Impact Analysis of Chapter XIV of Companies Act. This Chapter Deals with Inspection, Inquiry and Investigation Rights of Government and Obligation of Corporate's.

1. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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COMPANIES ACT 2013
IMPACT ANALYSIS – CHAPTER XIV(INSPECTION, INQUIRY AND INVESTIGATION)
Prepared By : CS Harsh Ranjan
Email: csharshranjan@gmail.com
PARTICULARS Impact
Section
No.
Relevant Provision
of Companies Act
2013
PRIVATE
COMPANY
PUBLIC COMPANY REMARKS
LISTED UNLISTED
206 (1) Power to Call
Information
This section is applicable to all types of
companies.
In Erstwhile Act u/s 234(1) power to call
for information is based on the perusal of
any document which a company is
required to submit ROC. However under
new Act ROC on the basis of scrutiny of
any documents filed by the company or
on the basis of received by him can call
for any further information, Documents
and Explanation.
In Present Act,
ROC power of
asking
information is
More wider.
(2) Obligation of
Company and its
officers
This section is applicable to all types of
companies.
ROC through a
notice served to
that employee in
writing, shall
also furnish such

2. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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In New Act ROC has power to call for
the information from the past Employees
for any explanation regarding any event
which occurs in their period of his/her
Employment. In erstwhile Act u/s 234(2)
past employees are not covered.
information or
explanation to
the best of their
knowledge.
(3) Power of Inspection
of Books
This section is applicable to all types of
companies.
Same as Section 234(3A) of erstwhile
Act.
No Change.
(4) Inquiry into the
Affairs of Company
This section is applicable to all types of
companies.
As per Section 234(4) of erstwhile Act
the company and each such person, who
is officer in default shall be punishable
with fine. But in New Act only Officer in
default shall be punished for fraud u/s
447 of CA, 13.
Central Government May direct
ROC/Inspector to carry out an inquiry
into the affair of Company
Inquiry by
inspector is new
provision in this
Act, which is not
available as per
section 234(7) of
old Act.
(5) Direct inspection by
Inspector on CG
order
This section is applicable to all types of
companies.
Central Government may, if it is satisfied
that circumstances so warrant, direct
inspection of books and papers of a
company by an inspector appointed by
it for the purpose.
(6) Inspection of Books
by any statutory
This section is applicable to all types of New Provision

3. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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authority companies.
CG by general or special order, authorise
any statutory authority to carry out the
inspection of books of account of a
company or class of companies.
(7) Offence and Penalty This section is applicable to all types of
companies.
Penalties Stand
Substantially
increased.
207 (1) Assistance in
conducting Inquiry
Inspection
This section is applicable to all types of
companies.
Same as Sub section (2) and (3) of
Section 209A of Erstwhile Act.
No Changes
(2) Authority to put
identification mark
or take copies of
books and records.
This section is applicable to all types of
companies.
Same as Sub section (4) of Section 209A
of Erstwhile Act.
No Changes
(3) Power of ROC/
Inspector
This section is applicable to all types of
companies.
Same as Sub section (5) of Section 209A
of Erstwhile Act.
the Registrar or inspector making an
inspection or inquiry shall have all the
powers as are vested in a civil court
under the Code of Civil Procedure, 1908,
while trying a suit in prescribed matter
No Changes

4. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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(4) Offence and Penalty This section is applicable to all types of
companies.
As per section 209A(8) Quantum of fine
imposed for any default was minimum
Rs. 50,000, however in new Act
Quantum of fine will be within Rs.
25,000 to Rs. 1,00,000.
If any director or officer is convicted,
under this section they shall be
disqualified from holding an office in any
company.
In erstwhile Act,
Disqualification
is for 5 years As
per section
209A(9).
208 Report on Inspection
made.
This section is applicable to all types of
companies.
In new Act ROC/Inspector may make
recommendation that further
investigation into the affairs of the
company is necessary giving his reasons
in support.
In erstwhile Act,
ROC was only
required to
report the
unsatisfactory
state of affairs
209 (1) Search and Seizure
of Books
This section is applicable to all types of
companies.
The power of ROC / Inspector has been
Extended. Now it covers KMP, Director,
Auditors and Practicing Company
Secretary.
For Search & Seizure of documents ROC
/ Inspector needs permission of special
For Search &
Seizure of
documents ROC
/ Inspector needs
permission of
First Class
Magistrate or
Presidency
Magistrate as per
section 234A of
erstwhile Act.
(2) Return of Books
after Search &
Seized Books
and papers shall
be returned

5. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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Seizure court.
Seized Books and papers shall be
returned within 180 days, with a
provision of one time extension 180
days.
within 30 days.
As per erstwhile
Act.
(3) Application of
Cr.PC relating to
search.
No Changes
210 (1) Investigation into
the affairs of
company
This section is applicable to all types of
companies.
Provision of section210(1)(c) empowers
the CG to order for investigation into the
affairs of company in the interest of
Public.
Wider Scope
than Section
235(1) of
erstwhile Act.
(2) Investigation on
order of Court /
Tribunal
No Changes
(3) Appointment of
inspector By CG
No Changes
211 (1) Establishment of
Serious Fraud
Investigation Office
(SFIO)
This section is applicable to all types of
Companies.
This New
Section
mandates the CG
to constitute
SFIO through
notification, to
investigate fraud
relating to a
company.
The SFIO will
be headed by
Director and
constitute of
experts from
various
discipline.
(2) Organization
Structure of SFIO
(3) Director of SFIO
(4) Discharge of
function in SFIO
(5) Terms & Conditions
of staff of SFIO
212 (1) Investigation into
the affairs of
This section is applicable to all types of This New
Section provides

6. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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company by SFIO companies. for investigation
into the affairs
by the SFIO and
lays down
elaborate
procedure and
Mechanism for
conducting such
investigation.
(2) Transfer of
Investigation by
other Government
Agencies to SFIO
(3) Manner and
procedure of
Investigation by
SFIO
(4) The Director,
Serious Fraud
Investigation Office
shall cause the
affairs of the
company to be
investigated by an
Investigating Officer
who shall have the
power of the
inspector under
section 217.
(5) Obligation of
Company and its
officer and
employees
(6) Power to arrest
(7) Limitation of
granting Bail under
Sub section (6)
(8) Power of Director,
Additional Director,
Assistant Director to
arrest
(9) Belonging of
arrested person must
be send to SFIO in

7. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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sealed Envelope
(10) Appearance before
Magistrate of
arrested person
(11) Interim report to CG
(12) Final Investigation
Report to CG
(13) Copy of
investigation report
may be obtained by
any concerned
person.
(14) Order by CG to
SFIO
(15) Filing of
Investigation Report
with Special Court.
(16) Effect on
investigation carried
under 1956 Act by
SFIO
(17) Sharing of
Information by
Government
Authorities
213 Investigation into
company’s affairs in
other cases
This section is applicable to all types of
companies.
This section empowers the tribunal to
order an investigation by CG in case the
application made by at least 100
members (as against 200 members
prescribed in section 235(2) of the 1956

8. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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Act.
In New Act, person found to be guilty for
fraud shall be punishable u/s 447.(No
Punishment is prescribed in section 235
or 237 of erstwhile Act
214 Security for payment
of costs and
expenses of
investigation
This section is applicable to all types of
companies.
The old Act specify the Amount of
Securities to not exceed Rs. 1,000.
However Rule 5 of Companies(
Inspection, Investigation and Inquiry)
Rules 2014, made under new Act
specifies the amount of security
Provision for
refund of
Security amount
was not there in
old Act.
215 Firm, body
corporate or
association not to be
appointed as
inspector
This section is applicable to all types of
companies.
Same as section 238 of Companies Act
1956.
No Changes
216 (1) Investigation of
ownership of
company
This section is applicable to all types of
companies.
This Section
doesn’t provide
as to who will
bear the
expenses of
investigation as
is provided in
section 247 of
erstwhile Act.
(2) Appointment of
inspector(s)
(3) Scope of
investigation is
defined by CG
(4) Terms of
appointment of an
inspector and his
power
217 (1) Duties of
Company’s/Body
This section is applicable to all types of No Changes

9. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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Corporate past and
present Employees,
Agents
companies.
(2) Information from a
body corporate,
other than a body
corporate referred in
sub section (1)
No Changes
(3) Custody of Books
and paper by
Inspector
No Changes
(4) Examine on Oath by
inspector
No Changes
(5) Power of Inspector Power of
Inspector are
derived from
Code of Civil
Procedure 1908.
It’s a New
Provision.
(6) Offences and
Penalty
No Changes
(7) Use of notes of any
examination made
under sub section (4)
as EVIDENCE
No Changes
(8) Offences and
Penalty
No Changes
(9) Assistance to be
given to inspector
No Changes
(10) Agreement with
foreign state to
assist in Inspection,
Investigation and
No Changes

10. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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Inquiry
(11) Letter of request No Changes
(12) Action to be taken
by CG on receipt of
letter of request.
No Changes
218 (1) Protection of
employees during
investigation
This section is applicable to all types of
companies.
Prior approval is
required from
Tribunal in
present Act (as
against only an
intimation is
required to given
to the Tribunal
in erstwhile Act.)
(2) Action against the
employee
(3) Appeal to Appellate
Tribunal against
order of Tribunal
(4) Appellate Tribunal
decision will be final
and binding
(5) provisions of this
section shall have
effect without
prejudice to the
provisions of any
other law for the
time being in force
219 Power of inspectors
to conduct
investigation into
affairs of related
companies, etc
This section is applicable to all types of
companies.
Opportunity to
being heard
Given to Body
Corporate /
person is missing
in New Act.
Which is given
in old act u/s
239(2).
220 (1) Seizure of
Documents by
This section is applicable to all types of
companies.
No approval is
required from
Magistrate of the

11. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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Inspector First Class or,
Presidency
Magistrate, for
seizure of books
by Inspector.
(2) Custody and Return
of Seized documents
by Inspector
This section is applicable to all types of
companies.
No Changes
(3) Application of
Provisions of Code
of Criminal
Procedure
This section is applicable to all types of
companies.
No Changes
221 (1) Freezing of assets of
a company on an
inquiry and
investigation
This section is applicable to all types of
companies.
This New
Section
empowers the
tribunal to freeze
assets of a
company on an
enquiry and
investigate into
the affairs of the
Company.
(2) Offences and
Penalty
In Case of
contravention the
company shall
be punishable
with fine and
Every officer of
company who is
in default shall
be punishable
with
imprisonment or
with Fine or with
both.
222 (1) Imposition of
restrictions upon
securities
This section is applicable to all types of
companies.
In New Act all
type of securities
of are covered.

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INVESTIGATION)
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(2) Offence and Penalty This section is applicable to all types of
companies.
In Case of
contravention the
company shall
be punishable
with fine and
Every officer of
company who is
in default shall
be punishable
with
imprisonment or
with Fine or with
both.
223 (1) Inspector’s report This section is applicable to all types of
companies.
No Changes
(2) Report shall be in
writing or printed
No Changes
(3) Copy of Report may
be obtained by
making an
application to CG
In erstwhile Act
copy of Report
could not be
obtained.
(4) Authentication of
Report of Inspector
No Changes
(5) Provisions of this
section shall not
apply to the report of
investigation carried
out by SIFO u/s 212
New Provision
224 (1) Actions to be taken
in pursuance of
inspector’s report
This section is applicable to all types of
companies.
No Changes
(2) Winding up related
matter based on
Inspector’s Report
No Changes
(3) Winding up
Proceedings by CG
No Changes

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INVESTIGATION)
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(4) Indemnity of costs
and expenses
incurred by CG in
sub section (3)
No Changes
(5) CG may file
application for
disgorgement of
asset etc.
New Provision
225 (1) Expenses of
Investigation to be
reimburse by
specified person(s)
to CG
This section is applicable to all types of
companies.
No Changes
(2) Any Amount which
company is liable to
pay shall be the first
charge on the
property
In erstwhile Act
it was treated as
arrears of land
revenue.
226 Voluntary winding
up of company, etc.,
not to stop
investigation
proceedings
This section is applicable to all types of
companies.
Investigation
should not be
stopped or
suspended.
227 Legal advisers and
bankers not to
disclose certain
information
This section is applicable to all types of
companies.
No Changes
228 Investigation, etc.,
of foreign
companies.
This section is applicable to all types of
companies.
No Changes
229 Penalty for
furnishing false
statement,
mutilation,
destruction of
documents.
This section is applicable to all types of
companies.
The provisions
of this Chapter
shall apply
mutatis mutandis
to inspection,
inquiry or
investigation in

14. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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relation to
foreign
companies.
Chapter XIV
Synopsis of Companies (Inspection, Investigation and Inquiry) Rules, 2014
 Appointment of Persons having expertise in various fields
Rule 3
C/G may appoint persons having expertise in the fields of investigations, cyber forensics,
financial accounting, management accounting, cost accounting e.t.c. for the efficient discharge of
Serious Fraud Investigation Office (SFIO) functions under the Act.
 Terms & condition of service
Section 211(5) – Rule No.4
Certain terms and conditions of service of Director, experts and other officers and employees of
the SFIO shall be as under-
a) Appointment of Director shall be governed by the deputation rules under the Central
Staffing Scheme of Government of India;
b) Expert service from the Central or State or Union territory Government, PSU,
Autonomous Bodies and such other organizations shall be as per recruitment rules duly
notified by the CG under article 309 of the Constitution of India;
c) Service of other officers and employees from Central or State or Union territory
Government, PSU, Autonomous Bodies and such other organizations shall be as per
recruitment rules duly notified by the CG under article 309 of the Constitution of India;
d) CG may appoint experts/consultants/professionals/professional firms on contractual basis
as per engagement of experts or consultants scheme duly approved by CG.
 Security
Section 214 – Rule No. 5
Before appointing inspector u/s 210(3), CG may require applicant to give maximum security of
Rs. 25,000 for payment of costs and expenses.
Turnover as per previous yr b/s Amt. Of security
 Upto Rs. 50 crore Rs. 10,000
 More than Rs. 50 crore and upto Rs. 15,000
200 crore

15. IMPACT ANALYSIS – CHAPTER XIV (INSPECTION, INQUIRY AND
INVESTIGATION)
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 More than Rs. 200 crore Rs. 25,000
Security shall be refunded if investigation results in prosecution.
 Letter of request
Section 217(11) – Rule 6
Letter shall be transmitted in such manner as specified by MCA.
Disclaimer: This is not a legal Advice. Please consult your Legal Advisors and Act According their
Advice.