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The Companies Act, 1956

Title : The Companies Act, 1956

Year : 1956



No court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any offence against this Act.



If any offence against this Act which is punishable with fine only is committed by any person within a Presidency town, such person may be tried summarily and punished by any Presidency Magistrate of that Presidency town.



Notwithstanding anything in Code of Criminal Procedure, 1898 ( 5 of 1898 ),1*every offence against this Act shall be deemed to be non-cognizable within the meaning of the said Code.

624A -2* Power of Central Government to appoint company prosecutors

Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (5 of 1898)3* the Central Government may appoint generally or in any case, or for any specified class of cases in any local area, one or more persons, as company prosecutors for the conduct of prosecutions arising out of this Act; and the persons so appointed as company prosecutors shall have all the powers and privileges conferred by that Code4* on public prosecutors appointed by a State Government under section 492 of that Code.]

624B -2* Appeal against acquittal

Notwithstanding anything contained in the Code of Criminal Procedure, 1898 ( 5 of 1898 )1*the Central Government may, in any case arising out of this Act, direct any company prosecutor or authorise any other person either by name or by virtue of hi s office, to present an appeal from an order of acquittal passed by any court other than a High Court and an appeal presented by such prosecutor or other person shall be deemed to have been validly presented to the appellate court.]

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1.  See now the Code of Criminal Procedure, 1973 (2 of 1974).

2. Inserted by Act 65 of 1960, Section 203 (w.e.f. 28-12-1960).

3. See now the Code of Criminal Procedure, 1973 (2 of 1974).

4. See now the Code of Criminal Procedure, 1973 (2 of 1974), section 24.

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(1) In respect of any case instituted upon the complaint of a shareholder against the company or any officer thereof in pursuance of section 621, the provisions of section 250 of the Code of Criminal Procedure, 1898 (5 of 1898), shall not apply and the following provisions shall apply instead.

(2) If the Magistrate by whom any such case is heard discharges or acquits all or any of the accused, and is of opinion that the accusation against them or any of them was false and either frivolous or vexatious, the Magistrate may, by his order of discharge or acquittal, if the shareholder upon whose complaint the accusation was made is present, call upon him forthwith to show cause why he should not pay compensation to such accused, or to each or any of such accused when there is more than one, or if such shareholder is not present, direct the issue of a summons to him to appear and show cause as aforesaid.

(3) The Magistrate shall record and consider any cause which such shareholder may show; and if the Magistrate is satisfied that the accusation was false and other frivolous or vexatious, he may, for reasons to be recorded, direct that compensation to such amount as he may determine be paid by such shareholder to the accused or to each or any of them, not exceeding one thousand rupees in all.

(4) The Magistrate may, by the order directing payment of the compensation under sub-section (3), further order that, in default of payment, the shareholder ordered to pay such compensation shall suffer simple imprisonment for a term not exceeding two months.

(5) When any person is imprisoned under sub-section (4), the provisions of sections 68 and 69 of the Indian Penal Code (45 of 1860), shall, so far as may be, apply.

(6) No person who has been directed to pay compensation under this section shall, by reason of such order, be exempted from any civil or criminal liability in respect of the complaint made by him:-

Provided that any amount paid to an accused person under this section shall be taken into account in awarding compensation to such person in any subsequent civil suit relating to the same matter.

(7) A complainant who has been ordered to pay compensation under sub-section (3) by Magistrate may appeal from the order, insofar as it relates to the payment of compensation, as if such complainant had been convicted on a trial held by such Magistrate.

(8) Where an order for payment of compensation to an accused person is made, the compensation shall not be paid to him before the period allowed for the presentation of the appeal under sub-section (7) has elapsed; or, if an appeal is presented, before the appeal has been decided.



The1*[Court or Tribunal] imposing any fine under this Act may direct that the whole or any part thereof shall be applied in or towards payment of the costs of the proceedings, or in or towards the rewarding of the person on whose information or at whose instance the fine is recovered.

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1. Substituted by Act 11 of 2003, Section 121, for "Court".

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(1) If, on an application made to a Judge of a High court in chambers1[or Tribunal, as the case may be] by the Public Prosecutor of the State or by the Central Government,2*[or by a company prosecutor appointed under section 624A], it is shown that there is reasonable cause to believe that any person has, while, he was an officer of a company, committed an offence in connection with the management of the company's affairs, and that evidence of the commission of the offence is to be found in any books or papers of or under the control of the company, an order may be made -

(i) Authorising any person named therein to inspect the said books or papers or any of them for the purpose of investigating, and obtaining evidence of the commission of, the offence; or

(ii) Requiring the3[***] manager of the company or such other officer thereof as may be named in the order, to produce the said books or papers or any of them to a person, and at a place and time, named in the order.

