Section 212: Investigation into affairs of Company by Serious Fraud Investigation Office
This section is for investigating the affairs of a company by the Serious Fraud Investigation Office and outlines the procedures and powers for such investigations.
The section, clause by clause
What the section says
In plain terms
(1)Without prejudice to the provisions of section 210, where the Central Government is of the opinion, that it is necessary to investigate into the affairs of a company by the Serious Fraud Investigation Office—
The Central Government can assign an investigation into a company's affairs to the Serious Fraud Investigation Office if it receives a report from the Registrar or inspector, or if a company passes a special resolution, or if it's in the public interest, or if a Department of the Central Government or a State Government requests it.
(1)(a)on receipt of a report of the Registrar or inspector under section 208;
(1)(b)on intimation of a special resolution passed by a company that its affairs are required to be investigated;
(1)(c)in the public interest; or
(1)(d)on request from any Department of the Central Government or a State Government, the Central Government may, by order, assign the investigation into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation.
(2)Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating agency of Central Government or any State Government shall proceed with investigation in such case in respect of any offence under this Act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and records in respect of such offences under this Act to Serious Fraud Investigation Office.
If the Central Government assigns a case to the Serious Fraud Investigation Office, no other investigating agency can proceed with the investigation, and any existing investigation must be transferred to the Serious Fraud Investigation Office.
(3)Where the investigation into the affairs of a company has been assigned by the Central Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and follow the procedure provided in this Chapter; and submit its report to the Central Government within such period as may be specified in the order.
The Serious Fraud Investigation Office must conduct the investigation as specified in the order and submit its report to the Central Government within the specified period.
(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.
The Director of the Serious Fraud Investigation Office will assign an Investigating Officer to investigate the company's affairs, who will have the power of an inspector under section 217.
(5)The company and its officers and employees, who are or have been in employment of the company shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation.
The company and its officers and employees must provide all information, explanation, documents, and assistance to the Investigating Officer.
(6)Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), 1[offence covered under section 447] of this Act shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless—
Offences under section 447 are cognizable, and no person accused of such an offence can be released on bail unless the Public Prosecutor has been given an opportunity to oppose the application and the court is satisfied that there are reasonable grounds for believing that the person is not guilty.
(6)(i)the Public Prosecutor has been given an opportunity to oppose the application for such release; and
(6)(ii)where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:
provisoProvided that a person, who, is under the age of sixteen years or is a woman or is sick or infirm, may be released on bail, if the Special Court so directs:
provisoProvided further that the Special Court shall not take cognizance of any offence referred to this sub- section except upon a complaint in writing made by—
(6)(i)the Director, Serious Fraud Investigation Office; or
(6)(ii)any officer of the Central Government authorised, by a general or special order in writing in this behalf by that Government.
(7)The limitation on granting of bail specified in sub-section (6) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.
The limitations on granting bail under sub-section (6) are in addition to the limitations under the Code of Criminal Procedure, 1973.
(8)2[If any officer not below the rank of Assistant Director] of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
An officer of the Serious Fraud Investigation Office can arrest a person if they have reason to believe that the person has committed an offence punishable under sections referred to in sub-section (6).
(9)3[The officer authorized under sub-section (8) shall, immediately after arrest of such person under such sub-section], forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed.
The officer must forward a copy of the order and material to the Serious Fraud Investigation Office, which must keep them for a prescribed period.
(10)Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a 4[Special Court or Judicial Magistrate] or a Metropolitan Magistrate, as the case may be, having jurisdiction:
A person arrested under sub-section (8) must be taken to a Special Court or Judicial Magistrate within 24 hours, excluding the time necessary for the journey.
provisoProvided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the 5[Special Court or Magistrate's court].
(11)The Central Government if so directs, the Serious Fraud Investigation Office shall submit an interim report to the Central Government.
The Central Government can direct the Serious Fraud Investigation Office to submit an interim report.
(12)On completion of the investigation, the Serious Fraud Investigation Office shall submit the investigation report to the Central Government.
The Serious Fraud Investigation Office must submit an investigation report to the Central Government on completion of the investigation.
(13)Notwithstanding anything contained in this Act or in any other law for the time being in force, a copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court.
A copy of the investigation report can be obtained by any person concerned by making an application to the court.
(14)On receipt of the investigation report, the Central Government may, after examination of the report (and after taking such legal advice, as it may think fit), direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees, who are or have been in employment of the company or any other person directly or indirectly connected with the affairs of the company.
The Central Government can direct the Serious Fraud Investigation Office to initiate prosecution against the company and its officers or employees based on the investigation report.
(14A)Where the report under sub-section (11) or sub-section (12) states that fraud has taken place in a company and due to such fraud any director, key managerial personnel, other officer of the company or any other person or entity, has taken undue advantage or benefit, whether in the form of any asset, property or cash or in any other manner, the Central Government may file an application before the Tribunal for appropriate orders with regard to disgorgement of such asset, property or cash and also for holding such director, key managerial personnel, other officer or any other person liable personally without any limitation of liability.]
If the report states that fraud has taken place, the Central Government can file an application before the Tribunal for disgorgement of assets and to hold directors or officers liable.
(15)Notwithstanding anything contained in this Act or in any other law for the time being in force, the investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974).
The investigation report filed with the Special Court for framing of charges is deemed to be a report filed by a police officer under section 173 of the Code of Criminal Procedure, 1973.
(16)Notwithstanding anything contained in this Act, any investigation or other action taken or initiated by Serious Fraud Investigation Office under the provisions of the Companies Act, 1956 (1 of 1956) shall continue to be proceeded with under that Act as if this Act had not been passed.
Any investigation or action taken by the Serious Fraud Investigation Office under the Companies Act, 1956, can continue under that Act.
(17)(a) In case Serious Fraud Investigation Office has been investigating any offence under this Act, any other investigating agency, State Government, police authority, income-tax authorities having any information or documents in respect of such offence shall provide all such information or documents available with it to the Serious Fraud Investigation Office;
The Serious Fraud Investigation Office must share information and documents with other investigating agencies, and other agencies must provide information and documents to the Serious Fraud Investigation Office.
(17)(b)The Serious Fraud Investigation Office shall share any information or documents available with it, with any investigating agency, State Government, police authority or income-tax authorities, which may be relevant or useful for such investigating agency, State Government, police authority or income-tax authorities in respect of any offence or matter being investigated or examined by it under any other law.
The right-hand column is written from the section text, not quoted from it, and it has no legal force. Where the two differ, the left-hand column is the law.
Amendment notes
- 1. Subs. by Act 21 of 2015, s. 17, for certain words, brackets and figures (w.e.f. 29-5-2015).
- 2. Subs. by Act 22 of 2019, s. 31, for “If the Director, Additional Director or Assistant Director” (w.e.f. 15-8-2019).
- 3. Subs. s. 31, ibid., for “The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub-section (8)” (w.e.f. 15-8-2019).
- 4. Subs. by s. 31, ibid., for “Judicial Magistrate” (w.e.f. 15-8-2019).
- 5. Subs. by s. 31, ibid., for “Magistrate’s Court” (w.e.f. 15-8-2019).
- 1. Ins. by Act 22 of 2019, s. 31 (w.e.f. 15-8-2019).
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Reproduced from the official India Code print for reference. Check the current text on India Code before you rely on it, and read the section alongside its Rules. Nothing here is legal advice.