Section 217 of the Companies Act, 2013 ("the Act") confers on inspectors the powers necessary to conduct an investigation effectively. The inspectors have the power to require the production of books and papers, to examine witnesses on oath, and to require the discovery and production of documents.
The Duty to Cooperate
It is the duty of all officers and other employees and agents of the company, including former officers, to preserve and produce to the inspector all books and papers relating to the company or the person under investigation. The duty extends to the production of documents in the possession of third parties who are connected with the company.
The Powers
The inspector has the powers of a civil court in respect of the attendance of witnesses, the discovery and production of documents, and the receiving of evidence on affidavits. The inspector can examine any person on oath, and the person is bound to answer the questions truthfully. The inspector can also require the production of books and papers at a specified place and time.
The Consequences of Non-Cooperation
The failure to comply with the inspector's requirements is an offence. The inspector can report the non-cooperation to the Central Government, which may take action against the company and its officers. The inspector can also apply to the court for an order requiring the production of the documents.
The inspectors' powers are broad, but they are subject to the safeguards in the Act and the rules. The inspector cannot seize documents without the authority of Section 220, and the inspector must return the documents at the conclusion of the investigation.
Call to Action
Anuj Desai & Associates advises companies and officers on inspections and investigations—from the response to the inspectors' notices and the production of documents to the defence against allegations of non-cooperation. If you are subject to an inspection, we can help you comply effectively.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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