COMPANIES ACT,2013
CA. Arun Saxena
Saxena & Saxena
Chartered Accountants
811, Ansal Bhawan
16, Kasturba Gandhi Marg,
New Delhi – 110 001.
Mob.: 9810037364
E-mail : arunsaxena@saxenaandsaxena.com
INSPECTION, ENQUIRY
AND
INVESTIGATION
Enquiry / Inspection (Section 206/207)
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



Based on scrutiny of Balance Sheet or any information
received by him.
ROC has power
 To call for information
 To inspect the books of accounts and papers
Duty of the company and the officers to provide the same.
Information from ex-employee / officer of the company.
SAXENA & SAXENA
Enquiry / Inspection (Section 206/207)
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



Central Government can also direct ROC to make
enquiries.
Central Government may also direct the inspection of
books of accounts and papers of the company.
Central Government may direct any statutory audit
authority to carry out the inspection of the books of
accounts.
In case of default company and every officer of the
company is punishable with fine upto Rs.1.00 lac and
Rs.500/- per day if default continues.
SAXENA & SAXENA
Enquiry / Inspection (Section 206/207)
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

Inspector or ROC may get the copies of the books of
accounts produced before them.
Can place marks of identification in such books of
accounts.
SAXENA & SAXENA
Power of the ROC / Inspector
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
All powers as are vested as in Civil Court under CPC
namely:


Discovery on production of books of account and other
documents.
Summoning and enforcing the attendance of the persons and
examining them on oath.
Inspection of books and registers and other documents of
company at any place.
SAXENA & SAXENA
Penalty for non-compliance of section 207
(Inspection)
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

In case any director contravenes any above said provision
he shall be deemed to vacate his office and shall be disqualified for holding office in any company.
Penalty for disobeying any order of ROC every oficer shall
be punishable of imprisonment upto one year and fine of
Rs.25,000 to Rs,1,00,000/-.
Report on Inspection
 The report of the Registrar or inspector may include the
recommendation of further investigation.
SAXENA & SAXENA
Search and Seizure by Inspector
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
In case the registrar or inspector has reasons to believe
that books and papers related to the company, KMP’s,
Director, Company Secretary in practice are likely to be
destroyed, altered, falsified, he may :




Obtain the order from Special Court for seizure of books and
papers.
Can enter the place or place where such books and papers are
kept.
seize such books and papers for 180 days.
Further take order for period of 180 days.
ROC can take copies of all the records seized by him before
returning to the company.
SAXENA & SAXENA
Investigation
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


Central Government
SFIO.
Tribunal
SAXENA & SAXENA
Investigation by Central Government
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
On receipt of the report from ROC or inspector

On intimation of Special resolution passed by company

In public interest.

On the direction of the Tribunal

Investigation of ownership of company
SAXENA & SAXENA
Investigation by SFIO (Section 212)
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


Central Government may refer any matter for investigation into
the affairs of the company to SFIO where it has opinion on the
basis of :
 Receipt of the report of Registrar or Inspector.
 Intimation from company regarding special resolution passed
with effect in public interest.
 Request from any Central or State Government Department.
 In the public interest.
Where any case assigned to SFIO no other Tribunal, Central or
State Government shall proceed with investigation in that
matter.
Central / State Government / Income Tax Authorities shall
provide required information / record to SFIO.
SAXENA & SAXENA
Constitution of the Investigation team by SFIO
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1)
2)
3)
Company and its officer shall provide all the assistance to the
investigating team for the investigation.
The SFIO has power to arrest officers and such person shall
not be released on bail or his own bond unless public
prosecutor has given opportunity to oppose the same.
Before taking such person into custody SFIO shall intimate
him ground for such arrest and SFIO shall produce such
person within 24 hours to the Judicial Magistrate or
Metropolitan Magistrate as the case may be.
SAXENA & SAXENA
Investigation by SFIO
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4)
5)
6)
Special court shall take cognize of offence only if complaint is
filed by Director SFIO or any officer of Central Government.
SFIO shall file interim and final report.
On receipt of the SFIO report Central Government may direct
for the prosecution against the company’s officers.
SAXENA & SAXENA
Investigation by Tribunal
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Eligibility:
 Not less than 100 members or 1/10th of total voting power
or
 Not less than 1/5th of total numbers (company not having
share capital)
 Tribunal may order for the investigation in the affair of the
company only in following circumstances :

