Inspection & Investigation (Sec. 217-220)

“Any person aggrieved by the functioning of an insolvency professional agency or
insolvency professional or an information utility may file a complaint to the Board in such
form, within such time and in such manner as may be specified. ” VL Note : –

“(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, 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.
” VL Note : –

“The Board may, upon completion of an inspection or investigation under section 218,
issue a show cause notice to such insolvency professional agency or insolvency professional
or information utility, and carry out inspection of such insolvency professional agency or insolvency professional or information utility in such manner, giving such time for giving
reply, as may be specified by regulations. ” VL Note : –

“(1) The Board shall constitute a disciplinary committee to consider the reports of the
investigating Authority submitted under sub-section (6) of section 218:
Provided that the members of the disciplinary committee shall consist of whole-time
members of the Board only.
(2) On the examination of the report of the Investigating Authority, if the disciplinary
committee is satisfied that sufficient cause exists, it may impose penalty as specified in subsection (3) or suspend or cancel the registration of the insolvency professional or, suspend or
cancel the registration of insolvency professional agency or information utility as the case may
be.
(3) Where any insolvency professional agency or insolvency professional or an
information utility has contravened any provision of this Code or rules or regulations made
thereunder, the disciplinary committee may impose penalty which shall be –
(i) three times the amount of the loss caused, or likely to have been caused, to
persons concerned on account of such contravention; or
(ii)three times the amount of the unlawful gain made on account of such
contravention,
whichever is higher:
Provided that where such loss or unlawful gain is not quantifiable, the total
amount of the penalty imposed shall not exceed more than one crore rupees.
(4) Notwithstanding anything contained in sub-section (3), the Board may direct any
person who has made unlawful gain or averted loss by indulging in any activity in
contravention of this Code, or the rules or regulations made thereunder, to disgorge an amount
equivalent to such unlawful gain or aversion of loss.
(5)The Board may take such action as may be required to provide restitution to the
person who suffered loss on account of any contravention from the amount so disgorged, if the
person who suffered such loss is identifiable and the loss so suffered is directly attributable to
such person.
(6) The Board may make regulations to specify-
(a) the procedure for claiming restitution under sub- section (5)
(b) the period within which such restitution may be claimed; and
(c) the manner in which restitution of amount may be made” VL Note : –