6, c 38).  Therefore, it  would, we  think,  be unreasonable to put a narrow  and  restricted construction  on  the words "acts or omissions" used  by  s. 45G(1). Dr.  Seyid Muhammad has then contended that in dealing  with the reports made by the liquidator in the present case,  the High  Court has not given effect to the provision  contained in (1)  Civil Appeal No. 286 of 1959 decided on 26-10-1961. (2)  A.I.R. 1961 S.C. 29. 144 the proviso to s. 45G(2). The said proviso requires that no person  shall be publicly examined unless he has been  given an  opportunity  to  show  cause why he  should  not  be  so examined,  and  Dr. Seyid Muhammad argues  that  unless  the matter is fully examined and an opportunity is given to  him to show   that the facts alleged in the reports are  untrue, the requirements of the proviso will not have been satisfied and  his grievance is that no such opportunity was given  to the  appellants in the present case.  There is no  substance even  in  this  argument.   What the  Court  has  to  do  in exercising  its  power under s. 45G(2) is  to  consider  the report  made  by the liquidator and decide  whether  it  can reasonably  entertain  the opinion that any person  who  has taken part in the promotion or formation ,or conduct of  the banking company should be publicly examined. In other words, it is a preliminary stage of the enquiry and the point which the  Court has to consider is whether, prima facie,  a  case has been made out to hold a public examination of the person concerned.   It cannot be the object of s. 45G(2) read  with the  proviso that the Court should allow the  appellants  to lead   evidence  rebutting  the  allegations  made  by   the liquidator in his reports, for if such a course was adopted, it would itself develop into a full-fledged enquiry and  the very object of a limited enquiry at the initial stage  would be defeated. What the Court can and should do in such  cases is to read the report submitted by the Official  Liquidator, consider whether the opinion expressed in the report appears to be, prima facie, reasonable; hear the explanation of  the person  concerned;  and  find out prima  facie  whether  the explanation  tendered by the person is sufficient to  reject the   liquidator’s   request  for   such   person’s   public examination  and  whether,  on the whole,  it  is  just  and beneficial  to  the  interest of the  banking  company  that public  examination  should be held.  The  subjectmatter  of this  preliminary  investigation  is not the  whole  of  the enquiry  on the merits; it is an enquiry as to  whether  the director  or  the  auditor  should  be  publicly   examined. Therefore,  we do not think Dr. Seyid Muhammad is  justified in contending that the High Court has ignored the  safeguard afforded to the appellants by the proviso s. 45G(2). The question about the construction of s. 45G(1) & (2)  does not present any serious difficulty.  What must be  disclosed by  the  report  of the Official Liquidator is  the  act  or omission of the person there specified which has led to loss to  the  banking company since its formation.  The  acts  or omissions to which s. 45G(1) refers, when considered in  the light  of  s.  45G (2), are acts or  omissions  "as  to  the promotion,  or formation, or the conduct of the business  of the banking company, or -,is to his conduct and dealings  in so  far  as  they  relate to  the  affairs  of  the  banking



company", so that after the report is made, the court  takes a broad and overall view of the state of 145 affairs  disclosed by the report and considers  prima  facie whether a case has been made out for the public  examination of  the director or the auditor.  We are satisfied that  the High Court has dealt with the matter precisely in this  way, and  no  Grievance can be made against its decision  on  the ground that the provisions of the proviso to s. 45G(2)  have been ignored. In  support  of his argument that the High  Court  has  mis- construed  the  effect of the provisions of s.  45G(1),  Dr. Seyid  Muhammad  referred  to two  decisions  which  may  be mentioned at this stage.  The first of these is the decision of  the  House  of  Lords  in  Ex  parte  George   Stapylton Barnes(1).   In  that case, the question which  fell  to  be considered  was  the  scope and effect of  s.  8(3)  of  the Companies  (Winding-up)  Act, 1890; Lord  Halsbury  observed that he entertained not the smallest doubt that the  meaning of  this  legislation is that, in order to  give  the  Court jurisdiction to make an order for public examination,  there must  be a finding of fraud, and a finding of fraud  against an individual who is thereby made subject to being  summoned before  the Court, and is compelled to answer,  whether  the answer  incriminates  him  or not,  but,  being  exculpated, receives  his costs.  He further observed: "I confess  I  am unable,  looking  at  the whole of the  legislation  on  the subject, to entertain the least doubt that that was what the Legislature  intended,  and  I  am  a  little  surprised,  I confess,  that there should have been any doubt  that  fraud must  be  found."  