The business is being conducted with intend to defraud.
The person connected with incorporation of the company are
guilty for fraud or Misfiseance
SAXENA & SAXENA
Investigation by Tribunal
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
Members of the company have not given all the
information with respect to its affairs.
Penalties:
If on investigation it is proved that business is conducted
to intend the defraud, the person involved in the formation
of the company guilty of fraud, the officers shall be
punishable u/s 447.
SAXENA & SAXENA
Power of the Investigator
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
Powers of the investigator to conduct investigation to the
affairs of the related companies:




Any body corporate which has or has been at any relevant time
company’s subsidiary company, holding company or the
subsidiary company of the holding company.
Any body corporate which is managed by any person as
Managing Director or Manager of the company. Or
Body corporate whose Board of Directors comprises nominees
of the company or
Body corporate whose Board of Directors are accustomed of
act according to the directions of the company or its directors.
SAXENA & SAXENA
Power of the Investigator
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

Any person who is at any time the Managing Director or
employee of the company.
The prior approval of the Central Government is
necessary to initiate the investigation of related company.
SAXENA & SAXENA
Seizure of documents by Investigator
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

Make search of place where books of account / record
placed.
Seize the documents for not later than the conclusion of
the inspection.
SAXENA & SAXENA
Freezing of assets of the company
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

To the Tribunal has power to pass any order to stay on
transfer, removal, disposal or any assets of the company.
Punishment in contravention Rs.1.00 lac to Rs.25.00 lacs
and officers shall be punishable with the imprisonment
which may extend to 3 years and fine Rs.50,000/- to
Rs.5.00 lacs.
SAXENA & SAXENA
REVIVAL
AND
REHABILITATION
OF
SICK COMPANY
JURISDICTION
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Jurisdiction with
NCLT
instead of
BIFAR
SAXENA & SAXENA
Determination of Sickness (Section 253)
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




Any kind of company can be declared as sick, not only
industrial undertaking.
Not on the basis of erosion of networth.
If company fails to pay 50% or more of outstanding of
secured creditors within 30 days from the service of notice
of demand.
Such creditors can apply to Tribunal.
Company can also apply for sickness.
SAXENA & SAXENA
Determination of Sickness (Section 253)
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
Such creditors or company can apply to Tribunal




for stay of any proceeding of the winding up or
for execution against any property and assets of the company.
Appointment of receiver.
No suit for recovery of any money or for the enforcement of any
security shall lie or be processed with.
SAXENA & SAXENA
Determination of Sickness (Section 253)
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
When any application is pending for declaration of
sickness


Company shall not dispose off any property / asset
Company shall not take any action likely to prejudice the interest of
the creditors.
SAXENA & SAXENA
Determination of Sickness (Section 253)
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

Tribunal shall give notice to company for not less than 30 days.
The Tribunal shall order on the application within 60 days whether
company is sick or not.
SAXENA & SAXENA
Revival & Rehabilitation (Section 254)
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


Application for revival by company / creditor within 60
days from the date of order of determination of sickness.
Reference to tribunal shall abate if secured creditors (3/4th
in value) have taken article for reviewing against the
company u/s 13(4) of the SERFASI Act.
No reference will be made if secured creditors (3/4th in
value) have taken action for recovery of debts against the
company u/s 13(4) of the SERFASI Act.
SAXENA & SAXENA
Revival & Rehabilitation (Section 254)
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


