Registration of charges, appointment of receiver and books of account
Registration of charges, appointment of receiver and books of account.
600. (1) The provisions of Part V ( to ) shall apply mutatis mutandis to—
(a ) charges on properties in India which are created by a foreign com-pany after the 15th day of January, 1937; and
(b ) charges on property in India which is acquired by any foreign company after the day aforesaid :
Provided that where a charge is created, or the completion of the acquisition of the property takes place, outside India, sub-section (5) of and the proviso to sub-section (1) of shall have effect as if the property, wherever situated, were situated outside India.
(2) The provisions of shall apply mutatis mutandis to a foreign company.
(3) [( a)] The provisions of shall apply to a foreign company to the extent of requiring it to keep at its principal place of business in India the books of account referred to in that section, with respect to moneys received and expended, sales and purchases made, and assets and liabilities, in the course of or in relation to its business in India.
[(b) On and from the commencement of the Companies (Amendment) Act, 1974,—
(i ) the provisions of shall, subject to such modifications or adaptations as may be made therein by the rules made under this Act, apply to a foreign company having an established place of business in India, as they apply to a company incorporated in India;
(ii ) the provisions of , , and and to (both inclusive) shall, so far as may be, apply only to the Indian business of a foreign company having an established place of business in India, as they apply to a company incorporated in India.]
(4) In applying the sections referred to in sub-sections (1), (2) and (3) to a foreign company as aforesaid, references in those sections to the Registrar shall be deemed to be references to the Registrar having jurisdiction over New Delhi, and references to the registered office of the foreign company shall be deemed to be references to its principal place of business in India.
83. See e-Form No. 15 of General Rules & Forms.
PART V
REGISTRATION OF CHARGES
"Charge" to include mortgage in this Part.
124. In this Part, the expression "charge" includes a mortgage.
Application of Part to charges requiring registration under it but not under previous law.
145. In respect of [any charge created before, and remaining unsatisfied at, the commencement of this Act,] which, if this Act had been enforced at the relevant time, would have had to be registered by the company in pursuance of this Part but which did not require registration under the Indian Companies Act, 1913 (7 of 1913), and in respect of all matters relating to such charge, the provisions of this Part shall apply and have effect in all respects, as if the date of commencement of this Act had been substituted therein for the date of creation of the charge, or the date of completion of the acquisition of the property subject to the charge, as the case may be.
Nothing contained in this section shall be deemed to affect the relative priorities as they existed immediately before the commencement of this Act, as between charges on the same property.
Certain charges to be void against liquidator or creditors unless registered.
125. (1) Subject to the provisions of this Part, every charge created on or after the 1st day of April, 1914, by a company and being a charge to which this section applies shall, so far as any security on the company’s property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, or a copy thereof verified in the prescribed manner, are filed with the Registrar for registration in the manner required by this Act within [thirty] days after the date of its creation :
[Provided that the Registrar may allow the particulars and instrument or copy as aforesaid to be filed within thirty days next following the expiry of the said period of thirty days on payment of such additional fee not exceeding ten times the amount of fee specified in Schedule X as the Registrar may determine, if the company satisfies the Registrar that it had sufficient cause for not filing the particulars and instrument or copy within that period.]
(2) Nothing in sub-section (1) shall prejudice any contract or obligation for the repayment of the money secured by the charge.
(3) When a charge becomes void under this section, the money secured thereby shall immediately become payable.
(4) This section applies to the following charges :
(a ) a charge for the purpose of securing any issue of debentures;
(b ) a charge on uncalled share capital of the company;
(c ) a charge on any immovable property, wherever situate, or any interest therein;
(d ) a charge on any book debts of the company;
(e ) a charge, not being a pledge, on any movable property of the company;
(f ) a floating charge on the undertaking or any property of the company including stock-in-trade;
(g ) a charge on calls made but not paid;
(h ) a charge on a ship or any share in a ship;
(i ) a charge on goodwill, on a patent or a licence under a patent, on a trade mark, or on a copyright or a licence under a copyright.
(5) In the case of a charge created out of India and comprising solely property situate outside India, [thirty] days after the date on which the instrument creating or evidencing the charge or a copy thereof could, in due course of post and if despatched with due diligence, have been received in India, shall be substituted for [thirty] days after the date of the creation of the charge, as the time within which the particulars and instrument or copy are to be filed with the Registrar.
(6) Where a charge is created in India but comprises property outside India, the instrument creating or purporting to create the charge under this section or a copy thereof verified in the prescribed manner, may be filed for registration, notwithstanding that further proceedings may be necessary to make the charge valid or effectual according to the law of the country in which the property is situate.
