(12.13.3) Discretionary Powers of the central Government

The Central Government may appoint one or more competent persons as inspectors to investigate into the affairs of any company and to report in such manner as the Central Government may direct in the circumstances as under.

  (i) On the application of members of a company. where (a) in the case of a company having a share capital, the number of members making application is not les than 200, or the members are holding not less than one-tenth of total voting power, or (b) in the case of a company not having a share capital, an application has been received from not less than one-fifth of the members, the Company Law Board may, after giving the parties an opportunity of being heard, by order, declare that the affairs of the company should be investigated by an inspector or inspectors and on such 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 (s.235).

  (ii) On the report of the registrar. The Central Government may, where a report has been mad by the registrar in pursuance of s.243, appoint one or more inspectors to investigate the affairs of a company and report thereon in such manner as the Central Government may direct. The Registrar’s report is made where a document filed by any company (whether having a share capital or not) with him discloses an unsatisfactory state of affairs, or it does not disclose full and fair statement of the matter to which it purports to relate [s.235 (1)].

  (iii) On suggestion of CLB. Section 237 provides that the Central Government may appoint if, in opinion of the Company Law Board, there are circumstances suggesting: (a) that the company’s business is being conducted with intent 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; or (b) that persons concerned in the formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or any of its members; or (c) 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.

  (iv) where the company, by special resolution, resolves that the affairs of the company be investigated by an inspector appointed by the Central Government (s.237).

  v. Where the court by order declares that the affairs be investigated by an inspector appointed by the Central Government (s.237).