CORPORATE OFFENCES & PUBLIC INTEREST: Establishing the rationale behind

protection of public interest

Abstract

The expression ‘public interest’ is not defined under the Companies Act, 2013. However,
‘public’ means ‘not private.’ By public we, do neither mean ‘public sphere’, nor ‘the people’,
if by this term one refers to an abstraction or a homogenous human population characterized
by a united voice served by the nation/state. The term public refers to the plurality of the
individuals residing in a country and regulated by a body of laws defining rights and
duties.1The term interest in relation to public would mean ‘goals developed by or for a
particular social collectivity to enhance or preserve its common good. Thus, a matter would
be of public interest if it affects the wellbeing of society or its members. The concept of public
interest is closely related with the corporate social responsibility. The objects underlying the
public policy will be defeated, if defaults committed by a company and its officers in
disregard of their social responsibility are not taken serious note of by the agencies
responsible for protecting the public interests. This paper focuses on that very reasoning and
provides for introduces new provisions for ensuring accountability and transparency in a
company's management, in the wake of corporate offences.

Introduction

“The objects underlying various corporate laws are to protect the interests of general public
and the Companies Act specifically aims to safeguard the interest of the shareholders and
creditors of the company.”2

In this context only, the Companies Act, 2013 provides for the regular meetings of the
directors and members, dissemination of various financial and other information to the
shareholders and also filing of various returns and forms with the registrar of companies and
maintenance of various statutory records and books at the registered office of the company
and making various such records available for inspection by the shareholders as well as the

1
Frank Johnston and Paula Sabloff, In Planning Seminar on Public Interests Anthropology.
2
Madan Gopal Dey v State (1968) 2 Comp LJ 22 (Cal).
Registrar of Companies. Similar provisions are made in other statutes as well as aiming
protection of public interests and also revenue in case of revenue legislation.

Avery Leiserson offers a pragmatic but somewhat limited definition, suggesting that “a
satisfactory criterion of the public interest is the preponderant acceptance of administrative
action by politically influential groups.” Such acceptance is expressed through groups that,
when affected by administrative requirements, regulations and decisions, comply without
seeking legislative revision, amendment or repeal.3 Ayn Rand has characterized the ‘public
interest’ as the ‘intellectual knife of collectivism’s sacrificial guillotine.’ Since there is no
such thing as the ‘public interest’ (other than the sum of the individual interests of individual
citizens), since that collectivist catch-phrase has never been and can never be defined, it
amounted to a blank check on totalitarian power over the broadcasting industry, granted to
whatever bureaucrats happened to be appointed to the Commission.’4

Justification behind protection of public interest

In State of Bihar v Kameshwar Singh 5, the Court observed that the expression public interest
is not capable of precise definition and has no rigid meaning and is elastic and takes its
colours from the statute in which it occurs, the concept carrying with the time and state of
society and its needs. In Re Noble & Sons (Clothing) Ltd.6, it was observed that the term
public interest is an ‘elusive abstraction’, meaning general social welfare or regard for social
good and predicating ‘interest of general public in matters where a regard for social good is
of first moment.

3
Avery Leiserson, Administrative Regulation: A Study in Representation of Interests, pp.16.
4
Ayn Rand, Capitalism: The Unknown Ideal, pp. 121-122.
5
AIR 1952 SC 252
6
(1983) BCLC 273.