(7) Where a negotiable instrument has been given to secure the payment of any book debts of a company, the deposit of the instrument for the purpose of securing an advance to the company shall not, for the purposes of this section, be treated as a charge on those book debts.
(8) The holding of debentures entitling the holder to a charge on immovable property shall not, for the purposes of this section, be deemed to be an interest in immovable property.
Registration of charges on properties acquired subject to charge.
127. (1) Where a company acquires any property which is subject to a charge of any such kind as would, if it had been created by the company after the acquisition of the property, have been required to be registered under this Part, the company shall cause the prescribed particulars of the charge, together with a copy (certified in the prescribed manner to be a correct copy) of the instrument, if any, by which the charge was created or is evidenced, to be delivered to the Registrar for registration in the manner required by this Act within [thirty] days after the date on which the acquisition is completed :
Provided that, if the property is situate, and the charge was created, outside India, [thirty] days after the date on which a copy of the instrument could, in due course of post and if despatched with due diligence, have been received in India shall be substituted for [thirty] days after the completion of the acquisition as the time within which the particulars and the copy of the instrument are to be delivered to the Registrar.
(2) If default is made in complying with sub-section (1), the company, and every officer of the company who is in default, shall be punishable with fine which may extend to [five thousand] rupees.
Right to obtain copies of and inspect trust deed.
118. (1) A copy of any trust deed for securing any issue of debentures shall be forwarded to the holder of any such debentures or any member of the company, at his request and within seven days of the making thereof, on payment—
(a ) in the case of a printed trust deed, of [such sum as may be prescribed]; and
(b ) in the case of a trust deed which has not been printed, of [such sum as may be prescribed] for every one hundred words or fractional part thereof required to be copied.
(2) If a copy is refused, or is not forwarded within the time specified in sub-section (1), the company, and every officer of the company who is in default, shall be punishable, for each offence, with fine which may extend to [five hundred] rupees and with a further fine which may extend to [two hundred] rupees for every day during which the offence continues.
(3) The [ Central Government] may also, by order, direct that the copy required shall forthwith be sent to the person requiring it.
(4) The trust deed referred to in sub-section (1) shall also be open to inspection by any member or debenture holder of the company in the same manner, to the same extent, and on payment of the same fees, as if it were the register of members of the company.
84. Lettered as clause (a) by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
Accounts
Books of account to be kept by company.
209. [(1) Every company shall keep at its registered office proper books of account with respect to—
(a ) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place;
(b ) all sales and purchases of goods by the company; [***]
(c ) the assets and liabilities of the company; [and]
[( d) in the case of a company pertaining to any class of companies engaged in production, processing, manufacturing or mining activities, such particulars relating to utilisation of material or labour or to other items of cost as may be prescribed, if such class of companies is required by the Central Government to include such particulars in the books of account:]
Provided that all or any of the books of account aforesaid may be kept at such other place in India as the Board of directors may decide and when the Board of directors so decides, the company shall, within seven days of the decision, file with the Registrar a notice in writing giving the full address of that other place.]
(2) Where a company has a branch office, whether in or outside India, the company shall be deemed to have complied with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarised returns, made up to dates at intervals of not more than three months, are sent by the branch office to the company at its registered office or the other place referred to in sub-section (1).
[(3) For the purposes of sub-sections (1) and (2), proper books of account shall not be deemed to be kept with respect to the matters specified therein,—
(a ) if there are not kept such books as are necessary to give a true and fair view of the state of affairs of the company or branch office, as the case may be, and to explain its transactions; and
(b ) if such books are not kept on accrual basis and according to the double entry system of accounting.]
[(4) [* * *] The books of account and other books and papers shall be open to inspection by any director during business hours.
(b) to (d) [** ** **]]
[(4A) The books of account of every company relating to a period of not less than eight years immediately preceding the current year [together with the vouchers relevant to any entry in such books of account] shall be preserved in good order:
Provided that in the case of a company incorporated less than eight years before the current year, the books of account for the entire period preceding the current year [together with the vouchers relevant to any entry in such books of account] shall be so preserved.]
(5) If any of the persons referred to in sub-section (6) fails to take all reasonable steps to secure compliance by the company with the requirements of this section, or has by his own wilful act been the cause of any default by the company thereunder, he shall, in respect of each offence, be punishable with [imprisonment for a term which may extend to six months, or with fine which may extend to [ten] thousand rupees, or with both] :
Provided that in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by the company with the requirements of this section, it shall be a defence to prove [***] that a competent and reliable person was charged with the duty of seeing that those requirements were complied with and was in a position to discharge that duty:
[Provided further that no person shall be sentenced to imprisonment for any such offence unless it was committed wilfully.]
