Sections 214 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 214 lets the Central Government ask the applicant for security, up to a prescribed limit of twenty-five thousand rupees, before it appoints an inspector in certain investigations. Section 215 says an inspector must be an individual: no firm, body corporate or other association can be appointed.
Where an investigation is ordered on a company's special resolution (section 210(1)(b)) or on a Tribunal order under section 213, the Government may, before appointing an inspector, require the applicant to give security not exceeding Rs 25,000 for costs and expenses. The security is refunded if the investigation results in prosecution. Separately, no firm, body corporate or other association can be appointed as an inspector.
Where sections 214 and 215 sit
Both sections are in the chapter on inspection, inquiry and investigation. They do not start an investigation. Others do. Section 210 lets the Central Government order an investigation on a Registrar's or inspector's report under section 208, on intimation of a special resolution of the company that its affairs ought to be investigated, or in public interest. Section 213 lets the Tribunal order an investigation on an application by a minimum body of members or on an application by any other person on the grounds listed in that section. Sections 214 and 215 then deal with two practical points about those investigations: who pays upfront, and who may investigate.
Section 214: security for costs
The section applies in two situations:
| Trigger | What it refers to |
|---|---|
| Investigation ordered by the Central Government under section 210(1)(b) | The route where the company has passed a special resolution that its affairs ought to be investigated |
| Investigation ordered on an order of the Tribunal under section 213 | The route where members, or any other person, apply to the Tribunal |
In either case, before appointing an inspector (under section 210(3) or section 213(b)), the Central Government "may" require the applicant to give "such security not exceeding twenty-five thousand rupees as may be prescribed, as it may think fit", for payment of the costs and expenses of the investigation.
Three points follow from the text.
- It is discretionary. The Government "may" require the security. The word "shall" does not appear.
- It is capped. The security cannot exceed Rs 25,000, and the amount is one the rules prescribe and the Government thinks fit within that cap.
- It comes back if prosecution follows. The security "shall be refunded to the applicant if the investigation results in prosecution". The section says nothing about a refund in other outcomes, and we should not assume one.
The security is a modest amount compared with the expense of a real investigation. Its purpose is to discourage frivolous applications. For the wider picture of how these investigations unfold and who meets the final cost, see section 225 and related provisions in this series.
If you are a member considering a section 213 application, or a company considering a special resolution under section 210(1)(b), our legal consultation service can help you weigh the grounds and the process.
Who counts as "the applicant"
Section 214 refers to "the applicant". In a section 213 case, the applicant is the member group or other person who applied to the Tribunal. For the special resolution route in section 210(1)(b), the section uses the same word, and the text does not define the applicant further. Practically, the person or body who put the matter before the Government or the Tribunal is the one exposed to the demand for security. If the status of the applicant is unclear in your case, take advice before you file.
Section 215: no firm, body corporate or association as inspector
Section 215 is one sentence: "No firm, body corporate or other association shall be appointed as an inspector."
The consequence is that inspectors are natural persons. A Government order appointing an inspector must name an individual, not a chartered accountancy firm, a company or a limited liability partnership. Section 210(3) speaks of the Central Government appointing "one or more persons as inspectors", and section 213(b) says "one or more competent persons". Read with section 215, those "persons" are individuals.
| Question | Answer under section 215 |
|---|---|
| Can an individual be appointed? | Yes |
| Can a firm of professionals be appointed? | No |
| Can a company or other body corporate be appointed? | No |
| Can an association be appointed? | No |
This matters for companies under investigation. If a notice or order names a firm as inspector, the defect is apparent on the face of the statute. A company should check the appointment order before responding, and take advice on the next step instead of ignoring it.
Practical examples
Example 1: members' application. A group of members holding one-tenth of the voting power applies to the Tribunal under section 213 and the Tribunal orders an investigation. Before appointing the inspector, the Government asks the applicants for security of Rs 20,000. If the investigation ends in prosecution, the security is refunded.
Example 2: investigation ends with no prosecution. The investigation concludes without prosecution. Section 214 does not say the security is refunded in that case, so the applicants should not assume it will be.
Example 3: firm named in order. An order purports to appoint an accounting firm as the inspector. Section 215 bars this, so the company should raise it with its advisers.
Why these two small sections matter
They look administrative, yet they shape behaviour. Section 214 makes a section 213 applicant put something on the line, while the cap in the section keeps the amount modest. Section 215 keeps personal accountability with a named individual, who then exercises the powers in section 217 and owes the company and the Government a report.
Need help with an investigation order or application?
Whether you are the applicant or the company under investigation, the early steps matter. Our team can look at the order, the grounds and the paperwork with you. Start with a legal consultation.
Key takeaways
- Section 214 applies to investigations under section 210(1)(b) and on a Tribunal order under section 213.
- The Government may require security of not more than Rs 25,000 before appointing an inspector.
- The security is refunded if the investigation results in prosecution.
- Section 215: no firm, body corporate or other association can be appointed as an inspector.
- Inspectors are individuals.
Read next
- Sections 206–212: Inspection, Investigation and SFIO
- Section 216 of the Companies Act, 2013: Investigation of ownership
- Section 217 of the Companies Act, 2013: Powers of inspectors
- SFIO Investigation: When and How Central Government Orders It
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.