Consequence of any investigation is report. The Report is just a milestone. We will discuss the journey ahead in this post.
Inspector’s Report (Section 223):
In inspector shall submit all interim reports, if any, and final report to the Central Government.
Every report shall be in writing or printed as per direction of the Central Government.
A copy of the report may be obtained by any one by making an application to the Central Government.
The report of any inspector shall be authenticated either –
(a) by the seal of the company investigated; or
(b) by a certificate of a public officer having the custody of the report
and such report shall be admissible in any legal proceeding as evidence.
FOLLOW UP ACTIONS ON REPORT (SECTION 224):
Criminal Prosecution:
The Central Government may prosecute any person appears to be guilty based on the report. It shall be duty of all officers and other employees of the company or body corporate to give the Central Government the necessary assistance in connection with the prosecution.
Winding up:
The Central Government may cause to be presented to the Tribunal a petition for winding up of the company or body corporate on the ground that it is just and equitable that it should be wound up or under Section 242 or both.
Winging up proceeding for Recovery:
The Central government may itself bring proceeding for winding up in the name of such company or body corporate –
(a) for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation or the management of the affairs of such company or body corporate; or
(b) for the recovery of any property of the company or body corporate which has been misapplied or wrongfully retained.
The Central Government shall be indemnified by such company or body corporate against any cost or expenses incurred by it in or in connection with any proceedings.
Disgorgement:
In case of fraud, undue advantage or benefit, the Central government my file an application before the Tribunal for appropriate orders with regard to disgorgement of such assets, property, or cash and also for holding directors, key managerial personnel, officers or other person personally liable without any limitation of liability.
EXPENSES OF INVESTIGATION (SECTION 225):
The expenses of, and incidental tom an investigation by an inspector other than expenses of inspection under Section 214 shall be defrayed in the first instance by the Central government but shall be reimbursed by the following person to the extent mentioned below, namely –
(a) any person convicted on a prosecution instituted or who is ordered to pay damages or restore any property in proceedings to the extent that he may in the same proceedings be ordered to pay the said expenses as may be specified by the court convicting such person or ordering him to pay such damages or restore such property;
(b) any company or body corporate in whose name proceedings are brought to the extent of the amount or value of any sums or property recovered by it as a result of such proceedings;
(c) unless a prosecution is instituted under Section 224 –
- any company, body corporate, managing director or manager dealt with by the report of the inspector; and
- the applicants for the investigation under section 213,
to such extent as the Central Government may direct.
Any amount for which a company or body corporate is liable under clause (b) shall be a first charge in the sums or property mentioned.
VOLUNTARY WINDING UP OF COMPANY NOT TO STOP INVESTIGATION (SECTION 226):
An investigation may be initiated and no investigation shall be stopped or suspended by reason only of, the fact that –
(a) an application has been made under section 241;
(b) the company has passed a special resolution for voluntary winding up;
(c) any other proceeding for the winding up of the company is bending before the Tribunal.
Where a winding up order is passed by the Tribunal, the inspector shall inform the Tribunal about the pendency of the investigation proceeding before him and the Tribunal shall pass such order as it may deem fit.
Nothing in the winding up order shall absolve any director or other employee of the company from participating in the proceedings before the inspector or any liability as a result of the finding by the inspector.
LEGAL ADVISERS AND BANKERS NOT TO DISCLOSE (SECTION 227):
The Tribunal or Central Government or Registrar or inspector shall not require any disclosure –
(a) by a legal advisors of any privileged communication except the name and address of his client; or
(b) by the bankers.
PENALTY FOR FALSE STATEMENT ETC (SECTION 229):
Where a person who is required to provide an explanation or make a statement during the course of inspection, inquiry or investigation, or an officer or other employee of a company or other body corporate which is also under investigation,—
(a) destroys, mutilates or falsifies, or conceals or tampers or unauthorisedly removes, or is a party to the destruction, mutilation or falsification or concealment or tampering or unauthorised removal of, documents relating to the property, assets or affairs of the company or the body corporate;
(b) makes, or is a party to the making of, a false entry in any document concerning the company or body corporate; or
(c) provides an explanation which is false or which he knows to be false,
he shall be punishable for fraud in the manner as provided in section 447.
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