Judgment :- 1. y these reports, made under S.45 G of the Banking Companies Act, the official liquidator asks for the public examination of ten persons - I shall call them respondents - the first nine of whom were directors (the first of them the managing director) of the banking company that is being wound up, and the tenth its auditor. The 2nd respondent died soon after the filing of the first of these reports, and he is beyond the reach of human examination. 2. Notice has gone to the remaining respondents and they have been heard as required by the proviso to sub-section (2) of the section. But, before considering the objections taken by them, I think it would be profitable to have a close look at the section and compare it with its parent section, now S.478 of the Companies Act, 1956. 3. S.45 G of the Banking Companies Act - so far as is material - runs as follows: "45G. (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. xxx xxx xxx xxx And S.478 of the Companies Act as follows: "478. xxx xxx xxx xxx And S.478 of the Companies Act as follows: "478. Power to order public examination of promoters; directors etc.- (1) When an order has been made for winding up a company by the Court, and the Official Liquidator has made a report to the Court under this Act, stating that in his opinion a fraud has been committed by any person in the promotion or formation of the company, or by any officer of the company in relation to the company since its formation, the Court, may, after considering the report, direct that that person or officer shall attend before the Court on a day appointed by it 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 his conduct and dealings: as an officer thereof." xxx xxx xxx xxx 4. The essential difference between the two provisions is that while S.478 of the Companies Act requires the liquidator to state that in his opinion a, fraud has been committed by the person whose public examination he seeks, S.45 G of the Banking Companies Act requires no allegation of fraud. All that it requires is an allegation that there has been an actor omission, whether amounting to fraud or not, by which loss has been caused. 5. There are other differences between the two provisions, but I do not think that they materially affect the scope of the inquiry. The more important of these differences are: (1) While S.478 of the Companies Act applies to all officers of the company, S.45 G of the Banking Companies Act applies only to directors and auditors. (I am leaving out promoters). (2) While S.478 of the Companies Act makes it quite clear that it is only that person against whom a fraud is alleged that can be summoned for public examination, the wording of S.45 G of the Banking Companies Act (following the wording of S.196 of the Indian Companies Act, 1913) is rather vague, and, on a literal construction, is capable of the meaning that, even a person (of the classes mentioned) against whom no act or omission resulting in loss is alleged, can be publicly examined on a general allegation of such acts or omissions. But, as I have shown in Official Liquidator v. Krishna Kamath (1958 K.L.T. 908) there is, despite the difference in wording, no difference between the two provisions on this point, and the principle laid down by the House of Lords in Exparte Barnes, (1896) A.C. 146, that a general incrimination would not be enough and that the individual person sought to be examined must be incriminated applies also to S.45 G of the Banking Companies Act. (3) S.478 of the Companies Act does not in terms require that the person sought to be examined should be heard before his examination is ordered. This is expressly required by the proviso to sub-section (2) of S.45 G of the Banking Companies Act. But, as pointed out by Chagla, C. J. in Fazal Ibrahim v. Appbhai (A.I.R.1949 Bombay 339) the practice both in England and in India with regard to public examination under the provisions of the Companies Act is to hear the person concerned before making an order against him, although in England the practice takes the form of first making an exparte order and then, after the order is served upon the person, to hear him if he applies to have the order discharged. Therefore, this provision regarding giving the person concerned an opportunity to show cause why he should not be examined contained in the Banking Companies Act only expressly lays down what is the settled practice even with regard to examinations under the Companies Act. It was perhaps thought necessary to make this obligatory since, for an examination under the Banking Companies Act, fraud need not be alleged and only an act or omission leading to loss need be alleged. (4) While S.478 (1) says that the court may, after considering the report, direct that the person concerned be publicly examined, S.45 G (2) of the Banking Companies Act says that if, on consideration of the report, the High Court is of opinion that the person concerned should be publicly examined, it shall direct that he be so examined. Here again I think that despite the difference in language the meaning is the same. Obviously, after considering the report as required by S.478 of the Companies Act, the court would direct public examination only if it is of opinion that the person concerned should be so examined, not otherwise. Here again I think that despite the difference in language the meaning is the same. Obviously, after considering the report as required by S.478 of the Companies Act, the court would direct public examination only if it is of opinion that the person concerned should be so examined, not otherwise. This is after all all that sub-section (2) of S.45 G of the Banking Companies Act says; and I should think the "may" of the former section means the same thing as the "shall" of the latter. 