Section 247 - Investigation of ownership of company. - Companies Act, 1956

Investigation of ownership of company. 247. (1) Where it appears to the Central Government that there is good reason so to do, it may appoint one or more inspectors to investigate and report on the membership of any company and other matters relating to the company, for the purpose of determining the true persons (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or materially to influence the policy of the company. [1] [(1A) Without prejudice to its powers under this section, the Central Govern ment shall appoint one or more inspectors under sub-section (1), if the [2] [Tribunal], in the course of any proceedings before it, declares by an order that the affairs of the company ought to be investigated as regards the membership of the company and other matters relating to the company, for the purpose of determining the true persons (a) who are or have been financially interested in the success or failure, whether real or apparent, of the company; or (b) who are or have been able to control or materially to influence the policy of the company.] (2) When appointing an inspector under sub-section (1), the Central Government may define the scope of his investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular, may limit the investigation to matters connected with particular shares or debentures. (3) Subject to the terms of an inspector's appointment, his powers shall extend to the investigation of any circumstances suggesting the existence of any arrangement or understanding which, though not legally binding, is or was observed or is likely to be observed in practice and which is relevant to the purposes of his investigation. [3] [(4) * * *] (5) For the purposes of any investigation under this section, sections 239, 240 and 241 shall apply with the necessary modifications of references to the affairs of the company or to those of any other body corporate [4] [* * *]: Provided that the said sections shall apply in relation to all persons (including persons concerned only on behalf of others) who are or have been, or whom the inspector has reasonable cause to believe to be or to have been, (i) financially interested in the success or failure, or the apparent success or failure, of the company, of any other body corporate [5] [* * *] whose membership or constitution is investigated with that of the company; or (ii) able to control or materially to influence the policy of such company, body corporate [6] [* * *], as they apply in relation to [7] [officers and other employees and agents] of the company [8] of the other body corporate, [9] [* * *] as the case may be: Provided further that the Central Government shall not be bound to furnish the company or any other person with a copy of any report by an inspector appointed under this section or with a complete copy thereof, if it is of opinion that there is good reason for not divulging the contents of the report or of parts thereof; but in such a case, the Central Government shall cause to be kept by the Registrar a copy of any such report, or as the case may be, of the parts thereof, as respects which it is not of that opinion. (6) The expenses of any investigation under this section shall be defrayed by the Central Government out of moneys provided by Parliament, unless the Central Government directs that the expenses or any part thereof should be paid by the persons on whose application the investigation was ordered. -------------------------------------- Notes:- [1] Inserted by the Companies (Amendment) Act, 1988, section 41, w.e.f. 31-5-1991. [2] Substituted for "Company Law Board" by the Companies (Second Amendment) Act, 2002, w.e.f. a date yet to be notified. [3] Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000, as provisions relating to managing agents, etc. had become redundant after abolition of system by Act 17 of 1969. [ Prior to its omission, sub-section (4) read as under: (4) Subjects as aforesaid, the powers of the inspector shall also extend, where the company has or at any time had a managing agent or secretaries and treasures, ___ (a) in case such managing agent or secretaries agent and treasures are or were a body corporate, to the investigation of the ownership of the shares of such body corporate, and of who the persons are or were who control or manage or controlled or managed its affairs; (b) in case such managing agent or secretaries and treasures are or were a firm; to the investigation of who the persons are or were who control or manage or controlled or managed its affairs as partners in the firm or otherwise and of the respective interest therein of the partners; and (c) in all case, to the investigation of who the persons are or were who are or were entitled to any share of, or any amount forming part of, the remuneration of such managing agent or secretaries and treasures ]. [4] Words or of any managing agent, secretaries and treasures, or corporate, or associate Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [5] Words or of any managing agent, secretaries and treasures, or corporate, or associate Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [6] Words or of any managing agent, secretaries and treasures, or corporate, or associate Omitted by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [7] Substituted by the Companies (Amendment) Act 1960, Act 65 of 1960, section 79, for "officers and agents". [8] Word or should be inserted after the word company . [9] Omitted for as provisions relating to or of the managing agents, secretaries and treasures or associate had become redundant after abolition of system by Act 17 of 1969.by the Companies (Amendment) Act, 2000, w.e.f 13-12-2000,