The Powers of the Inspectors appointed by the Central Government to investigate into the affairs of the company are as follows:
1. The inspector appointed by the Central Government has the power, if considers necessary for the performance of his duties, to investigate into the affairs of any other body corporate which is, or has at any relevant time been:
ADVERTISEMENTS:
(a) The company’s subsidiary or holding company or a subsidiary of its holding company;
(b) Managed by any person as managing director or as manager, or who is, or was at the relevant time either the managing director or manager of the company;
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(c) Managed by the company or whose board of directors comprises of nominees of the company or is accustomed to act in accordance with the directions of the company, or any of the directors of the company (Sec. 239).
2. The persons or companies, whose affairs are so investigated, shall have to furnish information and to produce before him all books, papers and all relevant documentary evidence in their possession. It is the duty of all officers and employees to assist the inspector in his work to their best. Any of the persons referred above can also be examined on oath by the inspector with the prior approval of the Central Government (Sec. 240).
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3. The inspector has the power to take down the notes in writing of examinations of persons investigated by him. The notes shall be read over to and signed by the persons examined and may thereafter be used in evidence against him [Sect. 239 (5)].
4. In all such cases where the investigator has reasonable grounds to believe that the relevant papers concerning the affairs of the company or its officers will be destroyed, mutilated, altered, falsified or secreted, he may with the order of a First Class Magistrate enter and search the places where such books or papers are kept and may seize the books and papers which he considers necessary for the purpose of his investigation.
He shall keep the seized documents and papers in his custody for a period not later than the conclusion of the investigation and shall return them thereafter to the person from whose possession these were seized (Sec. 240-A).
5. Inspectors have been given wide powers to compel production of books. Such powers may be exercised even without giving any notice to the company or any officer of the company.
ADVERTISEMENTS:
It is obligatory for a company to furnish information or explanations which the inspecting officers may require in the course of the investigation of the books of account of the company.
Report of the Inspector (Sec. 241):
The job of the inspector appointed by the Central Government is to conduct the investigation into the affairs of a company. The inspector is required to make a report to the Central Government on the completion of his work. Government may also require him to submit interim reports from time to time.
The Central Government:
(a) Shall forward a copy of any report made by the inspectors to the company at its registered office, and also to anybody corporate dealt with in the report;
(b) May, if it thinks fit, furnish a copy thereof, on request and on payment of the prescribed fee, to any person :
(i) Who is a member of the company or other body corporate dealt with in the report; and
(ii) Whose interests as a creditor of the company or other body corporate appear to the Central Government to be affected?
(c) Shall furnish a copy of the report to the applicants on whose request the inspectors are appointed for the investigation;
(d) Shall furnish a copy of the report to the Court, where the inspectors are appointed in pursuance of an order of the Court;
(e) Shall furnish a copy of the report to the Company Law Board (Tribunal) where the inspectors are appointed on the behest of the Company Law Board (Tribunal);
(f) May also cause the report to be published.