6. It seems to me that, despite these differences, there is no difference in the scope of the enquiry which the court has to make before ordering a public examination whether under S.478 of the Companies Act or under S.45 G of the Banking Companies Act. In Civil Naval and Military Outfitters Limited, In re, (1899) 1 Ch. 215, it was said at page 240 of the report with reference to public examination under a provision similar to S.478 of our Companies Act that, "you ought not to subject any one to a public examination unless you are satisfied on the report that the official receiver has come to the conclusion, and upon some substantial grounds, that a charge of fraud is disclosed by the facts against the person whom it is sought to examine - such a charge that he may understand what it is from which he will have to exculpate himself, and with which it is sought to incriminate him". Adapting this, I would say that before ordering a public examination under S.45 G of the Banking Companies Act the court must be satisfied that it appears from the liquidator's report that he has come to the conclusion, and upon some substantial ground, that an act or omission resulting in loss is disclosed by the facts against the person whom it is sought to examine, such a charge that he may understand what it is from which he will have to exculpate himself and with which it is sought to incriminate him. No investigation into the facts alleged in the report is contemplated. They must be assumed and the only question is whether the opinion expressed by the liquidator is justified by these facts. 7. No investigation into the facts alleged in the report is contemplated. They must be assumed and the only question is whether the opinion expressed by the liquidator is justified by these facts. 7. The differences between the two provisions have given rise to a charge of discrimination, and the respondents would have it that S.45 G of the Banking companies Act is bad for offending Art.14 of the Constitution. As I have pointed out, the only real difference between the two provisions is that, whereas in the case of an ordinary company fraud must be alleged, in the case of a banking company it is sufficient that an act or omission causing loss is alleged. This difference it seems to me clear is based on a reasonable classification. Banking companies do not by any means stand on the same footing as ordinary companies, and ah act or omission leading to loss on the part of those in management of a banking company has such far-reaching consequences that it may be said that, without anything more, it is blameworthy just as an act of fraud on the part of those in management of an ordinary company is blameworthy. In this connection I think I might repeat what I said in the winding up order in this very case. I am quoting from Para.22 of the report in Reserve Bank v. Palai Central Bank (1961 K.L.T. Page 54): "That a legal person like a company, stands on a very different footing from a natural person goes without saying. In a company the affairs of many are conducted by a few, and, what is mote important from our point of view, is that the device of a corporate personality and of limited liability enables a company to go bankrupt to the prejudice of its creditors, while the owners of the company, namely, its members, might still be very wealthy. This aspect of the matter is emphasised manifold in the case of a banking company where, unlike in the case of an ordinary company, business is transacted mainly with the unsecured funds of its depositors, ordinarily many times the paid up capital, in the present case nearly forty times. Moreover, a lender normally deals with an ordinary company much in the same manner as he does with a natural person. Moreover, a lender normally deals with an ordinary company much in the same manner as he does with a natural person. He takes security whenever he thinks that prudent, and that element of trust reposed in a banking company by its depositors does not enter into the transaction. In fact, it is not disputed that a banking company can justifiably be subjected to classification as against an ordinary company, and that the most stringent of provisions to safeguard the interests of those who have reposed trust in it cannot be assailed on the ground of an arbitrary differentiation". It seems to me obvious that in laying down that fraud must be alleged before an officer of an ordinary company can be subjected to a public examination whereas only an act or omission leading to loss need be alleged before a director or auditor of a banking company can be subjected to such examination, the legislature made a differentiation based on a reasonable classification. 8. It is argued that under the section even a perfectly innocent and, at the time, a perfectly prudent, act or omission would render a director or auditor of a banking company liable to public examination if, owing to some unforeseen circumstance, it results in loss. This, it is said, makes the section unreasonable and arbitrary. But, I do not think that in such a case the court would say that the act or omission was the cause of the loss. To borrow the language of the criminal law it would not be the legal cause even if it be the factual cause. In any case, the Court would not form the opinion that the person concerned should be publicly examined. 9. It has also been urged that the section is voilative of Art.19 (1) (d) and (g) of the Constitution. But I must confess that I have been quite unable to follow this argument and I shall therefore have to be content with stating that the argument was advanced. 