Section 217 of the Companies Act, 2013
Section 217 of the Companies Act, 2013
– Procedure, powers, etc., of inspectors
📜 Bare Act Summary (Simplified):
Section 217 lays down the powers, rights, and procedures that inspectors appointed by the Central Government under the Companies Act have when investigating a company.
✅ Key Provisions of Section 217:
🔍 1. Inspector’s Powers:
An inspector appointed under this Act may:
Enter and search any place (after obtaining approval from a magistrate),
Seize documents, books of account, or papers related to the company,
Examine officers, employees, or any other person connected with the company,
Require production of any document or information from any person.
🧑⚖️ 2. Search & Seizure with Judicial Approval:
An inspector can apply to a magistrate for permission to conduct a search and seizure.
Once approved, the inspector may enter premises, search and seize required items if he believes documents might be destroyed, altered, or falsified.
📂 3. Seized Material Handling:
Seized items must be returned within 180 days from the date of seizure, unless needed longer (with court permission).
The inspector must record reasons for seizure and list seized items.
📣 4. Cooperation by Companies & Individuals:
Directors, officers, and employees must assist and cooperate with inspectors.
If they fail to assist or conceal information, they are subject to penalties under the Act.
⚖️ Penalty for Non-cooperation:
If any person fails to produce documents, furnish information, or refuses to appear before the inspector:
Such person may face punishment as per Sections 447, 448, and others depending on the offense.
🧾 Example:
If the Ministry of Corporate Affairs suspects ABC Ltd. of financial fraud, it may appoint an inspector. That inspector, with magistrate approval, can raid ABC’s offices, seize ledgers, and question employees.
📌 Summary Table:
| Power/Right | Details |
|---|---|
| Entry/Search | With magistrate approval |
| Seizure | Documents, books, records related to company |
| Retention Limit | 180 days (extendable with approval) |
| Examination | Officers, employees, and others |
| Cooperation | Mandatory; failure invites penalty |
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