Section 218 of The Insolvency and Bankruptcy Code, 2016.
- (1)Where the Board, on receipt of a complaint under section 217 or has reasonable grounds to believe that any insolvency professional agency or insolvency professional or an information utility has contravened any of the provisions of the Code or the rules or regulations made or directions issued by the Board thereunder, it may, at any time by an order in writing, direct any person or persons to act as an investigating authority to conduct an inspection or investigation of the insolvency professional agency or insolvency professional or an information utility.
- (2)The inspection or investigation carried out under sub-section (1) of this section shall be conducted within such time and in such manner as may be specified by regulations.
- (3)The Investigating Authority may, in the course of such inspection or investigation, require any other person who is likely to have any relevant document, record or information to furnish the same, and such person shall be bound to furnish such document, record or information: Provided that the Investigating Authority shall provide detailed reasons to such person before requiring him to furnish such document, record or information.
- (4)The Investigating Authority may, in the course of its inspection or investigation, enter any building or place where they may have reasons to believe that any such document, record or information relating to the subject-matter of the inquiry may be found and may seize any such document, record or information or take extracts or copies therefrom, subject to the provisions of section 100 of the Code of Criminal Procedure, 1973 (2 of 1974), insofar as they may be applicable.
- (5)The Investigating Authority shall keep in its custody the books, registers, other documents and records seized under this section for such period not later than the conclusion of the investigation as it considers necessary and thereafter shall return the same to the concerned person from whose custody or power they were seized: Provided that the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof.
- (6)A detailed report of inspection or investigation shall be submitted to the Board by the Investigating Authority.
Summary
- The Board can initiate an investigation of a service provider if it receives a complaint under Section 217 or has reasonable grounds to believe a violation has occurred.
- The Board must issue a written order directing an investigating authority to conduct the inspection or investigation.
- The investigation must be completed within the specified time and in the specified manner.
- The investigating authority can require any person to produce relevant documents and has the power to enter buildings and seize records.
- Seized records must be returned after the investigation is concluded, and the authority can place identification marks on them.
- A detailed report of the inspection or investigation must be submitted to the Board.
Practical examples
FAQ
1. Under what conditions can the Board order an investigation of a service provider under Section 218 of the Insolvency and Bankruptcy Code, 2016?
Under Section 218 of the Insolvency and Bankruptcy Code, 2016, the Board can order an investigation upon receiving a complaint under Section 217, or if it has reasonable grounds to believe there has been a violation of the Code.
2. Can an investigator seize documents under Section 218 of the Insolvency and Bankruptcy Code, 2016?
Yes, under Section 218 of the Insolvency and Bankruptcy Code, 2016, the investigating authority can enter any building, search, and seize documents or take copies, subject to the Code of Criminal Procedure, 1973.
3. What happens to seized documents after an investigation is finished under Section 218 of the Insolvency and Bankruptcy Code, 2016?
Under Section 218 of the Insolvency and Bankruptcy Code, 2016, the seized records must be kept in custody up to the conclusion of the investigation and then returned to the person they were seized from.
4. Does an investigator have to give reasons before demanding documents under Section 218 of the Insolvency and Bankruptcy Code, 2016?
Yes, under Section 218 of the Insolvency and Bankruptcy Code, 2016, the investigating authority must provide detailed reasons to a person before requiring them to furnish documents, records, or information.
Test yourself
Q1.Under Section 218 of the Insolvency and Bankruptcy Code, 2016, what trigger allows the Board to order an inspection or investigation of a service provider?
Q2.What is the investigating authority required to do before demanding documents or information from a third party under Section 218 of the Insolvency and Bankruptcy Code, 2016?
Q3.According to Section 218 of the Insolvency and Bankruptcy Code, 2016, what must the investigating authority do with seized books and records once the investigation is concluded?
Q4.Under investigative framework of Section 218 of the Insolvency and Bankruptcy Code, 2016, how does a complaint filed under Section 217 of the Code affect the Board's actions?