Chapter XIV - Inspection, Inquiry and Investigation
Section 213
Section 213: investigation into a company’s affairs in other cases
Section 213 lets the Tribunal (NCLT) order that a company’s affairs be investigated by inspectors appointed by the Central Government, either on an application by a qualifying group of members or on any other person’s application if fraud, oppression, misconduct or withholding of information is suggested.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
The Tribunal may,—(a) on an application made by—(i) not less than one hundred members or members holding not less than one-tenth of the total voting power, in the case of a company having a share capital; or (ii) not less than one-fifth of the persons on the company’s register of members, in the case of a company having no share capital, and supported by such evidence as may be necessary for the purpose of showing that the applicants have good reasons for seeking an order for conducting an investigation into the affairs of the company; or (b) on an application made to it by any other person or otherwise, if it is satisfied that there are circumstances suggesting that—(i) the business of the company is being conducted with intent to defraud its creditors, members or any other person or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive to any of its members or that the company was formed for any fraudulent or unlawful purpose; (ii) persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) 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, order, after giving a reasonable opportunity of being heard to the parties concerned, that the affairs of the company ought to be investigated by an inspector or inspectors appointed by the Central Government and where such an order is passed, the Central Government shall appoint one or more competent persons as inspectors to investigate into the affairs of the company in respect of such matters and to report thereupon to it in such manner as the Central Government may direct: Provided that if after investigation it is proved that—(i) the business of the company is being conducted with intent to defraud its creditors, members or any other persons or otherwise for a fraudulent or unlawful purpose, or that the company was formed for any fraudulent or unlawful purpose; or (ii) any person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, then, every officer of the company who is in default and the person or persons concerned in the formation of the company or the management of its affairs shall be punishable for fraud in the manner as provided in section 447.
Introduction
For a company with share capital, the applicants must be at least one hundred members or members holding at least one-tenth of the total voting power. For a company without share capital, they must be at least one-fifth of the persons on the register of members. They must show good reasons for the investigation.
If the investigation proves fraud of the kinds listed, every officer in default and the persons concerned are punishable for fraud under section 447. Section 213 commenced on 1 June 2016 under S.O. 1934(E). The India Code shows no amendment, and its text matches the 2013 Gazette.
Key takeaways
Two routes
An application by qualifying members under clause (a), or by any other person (or otherwise) under clause (b).
Member thresholds
One hundred members or one-tenth of voting power (share capital), or one-fifth of members (no share capital).
Hearing first
The Tribunal must give the parties a reasonable opportunity of being heard.
Fraud liability
Proven fraud makes officers in default and the persons concerned punishable under section 447.
Who can apply
Clause (a) lets qualifying members apply with evidence showing good reasons. Clause (b) lets any other person apply, or the Tribunal act otherwise, where it is satisfied that circumstances suggest that the business is conducted to defraud creditors, members or others, or for a fraudulent or unlawful purpose, or oppressively; or that the company was formed for such a purpose; or that persons in its formation or management have been guilty of fraud, misfeasance or other misconduct; or that members have not been given information they might reasonably expect, including on commission payable to a managing or other director or the manager.
Order and inspectors
After hearing the parties, the Tribunal may order that the affairs be investigated by inspectors appointed by the Central Government. The Government must then appoint one or more competent persons to investigate and report to it as it directs.
Consequences of proven fraud
Under the proviso, if the investigation proves that the business was conducted with intent to defraud or for a fraudulent or unlawful purpose, or that the company was formed for such a purpose, or that persons concerned in its formation or management were guilty of fraud, every officer in default and those persons are punishable for fraud as provided in section 447.
Practical preparation
Check whether the applicants meet the member threshold; gather documentary evidence of good reasons; prepare for a hearing before the Tribunal; consider the security for costs that section 214 may require.
Investigation provisions are applied case by case by the Central Government, the Tribunal, the Special Court or the inspector; this guide explains the statutory text and is not a substitute for advice on a live matter.
Practical checklist
Do
- Support a members’ application with evidence, not allegations alone.
Avoid
- Do not assume a member application succeeds automatically; the Tribunal decides after a hearing.
Illustrative example
Hypothetical: minority members seek an investigation
Members holding more than one-tenth of the voting power suspect that related-party commissions are being concealed from them.
Application
They apply to the Tribunal under clause (a) with documents showing the missing commission information.
Hearing and order
After hearing the company, the Tribunal orders an investigation.
Inspection
The Central Government appoints inspectors, who report to it.
Outcome
- The members obtain an independent investigation without the Central Government having first acted on its own.
Glossary
- Tribunal
- The National Company Law Tribunal constituted under section 408.
- Misfeasance
- Improper performance of a lawful act, here by persons in the formation or management of the company.
Frequently asked questions
How many members are needed to apply?
For a company with share capital, at least one hundred members or members holding at least one-tenth of the total voting power. For a company without share capital, at least one-fifth of the persons on the register of members.
Who appoints the inspectors?
The Central Government, once the Tribunal has ordered the investigation.
Need help applying this provision to your situation?
Contact BizeneedLast updated 12 October 2026