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TMI Blog2024 (6) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no finding even prima facie of the petitioner s business being conducted fraudulently or unlawful purpose or in defiance of the provisions of the Act, etc. On the contrary in the affidavit in reply it is stated in the impugned notice respondent no. 1 is not alleging or establishing any fraud against petitioner, but is issued for gathering information and it is an opportunity of being heard. In such a case complying with the preconditions under Section 206 (1) to (3) is mandatory. Therefore, even on this count, initiation of Section 206 (4) of the Act being jurisdictional condition, is not satisfied, and therefore, the impugned order is wholly without jurisdiction. Therefore, without satisfying these preconditions an order of the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act or if the grievance of investors are not being addressed. Mr. Tulzapurkar submitted that the impugned order is bereft of any such determination and does not even record respondent no. 1 s satisfaction, much less the basis thereof. 5. It was also submitted by Mr. Tulzapurkar that Section 206 (4) of the Act makes it evident that information on explanation which is sought, has to be matters specified in the said order. The impugned order is bereft of any allegations. 6. In the affidavit in reply, it is not denied that respondent no. 1 has not complied with the procedure under sub-sections (1) and (3) of Section 206 of the Act, that is to say respondent no. 1 admits in the affidavit in reply filed through one Anil Yadav and affirmed on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Registrar through a notice served on them in writing, shall also furnish such information or explanation to the best of their knowledge. (3) If no information or explanation is furnished to the Registrar within the time specified under sub-section (1) or if the Registrar on an examination of the documents furnished is of the opinion that the information or explanation furnished is inadequate or if the Registrar is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in the company and does not disclose a full and fair statement of the information required, he may, by another written notice, call on the company to produce for his inspection such further books of account , books, papers and expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied that the circumstances so warrant, direct inspection of books and papers of a company by an inspector appointed by it for the purpose. (6) The Central Government may, having regard to the circumstances by general or special order, authorise any statutory authority to carry out the inspection of books of account of a company or class of companies. (7) If a company fails to furnish any information or explanation or produce any document required under this section, the company and every officer of the company, who is in default shall be punishable with a fine which may extend to one lakh rupees and in the case of a continuing failure, with an additional fine which may extend to five hundred rupees for every day after the first during wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act states if no information or explanation is furnished to the Registrar within the time specified under sub-section (1) or if the Registrar on an examination of the documents furnished is of the opinion that the information or explanation furnished is inadequate or if the Registrar is satisfied on a scrutiny of the documents furnished that an unsatisfactory state of affairs exists in the company and does not disclose a full and fair statement of the information required, he may, by another written notice, call on the company to produce for his inspection such further books of account, books, papers and explanations as he may require. Therefore, under sub-section (3) the Registrar has to form a further opinion that an unsatisfactory stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is not in compliance with the provisions of the Act or which are the grievances of the investors that were not being addressed. 13. However, the impugned proceedings have been allegedly taken on the basis of an email dated 6th August 2018 addressed by one Mr. Devendra Sharma. The said email refers to an entity called HDFC AMC IPO. The impugned order under Section 206 (4) of the Act has been passed against HDFC Bank Limited which is not the entity referred to in the said email. Therefore, the basis of initiating proceedings against petitioner is itself misconceived. 14. Respondent No. 1 appears to have passed the impugned order on the basis of the newspaper report which relates to offence committed by petitioner s former employee against w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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