Sections 206 and 207 of Companies Act 2013: Power to Call for Information, Inspection and Inquiry
Sections 206 and 207 form part of Chapter XIV of the Companies Act, 2013, dealing with inspection, inquiry and investigation. Section 206 empowers the Registrar of Companies and, in specified situations, the Central Government or an authorised authority to seek information and inspect company records. Section 207 sets out how an inspection or inquiry is conducted and the powers and duties that apply during that process.
Current-law note: This page has been redrafted with reference to the Companies Act, 2013 materials published by the Ministry of Corporate Affairs and India Code. For a filing, inquiry response or litigation, verify the latest notification, rule and amendment applicable on the relevant date.
Section 206 - Power to call for information, inspect books and conduct inquiries
Meaning: Section 206 creates a graduated regulatory mechanism. The Registrar may first seek information, explanations or documents. If the response is absent, inadequate or reveals an unsatisfactory state of affairs, further books and papers may be called for inspection. The provision also permits inquiry where the available material indicates possible fraud, illegality, non-compliance with the Act or unresolved investor grievances.
Section 206(1): Initial notice. On scrutiny of a document filed by a company, or on information received, the Registrar may issue a written notice requiring the company to furnish written information or explanations, or to produce documents, within a reasonable time specified in the notice.
Section 206(2): Duty to respond. The company and its concerned officers must furnish the information or explanation to the best of their knowledge and power and produce the documents within the specified or extended time. Former officers may also be required by written notice to provide information concerning a period during which they were employed by the company.
Section 206(3): Further inspection. Where information is not furnished, is inadequate, or the scrutiny indicates an unsatisfactory state of affairs without full and fair disclosure, the Registrar may issue a further written notice requiring production of additional books of account, books, papers and explanations for inspection. Reasons must be recorded in writing before such notice is served.
Section 206(4): Inquiry into specified concerns. If the Registrar is satisfied, on information available or furnished or on a representation by any person, that the company's business is being carried on for a fraudulent or unlawful purpose, is not compliant with the Act, or investor grievances are not being addressed, the Registrar may inform the company of the allegations by written order, call for information or explanation and conduct an inquiry after giving the company a reasonable opportunity of being heard. The Central Government may also direct the Registrar or an appointed inspector to carry out the inquiry. Where the business has been or is being carried on for a fraudulent or unlawful purpose, an officer in default may attract the fraud provision in section 447.
Section 206(5): Central Government inspection. Independently of the preceding powers, the Central Government may direct inspection of the books and papers of a company by an inspector appointed for that purpose.
Section 206(6): Inspection by statutory authority. The Central Government may, by general or special order and having regard to the circumstances, authorise a statutory authority to inspect the books of account of a company or class of companies.
Section 206(7): Consequence of failure. Failure by the company to furnish information or explanation or to produce a document required under section 206 attracts the statutory consequence prescribed by sub-section (7), including liability of the company and every officer in default. The applicable text and monetary consequence should be checked against the latest official consolidated Act for the relevant date.
Section 207 - Conduct of inspection and inquiry
Meaning: Section 207 governs cooperation with an inspection or inquiry under section 206. It requires directors, officers and employees to produce records and assist the Registrar or inspector, and gives the inspecting authority specified powers comparable to those of a civil court for defined purposes.
Section 207(1): Production and assistance. Every director, officer or other employee must produce the books of account and other books and papers called for under section 206, furnish the statements, information or explanations required, and render all assistance connected with the inspection.
Section 207(2): Copies and identification marks. During inspection or inquiry, the Registrar or inspector may make or cause copies to be made of books of account and other books and papers and may place, or cause to be placed, identification marks in the books as evidence of inspection.
Section 207(3): Civil court powers. Notwithstanding any contrary law or contract, the Registrar or inspector has the powers vested in a civil court under the Code of Civil Procedure, 1908 for discovery and production of books and documents, summoning and enforcing attendance and examining persons on oath, and inspecting books, registers and other company documents at any place.
Section 207(4): Disobedience of directions. A director or officer who disobeys a direction issued by the Registrar or inspector under section 207 is subject to the punishment stated in the provision. On conviction, the statutory consequences concerning vacation of office and disqualification from holding office in a company also apply as provided by the section.
Practical compliance points for a Section 206 or 207 notice
- Read the notice carefully and identify each document, explanation and period requested.
- Preserve relevant statutory registers, books of account, electronic records, correspondence and supporting documents.
- Coordinate the response through authorised officers and ensure that statements are accurate, complete and supported by records.
- If additional time is genuinely required, seek an extension before expiry of the stated period and retain proof of the request.
- Do not ignore requests relating to earlier periods; former officers can also be called upon under section 206(2).
- Where an inquiry proceeds under section 206(4), note the express requirement of a reasonable opportunity of being heard.
- Consider the connected provisions in sections 208 to 210 concerning the report on inspection, search and seizure, and investigation into the affairs of a company.
Official resources
For the authoritative statutory text and current corporate-law services, refer to the Ministry of Corporate Affairs and India Code - Companies Act, 2013. The Ministry's published Companies Act text may also be consulted for Chapter XIV and the wording of sections 206 and 207.
Legal information only. Statutory provisions can be affected by amendments, commencement notifications, rules, circulars and judicial decisions. Verify the law applicable to the relevant transaction or proceeding.
