An investigation into the affairs of the company can be conducted by Central Government, Investigations by Serious Fraud Investigation Office (SFIO), and it can be conducted in any other case. So let’s check the investigation in different cases.
1) Investigation through the order of Central Government:
The central government can order an investigation and appoint inspectors for conducting the investigation. There are different situations in which the Central Government can order for investigation which are as follows:
- The central government can give the order for investigation on the receipt of a report of the Registrar of Company (ROC) for Inspector under the provisions of Companies Act.
- If the Central government received an intimation of a special resolution passed by a company that the affairs of the company need to be investigated.
- The central government can also order an investigation if it appears that it is in the public interest.
- Where an order is passed by a court or the Tribunal in any proceedings before it that the affairs of a company need to be investigated.
2) The investigation by the Serious Fraud Investigation Office:
Central Government by order, assign the investigation, into the affairs of the company, to the Serious Fraud Investigation Office (SFIO) in the following cases:
- On receipt of a report of Registrar of Company (ROC) or inspector; or
- On receiving an intimation of a special resolution passed by a company; or
- If it appears that it is in Public Interest;
- Or on request made by the department of the central government, or a state government.
Where any case has been assigned to the Serious Fraud Investigation Office (SFIO) no other investigation agency of central government or any state government shall proceed with the investigation in such cases. The Serious Fraud Investigation Office (SFIO) shall follow the manner and procedure as provided and submit in a report to the central government. The central government may also direct to submit an interim report.
3) Investigation in other cases:
a) The Tribunal may on an application made by-
- Not less than 100 members or members holding not less than 10% of the total voting power, in the case of a company having a share capital; or
- In the case of a company having no share capital than an application made by not less than 1/5th of the person on the company’s register of members.
The application must be supported by the necessary evidence.
b) The Tribunal may consider for investigation on an application made to it by any other person if it is satisfied that there are circumstances suggesting that:
- The Business done by the company is being conducted with the intention to defraud its members, creditors, any other person or otherwise for a fraudulent or unlawful purpose, or that the company was formed for involving or doing any fraudulent or unlawful purpose.
- The persons who are concerned in the formation of the company or the management of the company of its affairs have been guilty of fraud, or misconduct.
- The members of the company have not been given all the information which is required to respect its affair which might reasonably be expected.
Order is passed after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company need to be investigated by an inspector on inspectors appointed by the central government and where such an order is passed by the central government shall appoint one or more competent persons as inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon to it in such manner as the central government may direct to them.