(2) Sub-section (1) shall apply also in relation to any books or papers of a person carrying on the business of banking so far as they relate to the company's affairs, as it applies to any books or papers of or under the control of the company, except that no such order as is referred to in clause (ii) thereof shall be made by virtue of this sub¬section.

(3) No appeal shall lie from the decision of a Judge of the High court1*[or Tribunal, as the case may be] under this section.

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1. Inserted by Act 11 of 2003, Section 122.

2. Inserted by Act 65 of 1960, Section 204 (w.e.f. 28-12-1960).

3. The words "managing agent, secretaries and treasurers," omitted by Act 53 of 2000, Section 223 (w.e.f. 13-12-2000).

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If in any return, report, certificate, balance sheet, prospectus, statement or other document required by or for the purposes of any of the provisions of this Act, any person makes a statement-

(a) Which is false in any material particular, knowing it to be false; or

(b) Which omits any material fact knowing it to be material,
he shall, save as otherwise expressly provided in this Act, be punishable with imprisonment for a term which may extend to two years, and shall also be liable to fine.



If any person intentionally gives false evidence-

(a) Upon any examination upon oath or solemn affirmation, authorised under this Act; or

(b) In any affidavit, deposition or solemn affirmation, in or about the winding up of any company under this Act, or otherwise in or about any matter arising under this Act,he shall be punishable with imprisonment for a term which may extend to seven years, and shall also be liable to fine.

629A - 1* Penalty where no specific penalty is provided elsewhere in the Act

If a Company or any other person contravenes any provision of this Act for which no punishment is provided elsewhere in this Act or any condition, limitation or restriction subject to which any approval sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to 2* [five thousand rupees], and where the contravention is a continuing one, with a further fine which may extend to 3*[five hundred rupees] for every day after the first during which the contravention continues.]

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1. Inserted by Act 65 of 1960, Section 205 (w.e.f. 28-12-1960).

2. Substituted by Act 53 of 2000, Section 224, for "five hundred rupees" (w.e.f. 13-12-2000).

3. Substituted by Act 53 of 2000, Section 224, for "fifty rupees" (w.e.f. 13-12-2000).

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(1) If any officer or employee of a company.-

(a) Wrongfully obtains possession of any property of a company; or

(b) Having any such property in his possession, wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act,he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to 1*[ten thousand rupees].

(2) The court trying the offence may also order such officer or employee to deliver up or refund, within a time to be fixed by the court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.

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1. Substituted by Act 53 of 2000, Section 225, for “one thousand rupees” (w.e.f. 13-12-2000).

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If any person or persons trade or carry on business under any name or title of which the word "Limited" or the words "Private Limited", or any contraction or limitation thereof, is or are the last word or words, that person or each of those persons shall, unless, duly incorporated with limited liability, or unless duly incorporated as a private company with limited liability, as the case may be, be punishable with fine which may extend to1*[five hundred rupees] for every day upon which that name or title has been used.

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1. Substituted by Act 53 of 2000, Section 226, for "fifty rupees" (w.e.f. 13-12-2000).

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Where a limited company is plaintiff or petitioner in any suit or other legal proceeding, any1*[Court or Tribunal] having jurisdiction in the matter may, if there is reason to believe that the company will be unable to pay the costs of the defendant if he is successful in his defence require sufficient security to be given for those costs, and may stay all proceedings until the security is given.

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1. Substituted by Act 11 of 2003, Section 123, for "Court".

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(1) If in any proceeding for negligence, default, breach of duty, misfeasance or breach of trust against an officer of a company, it appears to the court hearing the case that he is or may be liable in respect of the negligence, default, breach of duty, misfeasance or breach of trust, but that he has acted honestly and reasonably, and that having regard to all the circumstances of the case, including those connected with his appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit:-

1*[Provided that in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust.]

2*[(2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High court for relief and the High court on such application shall have the same power to relieve him as it would have had if it had been a court, before which a proceeding against that officer for negligence, default, breach of duty, misfeasance or breach of trust had been brought under sub-section (1).

