Section 45G of the Banking Regulation Act, 1949: Public Examination of Directors and Auditors
Section 45G forms part of Part IIIA of the Banking Regulation Act, 1949 and applies where a banking company is being wound up. It provides a special procedure for the High Court to publicly examine persons connected with the promotion, formation, management or audit of the banking company when the official liquidator reports that loss may have been caused by an act or omission.
Updated and reviewed: 13 September 2026.
- The official liquidator reports whether loss was caused to the banking company by acts or omissions connected with its promotion, formation, directors or auditors.
- The High Court may order a public examination after considering the report.
- The person concerned must first be given an opportunity to show cause against public examination.
- The examination is on oath, and creditors or contributories may participate.
- The written examination record may be used as evidence in civil or criminal proceedings.
- The High Court may, in specified circumstances, disqualify a director or auditor for a period not exceeding five years unless leave of the High Court is obtained.
Meaning and purpose of Section 45G
The provision is designed for winding-up proceedings involving a banking company. Its purpose is to enable judicial scrutiny of the conduct of promoters, directors and auditors where the official liquidator considers that the banking company may have suffered loss because of an act or omission. The section does not make fraud a necessary condition: the statutory inquiry can arise whether or not fraud is alleged or established.
For the Act generally, a banking company is a company which transacts the business of banking in India. Section 45G then operates specifically in the winding-up context and gives the High Court supervisory powers over a public examination.
Procedure under Section 45G
The process begins after an order for winding up has been made. The official liquidator must submit a report on whether, in the liquidator's opinion, loss has been caused since formation by an act or omission of a promoter, person involved in formation, director or auditor. If the High Court considers public examination appropriate, it fixes a public sitting and directs the person to attend.
Before such examination is ordered, the person must be given an opportunity to show cause. During the examination, the official liquidator participates, creditors and contributories may also take part, and the High Court may put or permit relevant questions. The examined person may obtain legal representation at personal cost and may be allowed questions that enable an explanation or qualification of answers.
Text of Section 45G - Public examination of directors and auditors
(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.
(3) The official liquidator shall take part in the examination and for that purpose may, if specially authorised by the High Court in that behalf, employ such legal assistance as may be sanctioned by the High Court.
(4) Any creditor or contributory may also take part in the examination either personally or by any person entitled to appear before the High Court.
(5) The High Court may put such questions to the person examined as it thinks fit.
(6) The person examined shall be examined on oath and shall answer all such questions as the High Court may put or allow to be put to him.
(7) A person ordered to be examined under this section may, at his own cost, employ any person entitled to appear before the High Court who shall be at liberty to put to him such questions as the High Court may deem just for the purpose of enabling him to explain or qualify any answer given by him:
Provided that if he is, in the opinion of the High Court, exculpated from any charges made or suggested against him, the High Court may allow him such costs in its discretion as it may deem fit.
(8) Notes of the examination shall be taken down in writing, and shall be read over to or by, and signed by, the person examined and may thereafter be used in evidence against him in any proceeding, civil or criminal, and shall be open to the inspection of any creditor or contributory at all reasonable times.
(9) Where on such examination, the High Court is of opinion (whether a fraud has been committed or not)-
(a) that a person, who has been a director of the banking company, is not fit to be a director of a company, or
(b) that a person, who has been an auditor of the banking company or a partner of a firm acting as such auditor, is not fit to act as an auditor of a company or to be a partner of a firm acting as such auditor,
the High Court may make an order 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.
Effect of the examination
The examination has potentially significant evidentiary and professional consequences. Under sub-section (8), the written and signed notes may be used in evidence against the examined person in civil or criminal proceedings. Under sub-section (9), the High Court may restrict a person found unfit from acting as a company director, participating in company management, acting as an auditor, or being a partner in an audit firm for a period of up to five years, unless the High Court grants leave.
Related provisions
Section 45G should be read in the context of Part IIIA of the Banking Regulation Act, 1949. Nearby provisions deal with documents of a banking company as evidence, damages against delinquent directors, assistance by directors and officers in realisation of property, and offences relating to banking companies being wound up.