Sections 214 and 215 of the Companies Act, 2013: Security for Investigation Costs and Eligibility of Inspectors
Sections 214 and 215 form part of Chapter XIV of the Companies Act, 2013, which deals with inspection, inquiry and investigation. Section 214 permits the Central Government, in specified applicant-driven investigations, to require security towards investigation costs. Section 215 separately bars a firm, body corporate or other association from being appointed as an inspector.
- Section 214 applies where investigation is ordered under section 210(1)(b) or by the Tribunal under section 213.
- The Central Government may require the applicant to furnish prescribed security before an inspector is appointed.
- The statutory ceiling under section 214 is Rs. 25,000.
- Rule 5 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014 prescribes security according to the company's turnover.
- If the investigation results in prosecution, the security is refundable to the applicant.
- Section 215 prohibits appointment of a firm, body corporate or other association as an inspector.
Section 214 - Security for payment of costs and expenses of investigation
Section 214 deals with security that may be required from an applicant when an investigation is initiated through the routes specified in section 210(1)(b) or section 213. The provision operates before appointment of an inspector and is intended to secure payment of investigation costs and expenses, subject to the statutory and prescribed limits.
Where the Central Government orders an investigation under section 210(1)(b), or the Tribunal orders an investigation under section 213, the Central Government may, before appointing an inspector, require the applicant to furnish security. The security cannot exceed Rs. 25,000 and must be dealt with in accordance with the prescribed rules. If the investigation results in prosecution, the security is refunded to the applicant.
When can security be required?
The power is linked to the investigation mechanisms referred to in section 214. Section 210 concerns investigation into the affairs of a company, while section 213 empowers the Tribunal to order investigation in specified circumstances. Section 214 allows the Central Government to require security before the inspector is appointed in the cases covered by the provision.
Security amount under Rule 5
Rule 5 of the Companies (Inspection, Investigation and Inquiry) Rules, 2014 prescribes the following security amounts by reference to turnover shown in the previous year's balance sheet:
| Turnover as per previous year's balance sheet | Security amount |
|---|---|
| Up to Rs. 50 crore | Rs. 10,000 |
| More than Rs. 50 crore and up to Rs. 200 crore | Rs. 15,000 |
| More than Rs. 200 crore | Rs. 25,000 |
The Rules also provide that the security is to be refunded to the applicant where the investigation results in prosecution.
Section 215 - Firm, body corporate or association not to be appointed as inspector
Section 215 is a short but important eligibility restriction. It provides that no firm, body corporate or other association shall be appointed as an inspector. Accordingly, the statutory appointment must not be made in the name of such an entity.
Related provisions in Chapter XIV
Sections 214 and 215 should be read in the wider framework of Chapter XIV. Section 210 deals with investigation into the affairs of a company; section 213 covers investigation into a company's affairs in other cases; sections 216 and 217 address investigation of ownership and the procedure and powers of inspectors. Later provisions deal with matters including related-company investigations, seizure, inspectors' reports, consequential action and investigation expenses.
Official legal sources
For the authoritative statutory text and rules, refer to the official resources of the Ministry of Corporate Affairs and India Code:
Companies Act, 2013 - Ministry of Corporate Affairs
Companies (Inspection, Investigation and Inquiry) Rules, 2014 - Ministry of Corporate Affairs
India Code - Central Acts and legislation
Updated: 17 September 2026. Readers should verify subsequent amendments, notifications and rules from official sources before relying on the provision for a current proceeding.