Page 339 - CA Final PARAM Digital Book.

(Future)
• Marketability: Is it possible to extend the sales into new markets or that these have been
fully exploited? Product wise estimation should be made.

QNO Investigation (Sec 210) Old Course- (M15R, PM17, N18R, N18M)
641.000 TITANIUM CNO – INTG.160
What will be your approach in investigation under Section 210 and 213 into the affairs of the company

registered under Companies Act, 2013?

Answer ➢ Approach in investigation under section 210 and 213 into the affairs of the Companies:
The general approach for investigation under Sections 210 and 213 of the Companies Act, 2013 is

conditioned by the legal requirements in these regards. The affairs of the company may include
everything such as goodwill, profit and loss, contracts, investments, assets, shareholding in
subsidiaries, decision making, etc. Also, the specific circumstances mentioned in these sections like
fraud, mismanagement, oppression of any shareholder etc. come within the term “affairs of the
company.”

Investigation under Sections 210 and 213 do not call for any special approach. Approach/Steps for
pursuing the investigation are:
• Clarity of Terms of Reference:
The approach to any investigation is determined on a consideration of the nature of the
investigation and the terms of reference. However, the inspector should ensure that the
terms of reference are clear, unambiguous and in writing. If he has any doubt about any item
in the terms, he should obtain clarification in writing. It should also be, seen that the terms of
reference are not too general, because that may frustrate the whole objective of the
investigation; the scope of the investigation will become unwieldy and ill defined. An
investigation order to investigate into the affairs of the company would be an instance at
point. Therefore, the inspector should ask for reframing of the order specifying the exact
matters to be investigated. He should also take into consideration the possible effect of
limitations, if any, put in the terms of reference and should keep the Central Government
informed in writing about their effect on the investigation.

• Scope of Investigation:
The next point for consideration of the inspector would be the determination of the scope of
the investigation on the basis of the terms of reference. At this stage, it may be useful for the
inspector to go into the history of the company and its affiliates or associates. He should
evaluate the terms of reference in sketching the scope of investigation; this will enable him to
locate the limitation, if any, in the terms of reference, not clearly mentioned. For a
purposeful investigation, he may need to stretch his inquiry into the books and records of
allied and associated persons and concerns and may require to arm himself with the powers
given under the Companies Act.
• Period for investigation:
He should also have regard to the period over which the investigation should stretch. The
evaluation of terms of reference and the consequential determination of the scope of
investigation are the twin props on which the entire investigation would rest and, therefore,
the inspector appointed under Sections 210 and 213 should devote careful attention to
these.

• Framing of Programme:
The next step is the investigator/inspector should frame his programme for investigation in a
systematic manner. He should keep adequate working notes and papers with references and
cross references in a proper and methodical way to aid him in the preparation of the report.
The actual process of investigation would be essentially an evidence gathering procedure
and, at every step, he should have regard to the procedures laid down in these sections
regarding production of documents and evidence, examination on oath and seizure of
documents. He should also keep his mind open to the revelations he comes across in the
process of evidence collection and should assess whether the programme of investigation
needs amendment or modification.
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