Power of Investigation of Affairs of-Related Companies

.9l.ns. When is it mandatory on the part of the Central Government to appoint Inspectors to
investigate the affairs of a company.
Section 237(a) contains circumstances under which Central Government must
appoint an Inspector to investigate the affairs of a company. These circumstances are:
(i) where the company, by special resolution, or
. (ii) the court, by order,
declares that the affairs of the company ought to be investigated by an Inspector appointed by the Central Government.
Powers of the Inspectors
Please see answer to Q. 4.

Q 4. Discuss the powers of the Inspectors appointed by the Central Government to
investigate into the affairs of the company. fC.A. (Final) Nov., 1985J
.9l.ns. The powers of Inspectors appointed by the Central Government to investigate into the affairs of a company may be discussed under the following four headings:

(i) Power of Investigation of Affairs of-Related Companies
The Inspector has been given, under the Act, wide powers, in connection with the investigation. Section 239 states that if the Inspector considers it necessary to investigate even the affairs of another company under the same management or in the same group, he may do so. Under this Section, an Inspector is empowered to investigate the affairs of the following persons and/or bodies corporate and report on their affairs also if he thinks that such an investigation is relevant to the affairs of the company under investigation:
(a) any other body corporate which is, or has at any relevant time been, the company's subsidiary or holding company or a subsidiary of its holding company or a holding company of its subsidiary;
(b) any other body corporate which is, or has at any relevant time been, managed by any person as Managing Director .or Manager, who is, or was, at the relevant time either the Managing Director or the Manager of the company under investigation;
(c) any body corporate which is, or has, at any relevant time been, managed by the company or whose Board of Directors comprises nominees of the company or is accustomed to act in accordance with the directions or instructions of:
(i) the company, or
(ii) any of the Directors of the company, or
(iii) any company, any of whose directorship is held by the employees or
nominees of those having the control and management of the first men
tioned company;
(d) any person who is, or has been at any relevant time, the company's Managing
Director or Manager.
The Inspector is required to obtain the prior approval of the Central Government before undertaking any investigation into the affairs of the company or the persons mentioned in (c) and (d) above. Before granting its approval, the Central Government