10. As is to be expected the main attack against the section is that it is bad for offending Art.20 (3) of the Constitution: "No person accused of any offence shall be compelled to be a witness against himself". I do not think that this attack is well founded. 10. As is to be expected the main attack against the section is that it is bad for offending Art.20 (3) of the Constitution: "No person accused of any offence shall be compelled to be a witness against himself". I do not think that this attack is well founded. It is well settled that before a person can claim the protection of this article he must be accused of an offence; the possibility, even the strong possibility, of his being later accused of an offence is not enough. In the words of the Supreme Court in State of Bombay v. K.K. Oghad, 1961 K.L.T. (S.C.) 75 at page 85 of the report, Para.16 (7): "To bring the statement in question within the prohibition of Art.20 (3), the person accused must have stood in the character of an accused person at the time he made the statement. It is not enough that he should become an accused, any time after the statement has been made." When does a person stand in the character of an accused person? I should think when an accusation is made against him, not in the popular sense of the word, "accusation" as meaning a derogatory imputation by whomsoever made, wheresoever made and howsoever made, but in the strict legal sense of the word as meaning information laid against a person with a view to bring him to trial for an offence. There is high authority for saying, criminal offence. But, for our present purpose, I do not think that the addition of the word, "criminal" is very helpful, except to indicate by one word the scope of the protection afforded by Art.20. 11. The word "accusation" is thus defined in Black's Law Dictionary, Fourth Edition: "A formal charge against a person, to the effect that he is guilty of a punishable offence, laid before a court or magistrate having jurisdiction to inquire into the alleged crime." I would perhaps substitute the word, "tribunal" for the words "court or magistrate" and I would add to the definition the words, "or before an authority competent to investigate the charge and bring the person to trial". The definition certainly lends support to the view I have taken that, before a person can be an accused person, there must be information laid against him with a view to bring him to trial for an offence. The definition certainly lends support to the view I have taken that, before a person can be an accused person, there must be information laid against him with a view to bring him to trial for an offence. But I am told that this view is not in accord with what the Supreme Court has said in two decisions in M.P. Sharma v. Satish Chandra (A.I.R.1954 S.C. 300 at page 304) and in Narayanalal v. M.P. Mistry (A.I R.1961 S.C. 29 at page 38). In the former case it was observed with reference to the protection afforded by Art.20 (3): "It is available therefore to a person against whom a formal accusation relating to the commission of an offence has been levelled which in the normal course may result in prosecution." This observation was quoted in the later case in Para.21 at page 38 of the report and was repeated in these words in Para.23: "Similarly, for invoking the constitutional right against testimonial compulsion guaranteed under Art.20 (3) it must appear that a formal accusation has been mala against the party pleading the guarantee and that it relates to the commission of an offence which in the normal course may result in prosecution." It is said that these observations show that; it is enough that the accusation made might in the normal course result in prosecution; it is not necessary that it should be made with a view to bring the offender to trial. 12. To understand these observations it is necessary to find out what exactly Their Lordships meant by the word, "prosecution". The following quotation from Thomas Dana V. State of Punjab (A.I.R.1959 Supreme Court 375 at page 379) tells us what the word "prosecution" means in the context of Art.20 of the Constitution: "According to Wharton's Law Lexicon, 14th edn. p. 810 'prosecution' means 'a proceeding either by way of indictment or information, in the criminal courts in order to put an offender upon his trial. In all criminal prosecutions the King is nominally the prosecutor". This very question was discussed by this Court in the case of Maqbool Hussain v. State of Bombay 1953 S.C.R. 730 at PP 738, 739, 743, with reference to the context in which the word 'prosecution' occurred in Art.20. In all criminal prosecutions the King is nominally the prosecutor". This very question was discussed by this Court in the case of Maqbool Hussain v. State of Bombay 1953 S.C.R. 730 at PP 738, 739, 743, with reference to the context in which the word 'prosecution' occurred in Art.20. In the course of the judgment, the following observations, which apply with full force to the present case were made:- " '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 creates the offence and regulates the procedure." This then is what the word, "prosecution" means in Art.20 of the Constitution, and this is the sense in which Their Lordships of the Supreme Court used the word in the observations we are considering. But there is another sense, a wider sense, in which the word is used as, for example, in an action for malicious prosecution or in a charge under S.211 of the Indian Penal Code. In that sense a prosecution begins the