If financial assets have been acquired by a scrutinization
company under SARFAESI Act, consent of such agency
shall be attached with Application.
Application shall be supported by:
 Audited financial statement.
 Scheme for revival and rehabilitation.
Declaration for no scheme
SAXENA & SAXENA
Appointment of Interim Administrator (Section 256)
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


Tribunal shall fix date of hearing within 7 days from the receipt of
application.
The date of hearing shall not be later than 90 days from the date
of receipt of application
On first date of hearing Tribunal may appoint interim Administrator
to:




To hold meetings of creditors within 45 days from the date of
appointment.
To consider whether it is possible to revive or rehabilitate the sick
company?
To submit his report to Tribunal within 60 days from the date of order.
In case no scheme is filed by company, Tribunal may direct the
Interim Administrator to takeover the management of the
SAXENA & SAXENA
company.
Committee of Creditors (Section 257)
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



Interim Administrator shall appoint a committee of creditors (not
more than 7 in number).
Representatives
represented.
of each class of creditors
should be
Interim Administrator shall decide the procedure to be followed
for meetings.
Interim Administrator may direct any Promoter, Director, KMPs
to attend any meeting and to furnish all the information, as
required.
SAXENA & SAXENA
ORDER OF TRIBUNAL (Section 258)
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Order of Tribunal on the date of hearing fixed

On the basis of report of Interim Administrator, Tribunal shall
order for




Proceedings for winding up of company be initiated or
Shall appoint Company Administrator for the company to prepare
scheme of Revival & Rehabilitation.
Tribunal may direct the company administrator to take over the
assets and management of the company.
Administrator may with the approval of Tribunal take services of
experts.
SAXENA & SAXENA
Powers & Duties of Company Administrator (Section 260)
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
To prepare:






Inventory of assets / liabilities.
Inventory of books and accounts and other records.
List of shareholders, secured / unsecured creditors.
Valuation Report for shares / assets of the company.
Provisional accounts if no upto date audit is done.
List of workmen with dues.
SAXENA & SAXENA
Scheme of Revival & Rehabilitation (Section 261)
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

Company administrator shall prepare scheme of Revival and
Rehabilitation considering the scheme filed by company (in
existing act operating agency)
Scheme shall provide following:







Financial restructuring of sick company.
Change in management or taking over of Management of sick co.
Amalgamation of sick company with any other company or any
other company with sick company.
Takeover of sick company by solvent company.
Sale or lease of part or whole of Assets or business of sick co.
Rationalization of Managerial Personnel, supervisor, staff,
workmen in accordance with law.
Repayment and rescheduling or restructuring of debts and
obligation of sick co. to any of its creditors or class of creditors.
SAXENA & SAXENA
Approval of Scheme (Section 262)
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



The revival and rehabilitation scheme, prepared by company
administration shall be approved atleast by:

3/4th of secured creditors

1/4th of unsecured creditors
If scheme involves amalgamation of sick company with other
company, approval in General Meeting as both the companies.
If approved, the scheme shall be submitted to Tribunal within
60 days from the appointment (extendable to 120 days).
Tribunal shall send scheme to company, company
administrator, other company (in case of amalgamation).
SAXENA & SAXENA
Approval of Scheme (Section 262)
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


Tribunal may direct to publish draft scheme in newspaper for
suggestion / objection within such period as Tribunal may
specify.
Complete draft scheme shall be kept at registered office.
If scheme is not approved Company Administrator shall report
to Tribunal within 15 days and Tribunal shall pass the order for
winding up.
SAXENA & SAXENA
Approval of Scheme (Section 262)
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


Tribunal shall pass the order after considering the suggestion,
within 60 days from the receipt of suggestions.
Copy of sanctioned scheme shall be filed with ROC within 30
days from the date of receipt of copy of order.
The sanctioned scheme shall be final and binding on company,
employees, creditors, shareholders and guarantors and
transferee company ( if any).
SAXENA & SAXENA
THANK YOU
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SAXENA & SAXENA