Chapter 8
Explanation and Investigation

110. Appropriate Department Empowered to Call for Explanations

(1) In case it is required to have any unclear point in the document submitted by the company explained, or to call for explanations on any matter, the appropriate department may issue orders to the company demanding explanations on such matter with the time-limit prescribed by it.
 

(2) The employees of the company shall forthwith reply to the best of their knowledge to all queries that may be made by the appropriate department.

(3) In case any irregularity is noticed in the operations of the company in the course of an inquiry, the appropriate department may issue necessary directives to the company to regularise such irregularity, and it shall be the duty of the company to comply with such directives.

111. Appropriate Department to Depute Inspectors on Receipt of Application

In case shareholders representing at least ten percent of the paid-up capital of the company or not least one-fourth of the total number of shareholders submit an application, the appropriate 
department may depute one more inspectors according to need to conduct investigation. The department shall obtain security from the applicant against the estimated excesses on such investigations.

112. Appropriate Department to Repute Inspectors

The appropriate department may depute one or more inspectors according to need to investigate the business of any company even if no application is submitted under Section 111, in case it is satisfied that :

(a) The company is being run with the intention of cheating its creditors or otherwise committing fraud or to put any shareholder to inconvenience or difficulty, or

(b) The public company or a private company which is a subsidiary of a public company does not furnish necessary information regarding its business.

113. Accounts and Records to be Submitted

The employees of the company shall produce, explain and hand over such account, records, registers, documents, etc. as may be demanded by the inspector deputed by the appropriate department.

114. Submission of Report

(1) The inspector shall, after completing investigations, submit a report of his finding to the appropriate department. The department shall send a copy of such report to the head office of the company as well as to the person applying for investigation where it has been conducted under Sub-Section 111. In case any shareholder makes a request for a copy of the report, the appropriate department may supply a copy to him on payment of as fee of Rs. 1.00.

(2) In case the report submitted by the inspector under Sub-Section (1) indicates that employee of the company or any other person has committee any offence against the company, the appropriate department shall direct the company to file suits or claims against such offengers.

(3) In case action is taken under Sub-Section (2) and in case the appropriate department wells that the company may be put to loss if its business continues to be in the hands of the person or persons responsible for such offences, it may suspend such person or persons and submit an application to the court for making necessary arrangements for running the business of the company. On receipt of such application, the court shall forthwith issue orders to the appropriate department to make necessary arrangements.

115. Expenses of Investigations

The expenses incurred in investigations conducted by the appropriate department under Section 111 or Section 112 shall be borne by the concerned company itself.

Provided that :

(a) In the case of investigations held under Section 111, if the application is found to have submitted applications for such investigation without proper reasons, the expenses shall be borne by the applicant himself.

(b) In case any employee of the company is found to have been involved in misconduct or committed fraud or forgery, the expenses shall be borne by the employee himself.