Section 218: Investigation of Insolvency Professional Agency, Insolvency Professional or Information Utility
Section 218 of the Insolvency and Bankruptcy Code, 2016 empowers the Insolvency and Bankruptcy Board of India to order inspection or investigation where it receives a complaint under Section 217 or has reasonable grounds to believe that an insolvency professional agency, insolvency professional or information utility has contravened the Code, rules, regulations or directions issued by the Board.
Section 218(1): Power to order inspection or investigation
Where the Board, on receipt of a complaint under Section 217, or on having reasonable grounds to believe that an insolvency professional agency, insolvency professional or information utility has contravened provisions of the Code or the rules, regulations or directions issued by the Board, it may by a written order direct a person or persons to act as the investigating authority and conduct an inspection or investigation.
Section 218(2): Time and manner of investigation
An inspection or investigation under sub-section (1) is required to be conducted within the time and in the manner specified by regulations.
Section 218(3): Power to require documents, records and information
During an inspection or investigation, the Investigating Authority may require another person who is likely to possess a relevant document, record or information to furnish it. Such person is bound to furnish the material. The proviso requires the Investigating Authority to provide detailed reasons before requiring that person to furnish the document, record or information.
Section 218(4): Entry, search and seizure
The Investigating Authority may enter a building or place where it has reason to believe relevant documents, records or information concerning the inquiry may be found. It may seize such material or take extracts or copies, subject to the criminal procedure provisions applicable to search.
The original text of Section 218 refers to Section 100 of the Code of Criminal Procedure, 1973. Since the Bharatiya Nagarik Suraksha Sanhita, 2023 came into force on 1 July 2024 and repealed the CrPC subject to its savings provisions, the applicable criminal procedure should be determined with reference to the current law and the relevant transitional or savings provisions.
Section 218(5): Custody and return of seized records
The Investigating Authority may retain books, registers, documents and records seized under the section for the period it considers necessary, but not later than conclusion of the investigation. It must thereafter return them to the person from whose custody or power they were seized. Before returning them, identification marks may be placed on the material or any part of it.
Section 218(6): Investigation report
The Investigating Authority is required to submit a detailed report of the inspection or investigation to the Board.
Meaning of Board and Investigating Authority
The "Board" is the Insolvency and Bankruptcy Board of India established under Section 188 of the Code. For an investigation under Section 218, the Board appoints or directs the person or persons who will act as the Investigating Authority. The detailed inspection and investigation procedure is governed by the applicable IBBI regulations.
Relationship with Sections 217, 219 and 220
Section 217 provides for complaints to the Board. Section 218 governs inspection and investigation. Section 219 deals with show-cause notice following inspection or investigation, while Section 220 concerns the disciplinary committee and consequential action.