Investigation of the affairs of limited liability partnership
The central Government shall appoint one or more competent persons as inspectors for investigation of the affairs of the limited liability partnership and to report thereon in such manner as it may direct if-
- The Tribunal, either suo motu, or an application received from not less than one fifth of the total number of partners of limited liability partnership, by order, declares that the affairs of the limited liability partnership ought to be investigated; or
- Any court, by order, declares that the affairs of the limited liability partnership ought to be investigated.
The Central Government may appoint one or more competent persons as inspectors to investigate the affairs of the limited liability partnership and to report on them in such manner as it may direct.
- The appointment of inspectors pursuant to sub-section (2) may be made;
- If not less than one fifth of the total number of partners of the limited liability partnership make an application along with supporting evidence and security amount as may be prescribed; or
- If the limited liability partnership makes an application that the affairs of the limited liability partnership ought to be investigated; or
- If, in the opinion of the Central Government,there are circumstances suggesting that the business of the limited liability partnership is being or has been conducted and carried with an intent to cheat its creditors, partners or any other person, or otherwise for a cheater or unlawful purpose, or in a manner oppressive or unfairly prejudicial to some or any of its partners, or that the limited liability partnership was formed for any fraudulent ore unlawful purpose; or
- That the affairs of the limited liability partnership are not being conducted in accordance with the provisions of this Act; or
- That, on statement or evidence of a report of the Registrar or any other investigating or regulatory agency, there are sufficient reasons that the affairs of the limited liability partnership ought to be investigated.
Application by partners for investigation
An application for investing by partners of the limited liability partnership under clause (a) of sub-section (1) of section 43 shall be associated by such evidence as the Tribunal may need for the purpose of showing that the applicants have proper reason for requiring the investigation and the Central government may, before appointing an inspector, need the applicants to provide security, of such amount as may be prescribed, for payment of costs of the investigation. No other firm or body corporate or other association shall be appointed as an inspector of an inspection.
Right of inspectors to carry investigation process into affairs of related entities, etc.
- If an inspector appointed by the Central Government to investigate the affairs of the a limited liability partnership thinks it is necessary for the purposes of his investigation to investigate also the affairs of an entity where has been associated in the past or is presently associated with the limited liability partnership or any present or former partner or designated partner of the limited liability partnership, the inspector shall have the right to do so and shall report on the affairs of the other entity through inspection or partner or designated partner, so far as he mentions that the results of his investigation thereof are relevant to the investigation of the affairs of the limited liability partnership.
- In the case of any associated entity or partner or designated partner mentioned in sub-section (1), the inspector shall not exercise his power of investigating into, and reporting on, it’s or his affairs without first having obtained the prior approval of the Central government thereto;
Provided that before according approval under this sub-section, the Central Government shall give the entity or partner or designated partner a reasonable opportunity to show cause why such approval should not be accorded.
Production of documents and evidence
The following statements shall be the responsibility of the designated partner and partners of the limited liability partnership-
- To maintain and to provide before an inspector or any person authorized by him in this behalf with the previous approval of the Central government, all books and papers of, or relating to, the limited liability partnership or, as the case may be, the other entity, which are in their custody or control; and
- Otherwise to bring to the inspector all assistance in relation with the investigation which they are reasonably able to provide.
- The inspector may, with the previous approval of the Central Government, require any entity other than an entity referred to in sub-section (1) to furnish such information to, or produce such books and papers before him or any person authorized by him in this behalf, with the previous approval of that Government, as he may consider necessary, if the furnishing of such information or the production of such books and papers is relevant or necessary for the purpose of his investigation.
- The inspector may keep in his custody any books and papers produced under subsection (1) or subsection (2) for thirty days and thereafter shall return the same to the limited liability partnership, other entity or individual by whom or on whose behalf the books and papers are produced.
Provided that the inspector may call for the books and papers if they are needed again. Provided further that if certified copies of the books and papers produced under sub-section (2) are furnished to the inspector, he shall return those books and papers to the entity or person concerned. An inspector may examine on oath-
- Any of the person referred to in sub-section(1);
- With the previous approval of the Central Government,any other person in relation to the affairs of the limited liability partnership or any other entity, as the case may be; and
- May administer an oath respectively and for that requirement may require any of those persons to appear before him personally.
- If any person fails without reasonable cause or refuses
- To produce before an inspector or any person authorized by him in this behalf with the previous approval of the Central Government any book or paper which it is his duty under sub-section (1) or sub-section(2) to produce; or
- To furnish any information which it is his duty under sub-section (2)to furnish ; or
- To appear before the inspector personally when required to do so under sub-section (4) or to answer any question which is put to him by the inspector in pursuance of that sub-section;
- To sign the notes of any examination,
He shall be giving explanations with fine which shall not be less than minimum of two thousand rupees but which may extend to maximum of twenty five thousand rupees and with a further fine which shall not be less than minimum of fifty rupees but which may extend to maximum of five hundred rupees for every day after the first day after which the default or automated continues.The notes of any examination under sub-section (4) shall be taken down in writing and signed by the person so examined on oath and thereafter be used as evidence by the inspector.
Seizure of documents by inspector
- Where in the department of investigation, the inspector has reasonable basis to believe that the books and papers of, or relating to, the limited liability partnership or other type of entity or partner or designated partner of such limited liability partnership may be demonstrated, mutilated, altered, duplicated or secreted, the inspector may create an application to the Judicial Magistrate of the first class, or, as the case may be, the appropriate Metropolitan magistrate, having the certain jurisdiction, for an order for the seizure of such kind of books and papers.
- After considering the application and hearing the inspector, if necessary, the Magistrate may, by order, authorize the inspector to enter, with such assistance, as may be required, the place or places where such books and papers kept; and to search that place or those places in the manner specified in the order; and to seize appropriate documents and books and papers which the inspector provides it is essential for the purposes of his investigation.
- The inspector shall maintain in his custody the books and papers seized under this section for such period not later than the conclusion of the investigation as he keep in mind the necessary and there afters shall return the same to the concerned or particular entity or person from whose custody or power they were seized and provide related information the Magistrate of such return.
- Save as otherwise provided in this section,every search or seizure made under this sub-section shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures made under the code.
The inspectors may, and if so directed by the Central Government, shall make interim reports to that government, and on the conclusion of the investigation, shall make the final report to the Central government and any such report shall be written or printed, as the Central Government may direct. The Central Government –
- Shall forward a copy of any report (other than an interim report) made by the inspectors to the limited liability partnership at its registered office, and also to any other entity or person dealt with or related to the report; and
- May, if it thinks fit, furnish a copy thereof,on request and on payment of the prescribed fee, to any person or entity related to or affected by the report.
If, from the results of resolution under section 49, it represents to the Central Government that any person in relation to the limited liability partnership like partner or designated partner or in relation to any other type of entity whose affairs have been investigated, has been guilty of any offence for which he is liable, the Central Government may prosecute such person for the offence; and it shall be the duty of all partners of an LLP,designated partners and other employees of that particular employee and agents of the limited liability partnership or other type of entity, as the case maybe, to give the Central government all assistance in association with the prosecution which they are reasonably able to provide.
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