Insights · Regulatory Defence
SFIO Summons Under Section 217: What Directors, Officers and Auditors Should Do
What section 217 of the Companies Act requires of people called by the SFIO, how notes of examination are used, and how to prepare.
A summons from the Serious Fraud Investigation Office under section 217 of the Companies Act, 2013 requires you to produce records, or to appear and be examined on oath. The notes of that examination are signed by you and can be used in evidence against you. Failing to comply without reasonable cause is itself an offence, so prepare from the records before you attend.
First steps
- Note the company, the period, the documents asked for and the date and place
- Do not ignore it. If the date is unworkable, write before the date and ask for another
- Preserve every record, including email and accounting data: destroying anything creates a separate problem
- Build a chronology of your role, dates of appointment and what you signed
- Take advice before the examination
What section 217 says
| Provision | What it does |
|---|---|
| Section 217(1) | Officers, employees and agents, including former ones, must preserve and produce books and papers, and give all reasonable assistance |
| Section 217(2) | Other bodies corporate can be required to furnish information or produce books if relevant to the investigation |
| Section 217(3) | Books and papers may be kept for up to 180 days, and called for again for a further 180 days by order in writing |
| Section 217(4) | The inspector can examine on oath. Examining anyone outside the group in section 217(1) needs prior approval, which in an SFIO case can come from the Director of the SFIO |
| Section 217(5) | The inspector has civil court powers on production of documents, attendance and inspection |
| Section 217(7) | Notes of the examination are written down, read over, signed, and can be used in evidence against the person |
| Section 217(8) | Failing without reasonable cause to produce, furnish, appear, answer or sign: up to six months’ imprisonment and a fine of Rs 25,000 to Rs 1 lakh, plus up to Rs 2,000 a day |
If you are a director
The investigator will want to know what you knew and decided. Collect the board minutes and papers for your period, your appointment and resignation records, and the related-party approvals. Directors who were not involved in the transactions need to be able to show that from the records. A statement that you signed what you were given rarely helps on its own.
If you are an auditor or adviser
Auditors and other advisers are commonly called because their working papers show what was examined and when. Retrieve your file for the year, including the engagement letter, working papers, management representations and the signed report, and check your professional obligations on client confidentiality before producing anything beyond what the summons requires. Answer from the file and not from memory.
Preparing for the examination
- Read the documents you signed. Expect questions on returns, reports and resolutions bearing your signature.
- Reconcile the transactions. Know how the transactions under investigation appear in the accounts and the bank statements.
- Produce under a covering letter. Index the documents, keep copies and obtain an acknowledgement.
- Answer what you know. If you do not remember, say so and offer to check. Do not guess or speculate about others.
- Read the notes before signing. Have errors corrected. Refusing to sign is itself an offence under section 217(8), so raise any disagreement in writing.
What can follow
- Arrest under section 212(8), by the Director, an Additional Director or an Assistant Director, on reasons recorded in writing, with production before a court within 24 hours
- For fraud under section 447, bail subject to the twin conditions in section 212(6), with exceptions for some accused and some smaller frauds
- The SFIO’s report to the Central Government under section 212(12), followed by prosecution in the Special Court
- Action by other agencies on the same facts, so your account must stay consistent across every forum
Who does what
Bail, quashing and trial are matters for advocates. The financial record, the reconciliation of the transactions and preparation for the examination are where accountants do most of the work. See EOW and SFIO investigations for how these agencies differ, and regulatory defence for matters involving several agencies.