(a) He has failed to obtain the desired information and explanation from the company; or the documents furnished by the company convey an unsatisfactory state of its affairs.
(b) He has obtained representation from a creditor, contributory or any other person against the fraudulent or unlawful conduct of the affairs of the company.
II. Investigation on the behest of the Company Law Board:
(1) As per section 235 (2), Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon where the Company Law Board declares that the affairs of the company ought to be investigated by the Central Government. The Company Law Board shall proceed for such declaration, after hearing the parties concerned, when an application has been received: (i) In the case of a company having share capital, from at least 200 members or from members holding at least 1/10th of the total voting power” (ii) In die case of a company having no share capital, from at least l/5th of die total number of members. The members of the company applying to the Company Law Board must support their application with evidence to show that they have good reasons for requiring the investigation. The Central Government may, before appointing an inspector, require the applicants to give security, for an amount not exceeding Rs. 1000 for payment of the cost of the investigation.
(2) As per section 237 (b), the Central Government may appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon if, in the opinion of the Company Law Board, there are circumstances suggesting: (i) That the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose; (ii) That persons connected in the formation of the company or the management of its affairs have been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or (iii) That the members of the company have not been given all the information with respect to its affairs which they are entitled to receive.
III. Investigation on the request of the Company:
As per section 237 (a), Central Government small appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon, if a company has passed a special resolution to get its affair investigated.
IV. Investigation on the order of the Court:
As per section 237 (a), if the court by an order declares that the affairs of a company ought to be investigated by an inspector appointed by the Central Government, the latter shall appoint one or more competent persons as inspectors to investigate into the affairs of the company.