CONDUCT OF INSPECTION AND INQUIRY AND REPORT ON INSPECTION MADE
CONDUCT OF INSPECTION AND INQUIRY AND REPORT ON INSPECTION MADE
CONDUCT OF INSPECTION AND REPORT ON INSPECTION MADE [SECTION 207 & 208]
CONDUCT OF INSPECTION AND INQUIRY (SECTION 207):
Section 207 of the Companies Act, 2013 provides for the conduct of inspection and inquiry as follows:
(i) Duty of director, officer or employee [Sub-Section (1)]: Where a Registrar or inspector calls for the books of account and other books and papers under sub section (1) of section 206, it shall be the duty of every director, officer or other employees of the company:
(a) to produce all such documents; and
(b) to furnish with such statements, information or explanations in such form as may require; and
(c) to render all assistance in connection with such inspection.
(ii) Powers of the Registrar or inspector [Sub-section (2) and (3)]:
(a) The Registrar or inspector making an inspection or inquiry under section 206 may, during the course of such inspection or inquiry, as the case may be,
(1) make or cause to be made copies of books of account and other books and papers; or
(2) place or cause to be placed any marks of identification in such books in token of the inspection having been made.
(b) The Registrar or inspector making an inspection or inquiry shall have all the powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit in respect of the following matters, namely:—
(1) the discovery and production of books of account and other documents, at such place and time as may be specified by such Registrar or inspector making the inspection or inquiry;
(2) summoning and enforcing the attendance of persons and examining them on oath; and
(3) inspection of any books, registers and other documents of the company at any place.
(iii) Penalty for Contravention [sub-section (4)]: If any director or officer of the company disobeys the direction issued by the Registrar or the inspector under this section, the director or the officer shall be punishable with imprisonment which may extend to 1 year and with fine which shall not be less than 25,000 rupees but which may extend to 1 lakh rupees.
If a director or an officer of the company has been convicted of an offence under this section, the director or the officer shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified from holding an office in any company.
REPORT ON INSPECTION MADE (SECTION 208):
Section 208 of the Companies Act, 2013 provides for the submission of the report on inspection made. According to this section:
The Registrar or inspector shall, after the inspection of the books of account or an inquiry under section 206 and other books and papers of the company under section 207, submit a report in writing to the Central Government. The registrar or inspector may recommend in report that there is the need of further investigation. The said recommendation has to be given with reasons in support.
The said report has to be submitted to Regional Director (RD). [Powers delegated vide Notification F No. 3/76/2015-CL-Il dated 31-12-2015]
If the punishment is less than two years, RD himself can sanction launching of prosecution. In other cases, he should forward the report to the Central Government for sanctioning prosecution.
