Where an investigation is ordered by the Central Government in pursuance of clause (b ) of sub-section (1 ) of section 210, or in pursuance of an order made by the Tribunal under section 213, the Central Government may before appointing an inspector under subsection (3 ) of section 210 or clause (b ) of section 213, 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 and such security shall be refunded to the applicant if the investigation results in prosecution.
Legal Commentary & Landmark Judgments: Section 214
Section 214 of the Companies Act, 2013 empowers the Central Government to require applicants seeking an investigation under Section 213 to furnish security for payment of investigation costs, imposing financial safeguards to deter frivolous, vexatious, or predatory shareholder petitions.
When representing minority shareholders applying for an investigation under Section 213, tender the prescribed security deposit upfront alongside the formal application in Form GNL-1 to prove bona fides and eliminate procedural delays. Conversely, when defending a company against hostile shareholder petitions, plead non-compliance with Section 214 security mandates and highlight the applicant's lack of financial stake to persuade the Central Government to reject the requisition as vexatious.