206. Power to call for information, inspect books and conduct inquiries
(1) Where on a scrutiny of any document filed by a company or on any information
received by him, the Registrar is of the opinion that any further information or explanation or
any further documents relating to the company is necessary, he may by a written notice
require the company—
(a) to furnish in writing such information or explanation; or
(b) to produce such documents,
within such reasonable time, as may be specified in the notice.
(2) On the receipt of a notice under sub-section (1), it shall be the duty of the company
and of its officers concerned to furnish such information or explanation to the best of their
knowledge and power and to produce the documents to the Registrar within the time specified
or extended by the Registrar:
Provided that where such information or explanation relates to any past period, the
officers who had been in the employment of the company for such period, if so called upon
by the Registrar through a notice served on them in writing, shall also furnish such information
or explanation to the best of their knowledge.
(3) If no information or explanation is furnished to the Registrar within the time
specified under sub-section (1) or if the Registrar on an examination of the documents
furnished is of the opinion that the information or explanation furnished is inadequate
or if the Registrar is satisfied on a scrutiny of the documents furnished that an
unsatisfactory state of affairs exists in the company and does not disclose a full and fair
statement of the information required, he may, by another written notice, call on the
company to produce for his inspection such further books of account, books, papers
and explanations as he may require at such place and at such time as he may specify in
the notice:
Provided that before any notice is served under this sub-section, the Registrar shall
record his reasons in writing for issuing such notice.
(4) If the Registrar is satisfied on the basis of information available with or furnished to
him or on a representation made to him by any person that the business of a company is
being carried on for a fraudulent or unlawful purpose or not in compliance with the provisions
of this Act or if the grievances of investors are not being addressed, the Registrar may, after
informing the company of the allegations made against it by a written order, call on the
company to furnish in writing any information or explanation on matters specified in the
order within such time as he may specify therein and carry out such inquiry as he deems fit
after providing the company a reasonable opportunity of being heard:
Provided that the Central Government may, if it is satisfied that the circumstances so
warrant, direct the Registrar or an inspector appointed by it for the purpose to carry out the
inquiry under this sub-section:
Provided further that where business of a company has been or is being carried on for
a fraudulent or unlawful purpose, every officer of the company who is in default shall be
punishable for fraud in the manner as provided in section 447.
(5) Without prejudice to the foregoing provisions of this section, the Central
Government may, if it is satisfied that the circumstances so warrant, direct inspection of
books and papers of a company by an inspector appointed by it for the purpose.
(6) The Central Government may, having regard to the circumstances by general or
special order, authorise any statutory authority to carry out the inspection of books of
account of a company or class of companies.
(7) If a company fails to furnish any information or explanation or produce any document
required under this section, the company and every officer of the company, who is in default
shall be punishable with a fine which may extend to one lakh rupees and in the case of a
continuing failure, with an additional fine which may extend to five hundred rupees for every
day after the first during which the failure continues.