(6) The persons referred to in sub-section (5) are the following namely:—
[( a) where the company has a managing director or manager, such managing director or manager and all officers and other employees of the company; and]
(b ) [***]
(c ) [***]
(d ) [where the company has neither a managing director nor manager, every director of the company.]
(e ) [***]
(7) If any person, not being a person referred to in sub-section (6), having been charged by the [***] [managing director, manager] or Board of directors, as the case may be, with the duty of seeing that the requirements of this section are complied with, makes a default in doing so, he shall, in respect of each offence, be punishable with [imprisonment for a term which may extend to six months, or with fine which may extend to [ten] thousand rupees, or with both].
85. Inserted by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975.
Annual returns
Annual return to be made by company having a share capital.
159. (1) Every company having a share capital shall, within [sixty] days from the day on which each of the annual general meetings referred to in is held, prepare and file with the Registrar a return containing the particulars specified in Part I of Schedule V, as they stood on that day, regarding—
(a ) its registered office,
(b ) the register of its members,
(c ) the register of its debenture holders,
(d ) its shares and debentures,
(e ) its indebtedness,
(f ) its members and debenture holders, past and present, and
(g ) its directors, managing directors [ ***], [managers and secretaries], past and present :
[Provided that if any of the [five] immediately preceding returns has given as at the date of the annual general meeting with reference to which it was submitted, the full particulars required as to past and present members and the shares held and transferred by them, the return in question may contain only such of the particulars as relate to persons ceasing to be or becoming members since that date and to shares transferred since that date or to changes as compared with that date in the number of shares held by a member.
Explanation : Any reference in this section or in section or or in any other section or in Schedule V to the day on which an annual general meeting is held or to the date of the annual general meeting shall, where the annual general meeting for any year has not been held, be construed as a reference to the latest day on or before which that meeting should have been held in accordance with the provisions of this Act.]
(2) The said return shall be in the Form set out in Part II of Schedule V or as near thereto as circumstances admit [and where the return is filed even though the annual general meeting has not been held on or before the latest day by which it should have been held in accordance with the provisions of this Act, the company shall file with the return a statement specifying the reasons for not holding the annual general meeting] :
Provided that where the company has converted any of its shares into stock and given notice of the conversion to the Registrar, the list referred to in paragraph 5 of Part I of Schedule V shall state the amount of stock held by each of the members concerned instead of the shares so converted previously held by him.
86. Refer Application of section 159 to Foreign Companies Rules, 1975.
[Inspection of books of account, etc., of companies.
209A. (1) The books of account and other books and papers of every company shall be open to inspection during business hours—
(i ) by the Registrar, or
[( ii) by such officer of the Government as may be authorised by the Central Government in this behalf;
(iii ) by such officers of the Securities and Exchange Board of India as may be authorised by it :
Provided that such inspection may be made without giving any previous notice to the company or any officer thereof:
Provided further that the inspection by the Securities and Exchange Board of India shall be made in respect of matters covered under sections referred to in .]
(2) It shall be the duty of every director, other officer or employee of the company to produce to the person making inspection under sub-section (1), all such books of account and other books and papers of the company in his custody or control and to furnish him with any statement, information or explanation relating to the affairs of the company as the said person may require of him within such time and at such place as he may specify.
(3) It shall also be the duty of every director, other officer or employee of the company to give to the person making inspection under this section all assistance in connection with the inspection which the company may be reasonably expected to give.
(4) The person making the inspection under this section may, during the course of inspection,—
(i ) make or cause to be made copies of books of account and other books and papers, or
(ii ) place or cause to be placed any marks of identification thereon in token of the inspection having been made.
(5) Notwithstanding anything contained in any other law for the time being in force or any contract to the contrary, any person making an inspection under this section shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:—
(i ) the discovery and production of books of account and other documents, at such place and such time as may be specified by such person;
(ii ) summoning and enforcing the attendance of persons and examining them on oath;
(iii ) inspection of any books, registers and other documents of the company at any place.
(6) Where an inspection of the books of account and other books and papers of the company has been made under this section, the person making the inspection shall make a report to the Central Government [or the Securities and Exchange Board of India in respect of inspection made by its officers].
(7) Any officer authorised to make an inspection under this section shall have all the powers that a Registrar has under this Act in relation to the making of inquiries.
(8) If default is made in complying with the provisions of this section, every officer of the company who is in default shall be punishable with fine which shall not be less than [fifty] thousand rupees, and also with imprisonment for a term not exceeding one year.