moment information is laid before an authority competent to try the alleged offender or bring him to trial. It begins not merely when a complaint is made to a competent court, but also when information is laid before a police officer under S.154 of the Criminal Procedure Code. And I might refer to S.169,170 and 173 of the Code to show that, as the term "accused" is understood in our law, a person against whom such information has been laid is a person accused of an offence. It is in the same sense that the term "person accused of any offence" is used in S.25 of the Evidence Act. It is in the same sense that the term "person accused of any offence" is used in S.25 of the Evidence Act. What Their Lordships decided in M.P. Sharma v. Satish Chandra (A.I.R.1954 S.C. 300) was that a person against whom a first information had been recorded under S.154 of the Code was entitled to claim the protection of Art.20 (3) of the Constitution and since they used the word "prosecution" in the strict sense of initiation of proceedings before a court of law or a judicial tribunal, they had to qualify their statement by the words, "which in the normal course may result in prosecution" so as to show that the recording of a first information gives rise to the protection under Art.20 (3). To say that the observations mean that the accusation need not be with a view to bring the alleged offender to trial but need only be something out of which a prosecution might arise in the future, is to miss the significance of the word, "formal" in the phrase, "formal accusation". That word itself implies that the accusation should be made in a particular form before an authority competent to afford redress in respect of it, namely, either to try the alleged offender or bring him to trial. In my view the observations only confirm what I have said, namely, that the accusation should be made with the object of bringing the alleged offender to trial. 13. Returning to S.45 G of the Banking Companies Act there can be no doubt that a person against whom an order is made under that provision is compelled to be a witness, and it is quite possible that he might have to speak against himself. Two of the requirements of Art.20 (3) are thus satisfied, but, in my view, the vital requirement that the person must be accused of an offence is not. After all, all that need be alleged in a report under the section against the person sought to be examined is that he has been guilty of an act or omission (which need not amount to fraud) which has caused loss to the company. There need not be an allegation of fraud, far less of any offence. After all, all that need be alleged in a report under the section against the person sought to be examined is that he has been guilty of an act or omission (which need not amount to fraud) which has caused loss to the company. There need not be an allegation of fraud, far less of any offence. But, even if the facts alleged do disclose an offence - and it is the case of the respondents that the facts alleged in the present reports disclose a number of offences under the Indian Penal Code, the Companies Act and the Banking Companies Act, something with which I do not agree, but on which it is not necessary for me to pronounce - the purpose of the report and of the examination pursuant thereto is not to bring the person concerned to trial for those offences. The object is, as sub-section (2) of the Section itself shows, that information may be gathered regarding the promotion or formation or the conduct of the business of the company or as to the conduct and the dealings of the person concerned in so far as they relate to the affairs of the company, and, even if public examination involves an element of pillorying, what it seeks to secure is information necessary for the beneficial winding up of the company by tracing its assets and taking steps for their recovery. The public examination is not a punishment, and the section creates no offence. True the proviso to sub-section (7) of the section shows that a charge is made or suggested against the person to be examined from which he might be exculpated. But then the charge is that mentioned in sub-section (1). It is not a charge of an offence, but only a charge that the person has been guilty of an act or omission resulting in loss to the company. True again that subsection (8) provides that the deposition of the person examined may thereafter be used in evidence against him in any proceedings civil or criminal, but that is only something that might happen in the future. It is not the object either of the reporter of the examination that the person examined should be brought to trial for any offence that either the report or the examination may disclose. It is not the object either of the reporter of the examination that the person examined should be brought to trial for any offence that either the report or the examination may disclose. Then, there is the disqualification for which sub-section (9) provides, and it is said that at least this sub-section creates an offence. Even so, neither the report nor the examination has for its object the imposition of such a disqualification although such a disqualification might be a consequence. Therefore, even if sub-s. (9) creates an offence there is in the report no formal accusation of such an offence. Nor do I think that sub-section (9) "does create an offence. The disqualification it contemplates which is akin to the disqualification which might be imposed on an advocate under the Bar Councils Act or against a chartered accountant under the Chartered Accountants Act or against a candidate in an election under the