Section 213 of Companies Act 2013: Investigation into Company's Affairs in Other Cases

Section 213 of the Companies Act, 2013 empowers the National Company Law Tribunal (NCLT), in specified circumstances, to order an investigation into the affairs of a company. The investigation is carried out by one or more inspectors appointed by the Central Government after the Tribunal passes the required order.

In brief: Section 213 provides a Tribunal-supervised route for investigating suspected fraud, unlawful purposes, oppressive conduct, misconduct in formation or management, or material non-disclosure to members. It also permits qualifying members to seek an investigation when they can show good reasons supported by necessary evidence.

Who can apply under Section 213?

Company having share capitalAn application may be made by at least 100 members or by members holding at least one-tenth of the total voting power.

Company having no share capitalAn application may be made by at least one-fifth of the persons on the company's register of members.

An application by members must be supported by evidence necessary to show that the applicants have good reasons for seeking an order for investigation into the company's affairs.

Other circumstances in which the Tribunal may order investigation

Section 213 also permits an application by any other person, or action by the Tribunal otherwise, where circumstances suggest one or more of the following:

The company's business is being conducted with intent to defraud creditors, members or any other person, for a fraudulent or unlawful purpose, in a manner oppressive to members, or the company was formed for a fraudulent or unlawful purpose.
Persons involved in formation of the company or management of its affairs have been guilty of fraud, misfeasance or other misconduct towards the company or its members.
Members have not received information concerning the company's affairs which they might reasonably expect, including information relating to calculation of commission payable to a managing or other director or the manager.

Meaning of important expressions

Tribunal

For the Companies Act, 2013, the expression "Tribunal" refers to the National Company Law Tribunal (NCLT) constituted under Section 408 of the Act.

Investigation

In the context of Section 213, an investigation is a formal examination of specified aspects of a company's affairs by an inspector or inspectors appointed by the Central Government pursuant to the Tribunal's order.

Fraud

Where the proviso to Section 213 results in liability for fraud, the punishment is linked to Section 447 of the Companies Act, 2013. Section 447 contains the Act's principal punishment provision for fraud.

Procedure and effect of an order under Section 213

Before directing investigation, the Tribunal must give a reasonable opportunity of being heard to the parties concerned. If the Tribunal concludes that the company's affairs ought to be investigated, it may order investigation by an inspector or inspectors appointed by the Central Government.

Once such an order is passed, the Central Government is required to appoint one or more competent persons as inspectors. They investigate the matters covered by the order and report in the manner directed by the Central Government.

Consequences where fraud is proved

The proviso to Section 213 states that where investigation proves that the company's business was conducted with intent to defraud, for a fraudulent or unlawful purpose, or that the company was formed for such a purpose, or where a person concerned with formation or management is proved guilty of fraud, the relevant officers in default and persons concerned may be punishable for fraud in the manner provided by Section 447.

Section 213 - practical legal points

A member-based application must satisfy the statutory numerical or voting-power threshold and be supported by evidence showing good reasons for investigation.
The alternative route under clause (b) focuses on circumstances suggesting fraud, illegality, oppression, misconduct or material informational deficiency.
The Tribunal's order precedes appointment of inspectors by the Central Government.
A reasonable opportunity of hearing is expressly required before the Tribunal orders investigation.
Section 213 should be read with the wider investigation framework in Chapter XIV of the Companies Act, including provisions dealing with inspectors, their powers and investigation reports.

Related provisions

For the surrounding statutory framework, see Section 212 - investigation by the Serious Fraud Investigation Office, Sections 214 and 215 - investigation costs and eligibility of inspectors, Sections 216 and 217 - ownership investigation and powers of inspectors, and Section 218 - protection of employees during investigation.

Updated: 17 September 2026. This page is a general statutory guide. Refer to the current Act, rules, notifications and applicable judicial decisions for a specific matter.