(9) Where a director or any other officer of a company has been convicted of an offence under this section he shall, on and from the date on which he is so convicted, be deemed to have vacated his office as such and on such vacation of office, shall be disqualified for holding such office in any company, for a period of five years from such date.]
[Power of Central Government to direct special audit in certain cases.
233A. (1) Where the Central Government is of the opinion—
(a ) that the affairs of any company are not being managed in accordance with sound business principles or prudent commercial practices; or
(b ) that any company is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or
(c ) that the financial position of any company is such as to endanger its solvency;
the Central Government may at any time by order direct that a special audit of the company’s accounts for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoint either a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) (whether or not such chartered accountant is a chartered accountant in practice within the meaning of that Act) or the company’s auditor himself to conduct such special audit.
(2) The chartered accountant or the company’s auditor appointed under sub-section (1) to conduct a special audit as aforesaid is hereafter in this section referred to as the special auditor.
(3) The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a company has under :
Provided that the special auditor shall, instead of making his report to the members of the company, make the same to the Central Government.
(4) The report of the special auditor shall, as far as may be, include all the matters required to be included in an auditor’s report under and, if the Central Government so directs, shall also include a statement on any other matter which may be referred to him by that Government.
(5) The Central Government may by order direct any person specified in the order to furnish to the special auditor within such time as may be specified therein such information or additional information as may be required by the special auditor in connection with the special audit; and on failure to comply with such order such person shall be punishable with fine which may extend to [five thousand] rupees.
(6) On receipt of the report of the special auditor, the Central Government may take such action on the report as it considers necessary in accordance with the provisions of this Act or any other law for the time being in force :
Provided that if the Central Government does not take any action on the report within four months from the date of its receipt, that Government shall sent to the company either a copy of, or relevant extract from, the report with its comments thereon and require the company either to circulate that copy or those extracts to the members or to have such copy or extracts read before the company at its next general meeting.
(7) The expenses of, and incidental to, any special audit under this section (including the remuneration of the special auditor) shall be determined by the Central Government (which determination shall be final) and paid by the company and in default of such payment shall be recoverable from the company as an arrear of land revenue.]
[Audit of cost accounts in certain cases.
233B. (1) Where in the opinion of the Central Government it is necessary so to do in relation to any company required under clause (d) of sub-section (1) of to include in its books of account the particulars referred to therein, the Central Government may, by order, direct that an audit of cost accounts of the company shall be conducted in such manner as may be specified in the order by an auditor [who shall be a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 (23 of 1959) :
Provided that if the Central Government is of opinion that sufficient number of cost accountants within the meaning of the Cost and Works Accountants Act, 1959 (23 of 1959), are not available for conducting the audit of the cost accounts of companies generally, that Government may, by notification in the Official Gazette, direct that, for such period as may be specified in the said notification, such chartered accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949), as possesses the prescribed qualifications, may also conduct the audit of the cost accounts of companies, and thereupon a chartered accountant possessing the prescribed qualifications may be appointed to audit the cost accounts of the company.]
[(2) The auditor under this section shall be appointed by the Board of directors of the company [in accordance with the provisions of sub-section (1B) of and] with the previous approval of the Central Government:]
[Provided that before the appointment of any auditor is made by the Board, a written certificate shall be obtained by the Board from the auditor proposed to be so appointed to the effect that the appointment, if made, will be in accordance with the provisions of sub-section (1B) of .]
(3) An audit conducted by an auditor under this section shall be in addition to an audit conducted by an auditor appointed under .
(4) An auditor shall have the same powers and duties in relation to an audit conducted by him under this section as an auditor of a company has under sub-section (1) of and such auditor shall make his report to the [Central Government] in such form and within such time as may be prescribed and shall also at the same time forward a copy of the report to the company.]
[(5) (a) A person referred to in sub-section (3) or sub-section (4) of shall not be appointed or re-appointed for conducting the audit of the cost accounts of a company.
(b) A person appointed, under , as an auditor of a company, shall not be appointed or re-appointed for conducting the audit of the cost accounts of that company.
(c) If a person, appointed for conducting the audit of cost accounts of a company, becomes subject, after his appointment, to any of the disqualifications specified in clause (a) or clause (b ) of this sub-section, he shall, on and from the date on which he becomes so subject, cease to conduct the audit of the cost accounts of the company.
(6) Upon receipt of an order under sub-section (1), it shall be the duty of the company to give all facilities and assistance to the person appointed for conducting the audit of the cost accounts of the company.
(7) The company shall, within thirty days from the date of receipt of a copy of the report referred to in sub-section (4), furnish the Central Government with full information and explanations on every reservation or qualification contained in such report.