(3) No court shall grant any relief to any officer under sub-section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other person, if any, as it thinks necessary, to show cause why such relief should not be granted.]

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1. Added by Act 65 of 1960, Section 206 (w.e.f. 28-12-1960).

2. Substituted by Act 65 of 1960, Section 206, for sub-section (2) (w.e.f. 28-12-1960).
 
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Any order made by a court under this Act may be enforced in the same manner as a decree made by the court in a suit pending therein.

634A -1* Enforcement of orders of Company Law Board

Any order made by the Company Law Board2[***] may be enforced by that Board in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for that Board to send, in the case of its inability to execute such order, to the court within the local limits of whose jurisdiction,-

(a) In the case of an order against a company, the registered office of the company is situated, or

(b) In the case of an order against any other person, the person concerned voluntarily resides, or carries on business or personally works for gain.]

3*[ Provided that the provisions of this section shall not apply on and after the commencement of the Companies (Second Amendment) Act, 2002 .]

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1. Inserted by Act 46 of 1977, Section 8 (w.e.f. 24-12-1977).

2. Certain words omitted by Act 31 of 1988, Section 60 (w.e.f. 31-5-1991).

3. Inserted by Act 11 of 2003, Section 124.

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(1) Where any order made by one court is required to be enforced by another court, a certified copy of the order shall be produced to the proper officer of the court required to enforce the order.

(2) The production of such certified copy shall be sufficient evidence of the order.

(3) Upon the production of such certified copy, the court shall take the requisite steps for enforcing the order, in the same manner as if it had been made by itself.

1*[(4) Where any order made by the 2*[Company Law Board or Tribunal]3[***] is required to be enforced by a court, a certified copy of the order shall be produced to the proper officer of the court required to enforce the order and the provisions of sub-sections (2) and (3) shall, as far as may be, apply to every such order in the same manner and to the same extent as they apply to an order made by a court].

635A -4* Protection of acts done in good faith

No suit, prosecution or other legal proceeding shall lie against the Government or any officer of Government or any other person in respect of anything which is in good faith done or intended to be done in pursuance of this Act or any rules or orders made thereunder, or in respect of the publication by or under the authority of the Government or such officer of any report, paper or proceedings.

635AA - Non-disclosure of information in certain cases

Notwithstanding anything contained in any other law for the time being in force, the Registrar, any officer of Government or any other person shall not be compelled to disclose to any court, tribunal or other authority whence he got any information which -

(a) Has led the Central Government to direct a special audit under section 233A or to order an investigation under section 235, 237 5*[or 247]; or

(b) Is or has been material or relevant in connection with such special audit or investigation.]

635B -6* Protection of employees during investigation by Inspector or pendency of proceeding before Appellate Tribunal in certain cases

(1) If-

(a) During the course of any investigation of the affairs and other matters of or relating to a company, body or person under section 235, section 237 or section 239 or of the membership and other matters of or relating to a company, or the ownership of shares in or debentures of a company or body corporate, or the affairs and other matters of or relating to a company, body or person, under section 247 8 [***]; or

(b) During the pendency of any proceeding against any person concerned in the conduct and management of the affairs of a company under Chapter IVA of Part VI,such company, body or person proposes-

(i) To discharge, or

(ii) To punish, whether by dismissal, removal, reduction in rank or otherwise,any employee, the company, body or person, as the case may be, shall send by post to the 9*[Tribunal] previous intimation in writing of the action proposed against the employee and if the 9*[Tribunal] has any objection to the action proposed, it shall send by post notice thereof in writing to the company, body or person concerned.

(2) If the company, body or person concerned does not receive within thirty days of the sending of the previous intimation of the action proposed against the employee, any notice of the objection from the 9*[Tribunal], then and only then, the company, body or person concerned may proceed to take against the employee the action proposed.

(3) If the company, body or person concerned is dissatisfied with the objection raised by the 9*[Tribunal], it may, within thirty days of the receipt of the notice of the objection, prefer an appeal to the 7* [Appellate Tribunal] in the prescribed manner and on payment of the prescribed fee.

(4) The decision of the 7*[Appellate Tribunal] on such appeal shall be final and be binding on the 9*[Tribunal] and on the company, body or person concerned.

(5) For the removal of doubt, it is hereby declared that the provisions of this section shall have effect without prejudice to the provisions of any other law for the time being in force.]

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1. Inserted by Act 46 of 1977, Section 9 ( w.e.f. 24-12-1977).

