Non-disclosure of information in certain cases
Non-disclosure of information in certain cases.
635AA. 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 or to order an investigation under , [or ]; or
(b ) is or has been material or relevant in connection with such special audit or investigation.]
[Power of Central Government to direct special audit in certain cases.
233A. (1) Where the Central Government is of the opinion—
(a ) that the affairs of any company are not being managed in accordance with sound business principles or prudent commercial practices; or
(b ) that any company is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or
(c ) that the financial position of any company is such as to endanger its solvency;
the Central Government may at any time by order direct that a special audit of the company’s accounts for such period or periods as may be specified in the order, shall be conducted and may by the same or a different order appoint either a chartered accountant as defined in clause (b) of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) (whether or not such chartered accountant is a chartered accountant in practice within the meaning of that Act) or the company’s auditor himself to conduct such special audit.
(2) The chartered accountant or the company’s auditor appointed under sub-section (1) to conduct a special audit as aforesaid is hereafter in this section referred to as the special auditor.
(3) The special auditor shall have the same powers and duties in relation to the special audit as an auditor of a company has under :
Provided that the special auditor shall, instead of making his report to the members of the company, make the same to the Central Government.
(4) The report of the special auditor shall, as far as may be, include all the matters required to be included in an auditor’s report under and, if the Central Government so directs, shall also include a statement on any other matter which may be referred to him by that Government.
(5) The Central Government may by order direct any person specified in the order to furnish to the special auditor within such time as may be specified therein such information or additional information as may be required by the special auditor in connection with the special audit; and on failure to comply with such order such person shall be punishable with fine which may extend to [five thousand] rupees.
(6) On receipt of the report of the special auditor, the Central Government may take such action on the report as it considers necessary in accordance with the provisions of this Act or any other law for the time being in force :
Provided that if the Central Government does not take any action on the report within four months from the date of its receipt, that Government shall sent to the company either a copy of, or relevant extract from, the report with its comments thereon and require the company either to circulate that copy or those extracts to the members or to have such copy or extracts read before the company at its next general meeting.
(7) The expenses of, and incidental to, any special audit under this section (including the remuneration of the special auditor) shall be determined by the Central Government (which determination shall be final) and paid by the company and in default of such payment shall be recoverable from the company as an arrear of land revenue.]
Investigation
[Investigation of the affairs of a company.
235. (1) The Central Government may, where a report has been made by the Registrar under sub-section (6) of , or under sub-section (7) of that section, read with sub-section (6) thereof, appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct.
(2) Where—
(a ) in the case of a company having a share capital, an application has been received from not less than two hundred members or from members holding not less than one-tenth of the total voting power therein, and
(b) in the case of a company having no share capital, an application has been received from not less than one-fifth of the persons on the company’s register of members,
the [ Tribunal] may, after giving the parties an opportunity of being heard, by order, declare that the affairs of the company ought to be investigated by an inspector or inspectors, and on such a declaration being made, the Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon in such manner as the Central Government may direct.]
Investigation of company’s affairs in other cases.
237. Without prejudice to its powers under , the Central Govern- ment—
(a ) shall appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct, if—
(i) the company, by special resolution; or
(ii) the Court, by order,
declares that the affairs of the company ought to be investigated by an inspector appointed by the Central Government; and
(b) may do so if, [ in its opinion or in the opinion of the Tribunal] , there are circumstances suggesting—
(i) that the business of the company is being conducted with intend to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose;
(ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or
(iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, [***] or the manager, of the company.
64. Substituted for figures ", 247, 248 or 249" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000.
Investigation of ownership of company.
247. (1) Where it appears to the Central Government that there is good reason so to do, it may appoint one or more inspectors to investigate and report on the membership of any company and other matters relating to the company, for the purpose of determining the true persons—
(a ) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or
(b ) who are or have been able to control or materially to influence the policy of the company.
[(1A) Without prejudice to its powers under this section, the Central Government shall appoint one or more inspectors under sub-section (1), if the [Tribunal], in the course of any proceedings before it, declares by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purpose of determining the true persons—
(a ) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or
(b ) who are or have been able to control or materially to influence the policy of the company.]
(2) When appointing an inspector under sub-section (1), the Central Government may define the scope of his investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular, may limit the investigation to matters connected with particular shares or debentures.
(3) Subject to the terms of an inspector’s appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangement or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant to the purposes of his investigation.
(4) [ Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000.]
(5) For the purposes of any investigation under this section, sections , and shall apply with the necessary modifications of references to the affairs of the company or to those of any other body corporate [***] :
Provided that the said sections shall apply in relation to all persons (including persons concerned only on behalf of others) who are or have been, or whom the inspector has reasonable cause to believe to be or to have been,—
(i ) financially interested in the success or failure, or the apparent success or failure, of the company, or of any other body corporate [***] whose membership or constitution is investigated with that of the company; or
(ii ) able to control or materially to influence the policy of such company, body corporate [***] ;
as they apply in relation to officers [and other employees] and agents of the company, of the other body corporate [***], as the case may be :
Provided further that the Central Government shall not be bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof, if it is of opinion that there is good reason for not divulging the contents of the report or of parts thereof; but in such a case, the Central Government shall cause to be kept by the Registrar a copy of any such report or, as the case may be, of the parts thereof, as respects which it is not of that opinion.
(6) The expenses of any investigation under this section shall be defrayed by the Central Government out of moneys provided by Parliament, unless the Central Government directs that the expenses or any part thereof should be paid by the persons on whose application the investigation was ordered.