Section 212 Investigation into affairs of Company by Serious Fraud Investigation Office – Companies Act 2013

Amended and updated notes on section 212 of Companies Act 2013. Investigation into affairs of Company by Serious Fraud Investigation Office (SFIO).

Amended and updated notes on section 212 of Companies Act 2013. Detail discussion on provisions and rules related to Investigation into affairs of Company by Serious Fraud Investigation Office.

Chapter XIV (Sections 206229) of the Companies Act, 2013 (CA 2013) deals with the provisions related to inspection, inquiry and investigation. Section 212 of Companies Act 2013 provides for Investigation into affairs of Company by Serious Fraud Investigation Office (SFIO).

Recently, we have discussed in detail section 211 (Establishment of Serious Fraud Investigation Office) of CA 2013. Today, we learn the provisions of section 212 of Companies Act 2013.

The provisions of section 212 are effective from 1st April, 2014 except sub-sections (8), (9) and (10) which are notified from 24th August, 2017. You may refer Notification No. S.O. 902(E) issued dated 27.03.2014 and S.O. 2751(E) dated 24.08.2017.

This notes on section 212 amended by the Companies (Amendment) Act, 2015 and the Companies (Amendment) Act, 2019. In this article, you will learn detail of the provisions of section 212 of Companies Act 2013.

Did you know? There are total 59 investigations has been ordered under section 212 for SFIO during last two years from 2018-19 and 2019-20 as stated by Shri Anurag Singh Thakur, Union Minister of State for Finance & Corporate Affairs, in response to a written question in the Lok Sabha dated 14th September, 2020.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.XIV
Chapter NameInspection, Inquiry and Investigation
Section No.212
Section NameInvestigation into affairs of Company by Serious Fraud Investigation Office
Monthly Updated EditionCompany Law PDF

Section 212 of Companies Act 2013: Investigation into affairs of Company by Serious Fraud Investigation Office

Section 212 shall come into force on 1st April, 2014 vide Notification No. S.O. 902(E) issued dated 27.03.2014 except sub-sections (8) to (10) which shall come into force 24th August, 2017 vide Notification No. S.O. 2751(E) dated 24.08.2017.

Here is the notes on section 212 of Companies Act 2013 as amended from time to time:

CG Order for Investigation by SFIO [Section 212(1)]:

CG may issue an order to assign SFIO to investigate into the affairs of a company in the following cases:

  1. Report: On receipt of report of Registrar or inspector u/s 208;
  2. Request: On request from any CG/SG Department;
  3. Intimation: On intimation of SR by company;
  4. Interest: In Public interest.

Note that CG will issue order u/s 212 without prejudice to the provisions of section 210 (Investigation into affairs of company) of the Companies Act, 2013. Director of SFIO may designate inspectors for the purpose of such investigation. The current SFIO director is Amardeep Singh Bhatia (IAS). You may contact him at email director@sfio.nic.in or telephone 011-24365787.

Other Investigating Agency [Section 212(2)]:

Where any case has been assigned by CG to SFIO, no other investigating agency of CG/SG shall proceed with investigation in such case. However, if any such investigation is pending, the concerned agency shall transfer the relevant documents and records to Serious Fraud Investigation Office.

Report of Investigation [Section 212(3)]:

SFIO shall conduct the investigation in the manner and follow the procedure provided in this Chapter i.e. Chapter-XIV (Sections 206-229). Thereafter, the SFIO shall submit investigation report to CG within such period specified in the order.

Power of Investigating Officer [Section 212(4)]:

Director of SFIO shall cause the affairs of the company to be investigated by an Investigating Officer. Investigating Officer shall have the power of the inspector under section 217 (Procedure, powers, etc., of inspectors).

Required Information for Investigation [Section 212(5)]:

The company and its officers and employees shall be responsible to provide all information, explanation, documents and assistance to the Investigating Officer as he may require for conduct of the investigation.

