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B Com Exam  >  B Com Test  >  Company Law  >  Test: Powers of the Inspector & Report - B Com MCQ

Powers of the Inspector & Report - Free MCQ Practice Test with solutions,


MCQ Practice Test & Solutions: Test: Powers of the Inspector & Report (10 Questions)

You can prepare effectively for B Com Company Law with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Powers of the Inspector & Report". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Powers of the Inspector & Report - Question 1
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Under which section of the Companies Act does an Inspector have the power to investigate the affairs of related companies and other entities?

Detailed Solution: Question 1

Section 219 of the Companies Act grants the power to an Inspector appointed under various sections to investigate not only the affairs of a company, but also the affairs of related entities such as subsidiary companies, holding companies, and other corporate bodies managed by relevant personnel. This section expands the scope of investigation beyond the company itself.

Test: Powers of the Inspector & Report - Question 2
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In case of contravention of an order of the Tribunal related to securities restrictions, what is the potential punishment for a company?

Detailed Solution: Question 2

Section 222 provides that if securities are issued or transferred against the order of the Tribunal, the company can face a fine ranging from one lakh rupees to twenty-five lakh rupees for non-compliance.

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Test: Powers of the Inspector & Report - Question 3
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What does Section 223 of the Companies Act govern?

Detailed Solution: Question 3

Section 223 deals with the Inspector's report, its submission, and authentication. The section outlines the process of submitting interim and final reports, obtaining copies of the report, and the authentication methods that make the report admissible as evidence.

Test: Powers of the Inspector & Report - Question 4
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What action can the Tribunal take if it believes that the removal of a company's funds and assets is prejudicial to the interests of shareholders, creditors, or public interest?

Detailed Solution: Question 4

Section 221 empowers the Tribunal, upon reference, inquiry, or complaint, to freeze the transfer, removal, or disposal of a company's funds, assets, or properties if it deems such actions prejudicial. This can be done for a period not exceeding three years and may be subject to specified conditions.

Test: Powers of the Inspector & Report - Question 5
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In what situation can an Inspector seize books and papers during an investigation?

Detailed Solution: Question 5

As per Section 220, an Inspector can seize books and papers if there are reasonable grounds to believe that they might be destroyed, altered, falsified, or secreted during the investigation. This is to ensure the preservation of evidence.

Test: Powers of the Inspector & Report - Question 6
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What is the purpose of submitting interim reports under Section 223 of the Companies Act?

Detailed Solution: Question 6

Section 223 allows an Inspector to submit interim reports to the Central Government during an investigation. These interim reports provide updates on the progress of the investigation, allowing the government to stay informed about the ongoing process.

Test: Powers of the Inspector & Report - Question 7
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Under what circumstances can the Central Government prosecute an individual based on an Inspector's report?

Detailed Solution: Question 7

As per Section 224, the Central Government can initiate prosecution against an individual if the Inspector's report indicates that the person is guilty of an offense for which they are criminally liable.

Test: Powers of the Inspector & Report - Question 8
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What action can the Central Government take if it believes that proceedings should be brought in the public interest to recover damages or property?

Detailed Solution: Question 8

According to Section 224, if the Central Government believes that proceedings should be brought in the public interest to recover damages or property, it can initiate winding-up proceedings on behalf of the company. This allows the government to take action in cases of fraud or misfeasance.

Test: Powers of the Inspector & Report - Question 9
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What is the purpose of imposing restrictions on securities under Section 222 of the Companies Act?

Detailed Solution: Question 9

Section 222 allows the Tribunal to impose restrictions on securities when it's necessary to find out relevant facts about securities issued by a company. These restrictions are meant to facilitate investigations into the company's affairs.

Test: Powers of the Inspector & Report - Question 10
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How can an Inspector's report be authenticated according to the Companies Act?

Detailed Solution: Question 10

Section 223 outlines methods for authenticating an Inspector's report. It can be authenticated by the seal of the company under investigation or by a certificate from a public officer holding custody, as per the Indian Evidence Act, 1872.

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About this B Com Practice Test

This test contains 10 MCQs on Powers of the Inspector & Report with detailed solutions for each question. It is part of the Company Law course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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