This article has been written by Ishika rawat , a student studying LLB from Asian law college , Noida. The author is 1st year law student.
INTRODUCTION
The registrar or the inspector may upon information in their possession or otherwise reach a conclusion that there is reasonable ground to believe that books and papers of a company or relating to key managerial personnel or any director or auditor or company secretary in practice are likely to be destroyed , mutilated , altered , falsified or secreted , it is very difficult to envisage a situation where somebody learns of a likelihood of impinging offences .
SEARCH AND SEIZURE
Section 209 of the companies act 2013 provides : –
(1) Where, upon information in his possession or otherwise, the Registrar or inspector has reasonable ground to believe that the books and papers of a company, or relating to the key managerial personnel or any director or auditor or company secretary in practice if the company has not appointed a company secretary, are likely to be destroyed, mutilated, altered, falsified or secreted, he may, after obtaining an order from the Special Court for the seizure of such books and papers :-
(a) enter, with such assistance as may be required, and search, the place or places where such
books or papers are kept; and
(b) seize such books and papers as he considers necessary after allowing the company to take
copies of, or extracts from, such books or papers at its cost.
(2) The Registrar or inspector shall return the books and papers seized under subsection (1), as soon as may be, and in any case not later than one hundred and eightieth day after such seizure, to the company from whose custody or power such books or papers were seized:
Provided that the books and papers may be called for by the Registrar or inspector for a further period of one hundred and eighty days by an order in writing if they are needed again:
Provided further that the Registrar or inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from them or place identification marks on them or any part thereof or deal with the same in such other manner as he considers necessary.
(3) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures shall apply, mutatis mutandis, to every search and seizure made under this section.
LEGISLATIVE HISTORY
This clause corresponds to section 234A of the companies act , 1956 and seeks to provide for search and seizure of documents by the registrar if he has reasonable ground to believe that the same is likely to be destroyed , mutilated , altered , falsified etc with the permission of special court . The registrar has to return the seized documents within 180 days to the company from whose custody the documents were seized .
ANALYSIS OF THE PROBLEM
This provision is relatable to section 234A of the 1956 Act . The registrar or the inspector may upon information in their possession or otherwise reach a conclusion that there is reasonable ground to believe that books and papers of a company or relating to key managerial personnel or any director or auditor or company secretary in practice are likely to be destroyed , mutilated , falsified or secreted , it is very difficult to envisage a situation where somebody learns of a likelihood of impinging offences . Hence it may be useful to look at the provision of Income tax act or some guidance as to how such a provision has been used.
Safeguards that had been built in is that the order from the special court is necessary for seizure of books and papers and to
- enter the place or places where the books are kept
- To seize such books or papers as he considers necessary after allowing the company to make copies or extracts etc .
In order to so carry out a seizure , the registrar or the inspector may also seek assistance wherever necessary .
Under sub section (2) the seized books and papers shall be returned to the company from whose custody such books were seized within 180 days from the seizure . However , the books and papers may be called for further period of 180 days if such books and records are necessary . Such requisition is to be made by the registrar or the inspector in the form of an order. Copies of the documents or identification marks may be affixed by the registrar or the inspector . The provision of code of criminal procedure relating to searches or seizure are made applicable to this section .This is also a slight departure from the provisions of sub section (4) of section 234A of the 1956 act .
This provision corresponds with section 234A of the 1956 Act with an attempt to slightly fortify the provision . This provision gives the registrar or the inspector fairly wide power to enter upon premises and search the place for any books and papers and to seize the books and papers that he considers necessary. The previous provision contemplated obtaining an order from the jurisdictional magistrate for the search and seizure . However , this has been replaced with an order to be obtained from the special court that is constituted under the 2013 Act .
In so far as the powers of seizure and the basis for apprehension are concerned , the provisions of new act are largely the same as the 1956 Act . However , in holding to the documents seized , while under the 1956 Act , the initial prescription was that the seizure would be for a period of 30 days in the first instance , the new act gives a fair greater window of 180 days with the possibility of an extension if so required.
In so far as the application under the criminal procedure code is concerned , the 1956 act contemplated that every search and seizure would be carried out in accordance with the provision relating to search and seizure under the criminal procedure code . The present act applies the provision of criminal procedure code mutatis mutandis into this section .
The section starts with the phase “where , upon information in his possession , or otherwise”.This could mean that if during the course of any documents that are submitted to the registrar or the inspector or any information made available to him , the registrar or the inspector specifically learns that seeking documents are faced with the likelihood of destruction , mutilation or being secreted or manipulated , such steps could be restored to . The use of the term “ or otherwise” can mean even an anonymous but credible piece of information that is made available to the registrar . As an analogy , it may be useful to refer to the provision of the Income tax act for similar provision .
The other significant change from the 1956 act is that under the 1956 act , only documents relating to managing director or manager were covered . However , present provision expands the scope of this provision to documents relating to auditors , key managerial personnel and the company secretary . Since the key managerial personnel include the directors , chief executive officers , company secretaries , chief finance officers etc ., the scope of this provision definitely stands enlarged to make it more meaningful . What is interesting is that strictly the act also applies to professional , auditors and company secretaries in practice in the case where the company has no full time company secretary .
Although the extension of time in the first instance from thirty days to one hundred and eighty days and thereafter is much longer than the term prescribed under the 1956 act , the company is given an opportunity to have photocopies of the documents being made for its use . However , the provision has virtually ensured an unlimited passage of time and the documents seized which simply lying in the office of the registrar or the inspector .
SECTION 220 {SEIZURE OF DOCUMENTS} OF THE COMPANIES ACT 2013
Seizure of documents by inspector :-
Where in the course of an investigation under this Chapter, the inspector has reasonable grounds to believe that the books and papers of, or relating to, any company or other body corporate or managing director or manager of such company are likely to be destroyed, mutilated, altered, falsified or secreted, the inspector may
(a) enter, with such assistance as may be required, the place or places where such books and
papers are kept in such manner as may be required; and
(b) seize books and papers as he considers necessary after allowing the company to take copies of, or extracts from, such books and papers at its cost for the purposes of his investigation.
(2) The inspector shall keep in his custody the books and papers seized under this section for such a period not later than the conclusion of the investigation as he considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing director or the manager or any other person from whose custody or power they were seized :-
Provided that the inspector may, before returning such books and papers as aforesaid, take copies of, or extracts from them or place identification marks on them or any part thereof or deal with the same in such manner as he considers necessary.
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches or seizures shall apply mutatis mutandis to every search or seizure made under this section.
ROLE IN CRPC {CRIMINAL PROCEDURE CODE}
CRPC :- for every search and seizure under this section the provisions of the code of criminal procedure 1973 shall apply . The books and paper seized shall be returned to the company as soon as possible but within one hundred and eighty days .Before returning the books and paper the person making the inspection may take copies of or extract from them or place identification mark on them .
BIBLIOGRAPHY
1} The companies act 2013
2} Company law and practice by Dr. G.K. Kapoor and Dr. Sanjay Dhamija
3} company law by Avtaar Singh
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