2. Substituted by Act 11 of 2003, Section 125, for "Company Law Board".

3. Certain words omitted by Act 31 of 1988, Section 60 (w.e.f. 31-5-1991).

4. Substituted by Act 31 of 1965, Section 58, for section 635A (w.e.f. 15-10-1965).

5. Substituted by Act 53 of 2000, Section 227, for ", 247, 248 or 249" (w.e.f. 13-12-2000).

6. Inserted by Act 32 of 1964, Section 2 (w.e.f. 9-10-1964).

7. Substituted by Act 17 of 1967, Section 4 and Schedule, for "Tribunal" (w.e.f. 1-7-1967) and again Substituted by Act 11 of 2003, Section 126 for "Court".

8. The words ", section 248 or section 249" omitted by Act 53 of 2000, Section 228 (w.e.f. 13-12-2000).

9. Substituted by Act 11 of 2003, Section 126, for "Company Law Board".
 
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(1) A company which is entitled to any specified fee, charge, or other sum by virtue of any provision contained in this Act or in its articles, may reduce the amount thereof to such extent as it thinks fit; and thereupon such provision shall, so long as the reduction is in force, have effect as if the reduced amount had been substituted for the fee, charge or sum specified in such provision.

(2) Any reduction made under sub-section (1) may, at any time, be cancelled or varied by the company.



1*[2*[(1) The Central Government may, by notification in the Official Gazette, and subject to such conditions, restrictions and limitations as may be specified therein, delegate any of its powers or functions under this Act (other than the power to appoint a person as public trustee under section 153A and the power to make rules), to such authority or officer as may be specified in the notification.]

(2) The powers and functions which cannot be delegated under 3 [***] sub-section (1) are those conferred by or mentioned in the following provisions of this Act, namely, sections 10, 81, 89(4), 211(3) and (4), 212, 213, 235,237, 239, 241, 242, 243, 244, 245, 247, 4 [***] 250, 259, 268, 269, 274(2), 295, 300, 310, 311, 5 [***], 349, 6[***], 372, 396, 399(4), and (5), 401, 408, 7 [***] 410, 411(b), 448, 609, 613, 620, 638, 641, and 642.]
8 [***]

(3) A copy of every notification issued under sub-section (1) shall, as soon as may be after it is issued, be placed before both Houses of Parliament.

637A -9* Power of central Government or Tribunal to accord approval, etc., subject to conditions and to prescribe fees on applications

(1 ) Where the Central Government or Tribunal is required or authorised by any provision of this Act, -

(a) To accord approval, sanction, consent, confirmation or recognition to or in relation to, any matter; or

(b) To give any direction in relation to any matter; or

(c) To grant any exemption in relation to any matter,then, in the absence of anything to the contrary contained in such or any other provision of this Act, the Central Government or Tribunal may accord, give or grant such approval, sanction, consent, confirmation, recognition, direction or exemption, subject to such conditions, limitations or restrictions as it may think fit to impose and may, in the case of contravention of any such condition, limitation or restriction, rescind or withdraw such approval, sanction, consent, confirmation, recognition, direction, or exemption.

(2) Save as otherwise expressly provided in this Act, every application which may be, or is required to be, made to the Central Government or Tribunal under any provision of this Act -

(a) In respect of any approval, sanction, consent, confirmation or recognition to be accorded by that Government or Tribunal to, or in relation to, any matter; or

(b) In respect of any direction or exemption to be given or granted by that Government or Tribunal in relation to any matter; or

(c) In respect of any other matter, shall be accompanied by such fee as may be prescribed:

Provided that different fees may be prescribed for applications in respect of different matters or in case of applications by companies, for applications by different classes of companies.]

637AA -10* Power of Central Government to fix a limit with regard to remuneration

Notwithstanding anything contained in section 198, section 309 or section 637A, the Central Government, may, white according its approval under section 269, to any appointment or to any remuneration under section 309, section 310, section 311 or section 387, fix the remuneration of the person so appointed or the remuneration, as the case may be, within the limits specified in this Act, at such amount or percentage of profits of the company, as it may deem fit and while fixing the remuneration, the Central Government shall have regard to -

(a) The financial position of the company;

(b) The remuneration or commission drawn by the individual concerned in any other capacity, including his capacity as a sole selling agent;

(c) The remuneration or commission drawn by him from any other company;

(d) Professional qualifications and experience of the individual concerned;

(e) Public policy relating to the removal of disparities in income.]

