Section 206(4) of the Companies Act, 2013 – Essential ingredients

Section 206 of the Companies Act empowers the Registrar to call for information, inspect books and conduct inquiries by giving notice under sub-section (1).   However, sub-section (4) provides that the Registrar is satisfied on the basis of information available or furnished to him, call upon the company by a written order to furnish any information or explanation.

HELD that there is nothing to indicate in the impugned order that the Registrar receiving any information or that he had scrutinized any document filed by the petitioner and had formed an opinion that he needs further explanation or documents or document.    Even if the Registrar proceeded directly under sub-section (4) of Section 206, the impugned order does not satisfy the requirements.  There is a general statement in the impugned order.   The impugned order should make out a prima facie case as to how information called for relates to the business of a company being carried on for fraudulent and unlawful purpose.

The order under Section 206(4) cannot be initiated or passed based on newspaper report dehors application of mind or inquiry.   The impugned proceedings were taken based on email dated 6.8.2018 in respect of HDFC AMC IPO.   However, the impugned order was passed against HDFC Bank Ltd.   The Registrar appears to have passed the impugned order on the basis of newspaper report relating to the offence committed by former employee of the Bank and against it has initiated proceedings and also submitted report to RBI.  

Judgment dated  20.6.2024 in W.P.No.3442 of 2018 of HDFC Bank Limited  Vs.  Registrar of Companies Mumbai and another