Conditions for Granting Bail [Section 212(6)]:

Notwithstanding anything contained in the Code of Criminal Procedure, 1973, offence covered under section 447 (Punishment for Fraud) of CA 2013 shall be cognizable. No person accused of any offence u/s 447 shall be released on bail or on his own bond unless—

(i) Public Prosecutor: The Public Prosecutor opposes the application for such release; and

(ii) Court: 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.

The Special Court may direct to release on bail if a person is:

  • Under the age of 16 years; or
  • A Women; or
  • Sick; or
  • Infirm.

The Special Court shall take cognizance of any offence u/s 212(6) only if a complaint in writing made by:

  • Director of SFIO; or
  • Any CG officer authorised by CG order in this behalf.

Note that sub-section (6) of Section 212 has been amended by the Companies (Amendment) Act, 2015 and such updates are effective from 29th May, 2015.

Additional Conditions for Granting Bail [Section 212(7)]:

The limitation on granting of bail specified u/s 212(6) is in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail.

Power to Arrest [Section 212(8)]:

Authorised CG Officer not below the rank of Assistant Director of SFIO has on the basis of material in his possession reason to believe that any person has been guilty of any offence punishable u/s 447, he may arrest such person and shall inform him of the grounds for such arrest.

Note that sub-section (8) of Section 212 has been amended by the Companies (Amendment) Act, 2019 and such updates are effective from 15th August, 2019.

Forward copy of Order [Section 212(9)]:

The officer authorised u/s 212(8) shall immediately after arrest, forward a copy of the order, along with the material in his possession to the SFIO in a sealed envelope, in prescribed and the SFIO shall keep such order and material for prescribed period.

Note that sub-section (9) of Section 212 has been amended by the Companies (Amendment) Act, 2019 and such updates are effective from 15th August, 2019.

Arrested Person to Special Court [Section 212(10)]:

Every person arrested u/s 212(8) shall within 24 hours, be taken to a Special Court or Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction.

However, the period of 24 hours shall exclude the time necessary for the journey from the place of arrest to the Special Court or Magistrate’s court.

Note that sub-section (10) of Section 212 has been amended by the Companies (Amendment) Act, 2019 and such updates are effective from 15th August, 2019.

Interim Report [Section 212(11)]:

If CG directs, the SFIO shall submit an interim report to the Central Government.

Investigation Report to CG [Section 212(12)]:

The SFIO shall submit the investigation report to the CG on completion of the investigation.

Copy of Investigation Report [Section 212(13)]:

A copy of the investigation report may be obtained by any person concerned by making an application in this regard to the court.

Prosecution [Section 212(14)]:

CG examine the investigation report and after taking legal advice may direct SFIO to initiate prosecution. Thereafter, the director of SFIO shall initiate prosecution against the company and the following person:

  • 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.

Unlimited Liability for Fraud [Section 212(14A)]:

Where the report u/s 212(11) or 212(12) states that fraud has taken place in a company and due to such fraud any director, KMP (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 CG 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, KMP, other officer or any other person liable personally without any limitation of liability.

Note that sub-section (14) of Section 212 has been inserted by the Companies (Amendment) Act, 2019 and such updates are effective from 15th August, 2019.

Police Officer Filed Report [Section 212(15)]:

The investigation report filed with the Special Court for framing of charges shall be deemed to be a report filed by a police officer u/s 173 of the Code of Criminal Procedure, 1973.

Investigation under Companies Act 1956 [Section 212(16)]:

Any investigation or other action taken or initiated by SFIO under the provisions of the Companies Act, 1956 shall continue to be proceeded with under that Act as if CA 2013 had not been passed.

Collect and Share Information for Investigation [Section 212(17)]:

The SFIO shall collect as well as share with the following Agency or Authority any information or documents for investigation:

  • Any Investigating Agency;
  • State Government;
  • Police Authority;
  • Income-tax Authorities

In other words, the above person having any information or documents shall provide all such information or documents available with it to the SFIO. Similarly, the SFIO shall share any information or documents available with it, with above person which may be relevant or useful for such agency or authority in respect of any offence or matter being investigated or examined by it under any other law.

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