1. Where it appears to the Tribunal, in connection with any investigation under section 216 or on a complaint made by any person in this behalf, that there is good reason to find out the relevant facts about any securities issued or to be issued by a company and the Tribunal is of the opinion that such facts cannot be found out unless certain restrictions, as it may deem fit, are imposed, the Tribunal may, by order, direct that the securities shall be subject to such restrictions as it may deem fit for such period not exceeding three years as may be specified in the order.
2. Where securities in any company are issued or transferred or acted upon in contravention of an order of the Tribunal under sub-section (1 ), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both.
Legal Commentary & Landmark Judgments: Section 222
Section 222 empowers the National Company Law Tribunal to freeze corporate securities, prohibiting any transfer of shares, voting rights, or dividend payouts during pending investigations.
Violation of the order attracts imprisonment up to six months and fine up to twenty-five lakh rupees.
Section 222 effectively immobilizes disputed share blocks. In hostile corporate takeovers or benami ownership controversies, obtaining an order under Section 222 neutralizes the shares: the suspect holder cannot vote the shares at general meetings, cannot collect dividends, and cannot sell the shares to third-party bona fide purchasers.