Representation of the People Act, is not a punishment in the sense in which the words "punishable by any law for the time being in force" are used in the definition of "offence" in S.3 (38) of the General Clauses Act. Lastly, there is the provision in S.45. J by which this very court may take cognizance of and try in a summary way certain offences alleged to have been committed by any person who has taken part in the promotion or formation of the banking company which is being wound up or by any manager or officer thereof. It is said that a report under S.45 G may disclose such offences and that the present reports do, in fact, disclose such offences which this very court may take cognizance of and try under S.45 J. This leads us back to the question whether a report under S.45 G is a formal accusation of offences which it might disclose and which this very court may take cognizance of and try under S.45 J. I think not, for as I have said more than once, even if the report does disclose facts making out offences which may be tried under S. 45 J, it is not information laid with a view to bringing the person concerned to trial for such offences. It is laid only with a view to eliciting from him such information as he possesses regarding the conduct of the business of the company and his own conduct and dealings in relation to it. 14. Only two reported cases where the question whether S.45G of the Banking Companies Act offends Art.20 (3) of the Constitution has been considered, have been brought to my notice. They are In re Central Calcutta Bank Ltd. (A.I.R.1957 Cal. 520) and Suryanarayana v. Vijay Commercial Bank (A.I.R.1958 Andhra Pradesh 756) and in both the answer was in the negative. I am of the same view and I might add, with due respect, that the former contains a very trenchant discussion of the matter. It does hot appear that the Supreme Court has had occasion to consider the matter but it seems to me that the reasoning by which it upheld S.240 of the Companies Act against an attack based on Art.20 (3) of the Constitution in Narayanlal M P. v. Mistry (A.I.R.1961 Supreme Court 29) would serve to uphold S.45 G of the Banking Companies Act against a like attack. 15. On behalf of the respondents it is contended that the present reports do not satisfy the requirements of S.45 G of the Banking Companies Act in that they do not impute to each of the persons sought to be examined, acts or omissions resulting in loss, that they do not make out such a charge that he may understand what it is from which he will have to exculpate himself and with which it is sought to incriminate him. Before considering this contention I might say that the case of the 10th respondent who was only an auditor of the company stands on a somewhat different footing from the case against the remaining respondents who were directors of the company. Now, two main charges have been levelled in the reports. The first, levelled in Para.11 of the first report, and explained in great detail in the annexure thereto, is that very large sums of money were advanced by the company to various parties without proper security with the result that they have become irrecoverable. This has resulted in loss to the company to the tune of Rs. 232.30 lakhs. The first, levelled in Para.11 of the first report, and explained in great detail in the annexure thereto, is that very large sums of money were advanced by the company to various parties without proper security with the result that they have become irrecoverable. This has resulted in loss to the company to the tune of Rs. 232.30 lakhs. The second charge is that, although no interest was being realised or was realisable on these bad advances, the company was, year after year, taking credit for the interest clue in computing its profits without any regard to the question whether the money was realisable or not, with the result that dividends were declared from year to year, of a total sum of Rs. 19.95 lakhs, and taxes paid to the tune of Rs. 25.96 lakhs on what might be called illusory profits. Loss was thus caused to the company. Now, if these allegations be true - and as I have already said I must assume the facts in the liquidator's reports to be true and cannot embark on an investigation with regard to them - it must necessarily follow that these losses were caused by acts and omissions on the part of the management of the company. Both under the provisions of the several statutes governing this particular company during the relevant periods (the Travancore Companies Act up to 31-3-1951, the Indian Companies Act, 1913 from 1-4-1951 to 1-4-1956, the Companies Act, 1956 from 1-4-1956 onwards and the Banking Companies Act, 1949 from 18-3-1950 onwards) and under its articles, its management is vested in the Board of Directors. So much so, if there has been an act or omission leading to loss on the part of the management, prima facie it would appear that there must have been such an act or omission on the part of each person who was a member of the Board at the relevant time. It is perhaps in this sense that it was said in In re Calcutta City Cank Ltd. (A.I.R 1957 Cal. 508) that, where there is a loss, "that creates a prima facie case for public examination of the directors who were responsible for the management of the banking company at the relevant time," it being of course understood that the loss must have been occasioned by an act or omission of the management. 