In our opinion, this  passage  is  hardly relevant  for  our  purpose,  because  as  we  have  already indicated,  s.  45G(1) expressly provides that  the  act  or omission  complained of need not necessarily be  fraudulent, and so, there can be no question, under s. 45G(1), of coming to  a  conclusion  that  fraud  has  been  committed  before directing public examination of a person. The other decision on which Dr. Seyid Muhammad has relied is the  judgment of the Bombay High Court in Sir Fazal  Ibrahim Rahimtoola  v. Appabhai C. Desai(2).  In that case,  dealing with the provisions contained in s. 196 of the old Companies Act, Chagla C.J. disapproved of the practice of ordering  ex parte public examination of persons.  In that connection, he quoted  with  approval the warning sounded by  Sir  Lawrence Jenkins  in  the  Ahmedabad  Advance  Spinning  and  Weaving Company  v. Lakshmishanker(3), that the practice of  passing ex  parte  orders involving the person affected  in  serious liability  is  much  to be deprecated.  In  that  case,  the Bombay  High Court was called upon to consider  whether  the allegations  made  against  the  director  were  vague   and indefinite.  As we will. (1) [1896] A.C. 146 at P. 152. (2)A.I.R. 1949 Bom. 339. (3)I.L.R. 30 Bom. 173. 146 presently  point out, that difficulty does not arise in  the present appeals.  The allegations made by the liquidator  in his  reports against the appellants are clear,  precise  and definite. Let us now refer to the reports submitted by the  liquidator in  the present case.  In his first report,  the  liquidator has stated that in carrying out the affairs of the bank, the Directors,  with the help of officers appointed by them  out of  their  own relatives, have not  properly  conducted  the affairs  of  the  bank.   He has also  stated  that  in  his



opinion,  loss  had  been  caused  to  the  bank  since  its formation by the acts and omissions of the Directors and  of the  auditor  of  the bank.  The  report  then  proceeds  to specify  the extent of the loss and the causes for the  said loss.   It appears from the report that loans were  advanced by  the bank without regard to the question of any  adequate security.   In many cases, loans were advanced  without  any security at all and the inevitable consequence has been that a  large  number of debts have become barred  by  time  long before  the winding up proceedings were started.   The  bank appears  to  have paid dividends  without  earning  profits. Similarly,  though it did not earn any profits between  1936 to 1958, it submitted reports showing substantial amounts as net  income  and  so, it has paid  income-tax  on  the  said amounts.    A  large  amount  of  advances  appears  to   be irrecoverable.  At the end of his report, the liquidator has mentioned 10 persons, including the three appellants  before us, whose acts and omissions, in his opinion, contributed to loss to the banking company.  Two further reports were  made by the liquidator and they support the opinion expressed  by him  in  his first report.  The third of these  reports  was filed  after  this matter was heard by  the  learned  Single Judge but the first two reports themselves fully justify the order made by him, and so, the third report can well be left out of consideration. When  we turn to the objections filed by the appellants,  it is clear that some of the facts are not seriously  disputed. Take,  for  instance,  the allegation  that  dividends  were declared  without  earning profits.   The  appellant  Joseph Augusthi contended before the High Court that the bank  used to treat interests accrued on advances, though not received, as  income,  and so, income-tax and super-tax were  paid  on such income and dividends were also paid on the same  basis. He  suggested that the Reserve Bank had noticed these  facts and had waived its objection.  In other words, he relied  on a practice which is obviously unsound in a commercial  sense and  pleaded  that  at this stage the  Reserve  Bank  cannot challenge the correctness or propriety of the said practice. This  practice  has  been  described  by  the  appellant  as mercantile system of accounting.  It would thus be seen that some  of the facts alleged by the liquidator in  his  report are not disputed; the effect of those facts was a matter  of argument between the parties before the High Court.  In such 147 a  case, we do not see how the appellants  can  successfully challenge  the  correctness of the view taken  by  the  High Court  that  a  case  had  been  made  out  for  the  public examination of the appellants.  That is why we do not  think there  is any substance in the argument urged before  us  by Dr. Seyid Muhammad that on the facts, an opportunity had not been  given  to  the appellants to show  that  their  public examination  should, not be ordered.  We are satisfied  that in  dealing  with the facts of this case, the  Courts  below have  taken into account the reports made by the  liquidator and   after  considering  the  objections  raised   by   the appellants, they have come to the right conclusion that  the appellants should face a public examination. The result is the appeals fail and are dismissed with costs. One set of hearing fees. Appeals dismissed. 148