637B - 11*Condonation of delays in certain cases

Notwithstanding anything contained in this Act,-

(a) Where any application required to be made to the Central Government under any provision of this Act in respect of any matter is not made within the time specified therein that Government may, for reasons to be recorded in writing, condone the delay;

(b) Where any document required to be filed with the Registrar under any provision of this Act is not filed within the time specified therein, the Central Government may, for reasons to be recorded in writing, condone the delay.]

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1. Substituted by Act 53 of 1963, Section 14, for sub-sections (1) and (2) (w.e.f. 1-1-1964).

2. Substituted by Act 31 of 1988, Section 62, for sub-section (1) (w.e.f. 31-5-1991).

3. The words, brackets and letter "clause (b) of" omitted by Act 31 of 1988, Section 62 (w.e.f. 31-5-1991).

4. The figures "248, 249." omitted by Act 53 of 2000, Section 229 (w.e.f. 13-12-2000).

5. The figures "324, 326, 328, 329, 332, 345, 346, 347(2)" omitted by Act 53 of 2000, Section 229 (w.e.f. 13-12-2000).

6. The Figures "352, 369," omitted by Act 53 of 2000, Section 229 (w.e.f. 13-12-2000).

7. The figures "409" omitted by Act 31 of 1988, Section 62 (w.e.f. 31-5-1991).

8. Sub-section (2A) omitted by Act 31 of 1988, Section 62 (w.e.f. 31-5-1991).

9. Substituted by Act 11 of 2003, Section 127, for section 637A (See Annexe).

10. Inserted by Act 41 of 1974, Section 38, (w.e.f. 1-2-1975).

11. Inserted by Act 31 of 1965, Section 59 (w.e.f. 15-10-1965).

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The Central Government shall cause a general annual report on the working and administration of this Act to be prepared and laid before both Houses of Parliament, within one year of the close of the year to which the report relates.

1[***]

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1. The heading "Annual Reports on Government Companies" omitted by Act 65 of 1960, Section 208 (w.e.f. 28-12-1960).

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[Rep. by the Companies (Amendment) Act, I960 (65 of 1960), Section 208 (w.e.f. 28-12-1960)]



Any firm which stood registered at the commencement of this Act, as a member of any association or company licensed under section 26 of the Indian Companies Act, 1913 (7 of 1913), shall be deemed to have been validly so registered with effect on and from the date of its registration.

640A - Exclusion of time required in obtaining copies of order of Court or Tribunal

1*[Computation of time for filing orders of 2*[3*[Court or the Tribunal]]

4 [640A. Exclusion of time required in obtaining copies of order of Court or Tribunal

Except as expressly provided in this behalf elsewhere in this Act, where by any provision of this Act, any order of the Court or Tribunal is required to be filed with the Registrar, or a company or any other person within a period specified therein, then, in computing that period, the time taken in drawing up the order and in obtaining a copy thereof shall be excluded.]

640B - 5* Forms of, and procedure in relation to, certain applications

(1) Every application made to the Central Government under sections 259, 268, 269, 310 6*[or 352] shall be in such form as may be prescribed.

(2) (a) Before any application is made by a company to the Central Government under any of the sections aforesaid, there shall be issued by or on behalf of the company a general notice to the members thereof, indicating the nature of the application proposed to be made.

(b) Such notice shall be published at least once in a newspaper in the principal language of the district in which the registered office of the company is situate and circulating in that district, and at least once in English in an English newspaper circulating in that district.

(c) Copies of the notices, together with a certificate by the company as to the due publication thereof, shall be attached to the application.

7 [***]

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1. Inserted by Act 65 of 1960, Section 209 (w.e.f. 28-12-1960).

2. Substituted by Act 31 of 1988, Section 64, for "Court" (w.e.f. 31-5-1991).

3. Substituted by Act 11 of 2003, Section 128, for "Court or the Company Law Board".

4. Substituted by Act 11 of 2003, Section 129, for Section 640A (See Annexe).

5. Inserted by Act 31 of 1965, Section 60 (w.e.f. 15-10-1965).

6. Substituted by Act 53 of 2000, Section 230, for ", 311, 326, 328, 329, 332, 343, 345, 346, or 352" (w.e.f. 13-12-2000).

7. Clause (d) omitted by Act 53 of 2000, Section 230 (w.e.f. 13-12-2000).

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Last updated on September, 2016

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