508) that, where there is a loss, "that creates a prima facie case for public examination of the directors who were responsible for the management of the banking company at the relevant time," it being of course understood that the loss must have been occasioned by an act or omission of the management. For, if the director concerned did participate in the particular aspect of management, then the act or omission would be his; and, if he did not, then unless he can show that under the rules governing the internal working of the company, it was no part of his duty to see to the proper management of the matter complained of, he would be guilty of an omission leading to the loss. But, in the case of an auditor, I have to be satisfied that it was part of his duty to have scrutinised the nature of the advances to see whether they were good advances or not and, further, that it was part of his duty to have ascertained whether the profits for which the management took credit following, it is said, the commercial system of accounting, were real or illusory. 16. With regard to respondents 4 and 6 to 9 it is said that there are certain special circumstances which I should take into consideration before ordering their public examination. I am not expressing any opinion with regard to this. But prima facie, it would appear that there might be circumstances which would justify some leniency in their case if leniency is permissible under the terms of the section. Therefore, with regard to these respondents and also with regard to the auditor, the 10th respondent, I am not for the present making an order, but shall defer orders until the examination of respondents 1, 3 and 5 which I am now ordering, is completed. It will then be open to the liquidator, in the light of the information gathered by him from the examination of these respondents, to make a further report with regard to the respondents regarding whom I am deferring orders. 17. The 1st respondent was the paid managing director of the company from its incorporation in January 1927 until it closed down in August 1960. 17. The 1st respondent was the paid managing director of the company from its incorporation in January 1927 until it closed down in August 1960. It is not disputed that he was in active management of its affairs and it is further not disputed that large unsecured advances have been made to his son-in-law, the 3rd respondent and his daughter (the 3rd respondent's wife) from whom an amount of Rs. 13.36 lakhs is now due to the company. Neither of them has so far shown any inclination to pay, and the liquidator has valued the security given by them at less than Rs. 2 lakhs. The 1st respondent's brother is a debtor to the tune of over Rs. 14 lakhs secured only by the pledge of shares of the face value of Rs. 80,000/-. The 1st respondent is undisputedly responsible for the grant of these loins as of the remaining loans characterised by the liquidator as irrecoverable, and the liquidator's opinion that the acts of the 1st respondent have caused loss to the company is obviously founded on substantial grounds. 18. The 3rd respondent was a director from the beginning till the end, and a paid officer of the Company from February 1958 till the end. He has himself been responsible for taking large loans towards which nothing has been paid and, so far as can be seen, nothing is proposed to be paid. That very act of his, taking the loan and failing to repay it, has, it would appear, caused loss to the company even if we leave out of account his responsibility so far as the loans granted to the other debtors including his own wife are concerned. 19. The 5th respondent was a director of the company from 14-1-1935 to 8-8-1960 and he was a paid officer till the end of 1954. He also has taken large loans from the bank towards which no doubt substantial payments have been made, but, even so, more than Rs. 3 lakhs is still due from him. This amount is unsecured and he has so far done nothing to dispel the liquidator's opinion that the loan is irrecoverable. 20. I might add that neither respondent 3 nor respondent 5 has urged that under the rules governing the internal working of the company their duties as directors did not extend to the grant of advances and their recovery. 21. 20. I might add that neither respondent 3 nor respondent 5 has urged that under the rules governing the internal working of the company their duties as directors did not extend to the grant of advances and their recovery. 21. It would appear from the reports that, year after year the company was counting towards its profits interest payable on advances but not actually realised. Neither the interest nor the principal has so far Been realised and in the opinion of the liquidator they are largely unrealisable. Whatever might be said of the commercial system of accounting, I do not think that it justifies taking into account as profits amounts which were not merely not realised but which have, from year to year, remained unrealised and which a prudent businessman would regard as unrealisable. I should think that, even under the commercial system of accounting, no one is entitled to take into account in computing profits sums due but not realised unless he is satisfied that, so far as can be seen, the sums will be realised. 22. It is not disputed that the preparation of the profit and loss accounts and the balance sheets, the declaration of dividends, and the payment of taxes, were the acts of the directors, and, under this head, it is clear that the liquidator's opinion that loss in the shape of dividends and taxes which should not have been paid but were paid, has been occasioned to the company by the acts of the directors, including respondents 1, 3 and 5, is based on substantial grounds. 23. I direct the public examination of respondents 1, 3 and 5 and an order will issue in form No. 112.