Section 224: Actions to be taken in pursuance of inspector’s report
This section is for outlining the actions the Central Government may take based on an inspector's report, including prosecution, winding up a company, and recovering damages or property.
The section, clause by clause
What the section says
In plain terms
(1)If, from an inspector’s report, made under section 223, it appears to the Central Government that any person has, in relation to the company or in relation to any other body corporate or other person whose affairs have been investigated under this Chapter been guilty of any offence for which he is criminally liable, the Central Government may prosecute such person for the offence and it shall be the duty of all officers and other employees of the company or body corporate to give the Central Government the necessary assistance in connection with the prosecution.
The Central Government may prosecute any person found guilty of an offence by an inspector's report and must be assisted by the company's officers and employees in the prosecution.
(2)If any company or other body corporate is liable to be wound up under this Act 1[or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)] and it appears to the Central Government from any such report made under section 223 that it is expedient so to do by reason of any such circumstances as are referred to in section 213, the Central Government may, unless the company or body corporate is already being wound up by the Tribunal, cause to be presented to the Tribunal by any person authorised by the Central Government in this behalf—
The Central Government may petition the Tribunal to wind up a company if it appears expedient due to circumstances referred to in section 213 and the company is not already being wound up.
(2)(a)a petition for the winding up of the company or body corporate on the ground that it is just and equitable that it should be wound up;
(2)(b)an application under section 241; or
(2)(c)both.
(3)If from any such report as aforesaid, it appears to the Central Government that proceedings ought, in the public interest, to be brought by the company or any body corporate whose affairs have been investigated under this Chapter—
The Central Government may bring proceedings in the name of a company for the recovery of damages or property if it appears that proceedings ought to be brought in the public interest.
(3)(a)for the recovery of damages in respect of any fraud, misfeasance or other misconduct in connection with the promotion or formation, or the management of the affairs, of such company or body corporate; or
(3)(b)for the recovery of any property of such company or body corporate which has been misapplied or wrongfully retained, the Central Government may itself bring proceedings for winding up in the name of such company or body corporate.
(4)The Central Government, shall be indemnified by such company or body corporate against any costs or expenses incurred by it in, or in connection with, any proceedings brought by virtue of sub-section (3).
The Central Government will be indemnified by the company against any costs or expenses incurred in proceedings brought under sub-section (3).
(5)Where the report made by an inspector 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, as the case may be, and also for holding such director, key managerial personnel, officer or other person liable personally without any limitation of liability.
If an inspector's report states that fraud has taken place, the Central Government may file an application before the Tribunal for orders regarding disgorgement of assets and holding individuals liable.
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. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
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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.