Section 237(b) provides that the Central Government may appoint Inspectors if, in the . opinion of the CLB, there are circumstances suggesting:
(i) that the business of the COIT\pany 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; or
(ij) that the persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or any or its members; or
(iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a Managing or other Director or the Manager of the company.
Thus, under Section 237, although the power to appoint Inspectors to conduct investigation and to act on the reports of the investigation rests with the Central Government, it can do so only if CLB expresses its opinion as regards existence of circumstances calling for investigation.
It is important to note that the above three grounds limit the justification of the Central Government, and it has no general direction to go on a fishing expedition to find evidence [Barium Chemicals Ltd. Vs. The Company lAw Board (1966)].