(8) If, after considering the report referred to in sub-section (4) and the information and explanations furnished by the company under sub-section (7), the Central Government is of opinion that any further information or explanation is necessary, that Government may call for such further information and explanation and thereupon the company shall furnish the same within such time as may be specified by that Government.
(9) On receipt of the report referred to in sub-section (4) and the informations and explanations furnished by the company under sub-section (7) and sub-section (8), the Central Government may take such action on the report, in accordance with the provisions of this Act or any other law for the time being in force, as it may consider necessary.
(10) The Central Government may direct the company whose cost accounts have been audited under this section to circulate to its members, along with the notice of the annual general meeting to be held for the first time after the submission of such report, the whole or such portion of the said report as it may specify in this behalf.
(11) If default is made in complying with the provisions of this section, the company shall be liable to be punished with fine which may extend to five thousand rupees, and every officer of the company who is in default, shall be liable to be punished with imprisonment for a term which may extend to three years, or with fine which may extend to [fifty] thousand rupees, or with both.]
Power of Registrar to call for information, etc.
Power of Registrar to call for information or explanation.
234. (1) Where, on perusing any document which a company is required to submit to him under this Act, the Registrar is of opinion that any information or explanation is necessary [with respect to any matter to which such document] purports to relate, he may, by a written order, call on the company submitting the document to furnish in writing such information or explanation, within such time as he may specify in the order.
(2) On receipt by the company of an order under sub-section (1), it shall be the duty of the company, and of all persons who are officers of the company, to furnish such information or explanation to the best of their power.
(3) On receipt of a copy of an order under sub-section (1), it shall also be the duty of every person who has been an officer of the company to furnish such information or explanation to the best of his power.
[(3A) If no information or explanation is furnished within the time specified or if the information or explanation furnished is, in the opinion of the Registrar, inadequate, the Registrar may by another written order call on the company to produce before him for his inspection such books and papers as he considers necessary within such time as he may specify in the order; and it shall be the duty of the company, and of all persons who are officers of the company, to produce such books and papers.]
(4) If the company, or any such person as is referred to in sub-section (2) or (3), refuses or neglects to furnish any such information or explanation [or if the company or any such person as is referred to in sub-section (3A) refuses or neglects to produce any such books and papers],—
[( a) the company and each such person shall be punishable with fine which may extend to [five thousand] rupees and in the case of a continuing offence, with an additional fine which may extend to [five hundred] rupees for every day after the first during which the offence continues; and
(b ) the Court trying the offence may, on the application of the Registrar and after notice to the company, make an order on the company for production before the Registrar of such books and papers as in the opinion of the Court, may reasonably be required by the Registrar for the purpose referred to in sub-section (1).]
[(5) On receipt of any writing containing the information or explanation referred to in sub-section (1), or of any book or paper produced whether in pursuance of an order of the Registrar under sub-section (3A) or of an order of the Court under sub-section (4), the Registrar may annex that writing book or paper, or where that book or paper is required by the company, any copy or extract thereof, to the document referred to in sub-section (1); and any writing or any book or paper or copy or extract thereof so annexed shall be subject to the like provisions as to inspection, the taking of extracts and the furnishing of copies, as that document is subject.
(6) If such information or explanation is not furnished within the specified time or if after perusal of such information or explanation or of the books and papers produced whether in pursuance of an order of the Registrar under sub-section (3A) or of an order of the Court under sub-section (4), the Registrar is of opinion that the document referred to in sub-section (1), together with such information or explanation or such books and papers discloses an unsatisfactory state of affairs or does not disclose a full and fair statement of any matter to which the document purports to relate, the Registrar shall report in writing the circumstances of the case to the Central Government.]
(7) If it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of a company is being carried on in fraud of its creditors or of persons dealing with the company or otherwise for a fraudulent or unlawful purpose, he may, after giving the company an opportunity of being heard, by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein; and the provisions of sub-sections (2), (3), [(3A)], (4) and (6) of this section shall apply to such order.
If upon inquiry the Registrar is satisfied that any representation on which he took action under this sub-section was frivolous or vexatious, he shall disclose the identity of his informant to the company.
(8) The provisions of the section shall apply mutatis mutandis to documents which a liquidator, or a foreign company within the meaning of , is required to file under this Act.
Inspectors’ report to be evidence.
246. A copy of any report of any inspector or inspectors appointed under section or authenticated in such manner, if any, as may be prescribed, shall be admissible in any legal proceeding as evidence of the opinion of the inspector or inspectors in relation to any matter contained in the report.