Companies Act Section 225 — Expenses of investigation
CHAPTER XIV INSPECTION, INQUIRY AND INVESTIGATION
Commercial / Corporate
Summary
Sub-section (1) sets out who pays for the expenses of an investigation carried out by an inspector appointed by the Central Government under this Chapter. These expenses, apart from those related to inspection under section 214, are initially paid by the Central Government, but must be reimbursed by certain persons to the extent described below.
Under clause (a) of sub-section (1), if a person is convicted in a prosecution or is ordered to pay damages or restore property in proceedings brought under section 224, that person must reimburse the expenses to the extent the court specifies in the same proceedings.
Under clause (b) of sub-section (1), if a company or body corporate brings proceedings as mentioned above, it must reimburse the expenses to the extent of the amount or value of any sums or property it recovers as a result of those proceedings.
Under clause (c) of sub-section (1), if no prosecution is instituted under section 224 as a result of the investigation, then the expenses must be reimbursed by the company, body corporate, managing director, or manager dealt with in the inspector's report, and also by the applicants for the investigation if the inspector was appointed under section 213, to the extent the Central Government directs.
Sub-section (2) states that any amount a company or body corporate is liable to pay under clause (b) of sub-section (1) becomes a first charge on the sums or property recovered in the proceedings mentioned in that clause.
Official Text
(1) The expenses of, and incidental to, an investigation by an inspector appointed by the Central Government under this Chapter other than expenses of inspection under section 214 shall be defrayed in the first instance by the Central Government, but shall be reimbursed by the following persons to the extent mentioned below, namely:—
(a) any person who is convicted on a prosecution instituted, or who is ordered to pay damages or restore any property in proceedings brought, under section 224, to the extent that he may in the same proceedings be ordered to pay the said expenses as may be specified by the court convicting such person, or ordering him to pay such damages or restore such property, as the case may be;
(b) any company or body corporate in whose name proceedings are brought as aforesaid, to the extent of the amount or value of any sums or property recovered by it as a result of such proceedings;
(c) unless, as a result of the investigation, a prosecution is instituted under section 224,—
(i) any company, body corporate, managing director or manager dealt with by the report of the inspector; and
(ii) the applicants for the investigation, where the inspector was appointed under section 213, to such extent as the Central Government may direct.
(2) Any amount for which a company or body corporate is liable under clause (b) of sub-section (1) shall be a first charge on the sums or property mentioned in that clause.