While discussing Section 211 of the Companies Act 2013 earlier here, the Central Government shall establish Serious Fraud Investigation Office to investigate fraud related to companies.
Rule 3 of the Companies (Inspection, Investigation and Inquiry) Rules 2014 supplement Section 211(2) of the Act.
Appointment of persons having expertise in various fields [Rule 3]
The Central Government may appoint persons having expertise in the fields of investigations, cyber forensics, financial accounting, management accounting, cost accounting and any other fields as may be necessary for the efficient discharge of Serious Fraud Investigation Office (SFIO) functions under the Act.
Terms and Condition of service [Rule 4]
The terms and conditions of service of Director, experts and other officers and employees of the Serious Fraud Investigation Office under sub-section (5) of Section 211 shall be as unders—
(a) the terms and conditions of appointment of Director shall be governed by the deputation rules under the Central Staffing Scheme of Government of India;
(b) the terms and conditions of service of experts from the Central Government or the State Government or Union territory Government, Public Sector Undertaking, Autonomous Bodies and such other organizations shall be as per the recruitment rules which may be duly notified by the Central Government under article 309 of the Constitution of India;
(c) the terms and conditions of service of other officers and employees from the Central Government or the State Government or Union Territory Government, Public Sector Undertaking, Autonomous Bodies and such other organizations shall be as per the recruitment rules which may be duly notified by the Central Government under article 309 of the Constitution of India;
(d) the Central Government may appoint experts or consultants or other professionals or professional firms on contractual basis as per the Scheme of engagement of experts or consultants which may be duly approved by the Central Government.
Security [Rule 5]
The Central Government may before appointing an inspector under sub-section (3) of Section 210, require the applicant to give a security not exceeding twenty-five thousand rupees for payment of the costs and expenses of investigation as per the criteria given below—
|Turnover as per previous year balance sheet (Rs.)||Amount of security (Rs.)|
|Turnover up to Rs. 50 crore||Rs. 10,000|
|Turnover more than Rs. 50 crore and up to 200 crore||Rs. 15,000|
|Turnover more than Rs. 200 crore||Rs. 25,000|
The security shall be refunded to the applicant if the investigation results in prosecution.
Letter of Request, as per Section 217
According to Section 217(11), if, in the course of an investigation into the affairs of the company, an application is made to the competent court in India by the inspector stating that evidence is, or may be, available in a country or place outside India, such court may issue a letter of request to a court or an authority in such country or place, competent to deal with such request, to examine orally, or otherwise, any person, supposed to be acquainted with the facts and circumstances of the case, to record his statement made in the course of such examination and also to require such person or any other person to produce any document or thing, which may be in his possession pertaining to the case, and to forward all the evidence so taken or collected or the authenticated copies thereof or the things so collected to the court in India which had issued such letter of request. The letter of request shall be transmitted in such manner as the Central Government may specify in this behalf.
According to Rule 6, the letter of request shall be transmitted in such manner as specified by the Ministry of Corporate Affairs.
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