Chapter XIV - Inspection, Inquiry and Investigation
Section 218
Section 218: protection of employees during investigation
Section 218 protects employees while their company is under investigation, or while Chapter XVI proceedings are pending. The company cannot discharge, suspend, punish or worsen the terms of any employee without the Tribunal’s approval.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Notwithstanding anything contained in any other law for the time being in force, if—(a) during the course of any investigation of the affairs and other matters of or relating to a company, other body corporate or person under section 210, section 212, section 213 or section 219 or of the membership and other matters of or relating to a company, or the ownership of shares in or debentures of a company or body corporate, or the affairs and other matters of or relating to a company, other body corporate or person, under section 216; or (b) during the pendency of any proceeding against any person concerned in the conduct and management of the affairs of a company under Chapter XVI, such company, other body corporate or person proposes—(i) to discharge or suspend any employee; or (ii) to punish him, whether by dismissal, removal, reduction in rank or otherwise; or (iii) to change the terms of employment to his disadvantage, the company, other body corporate or person, as the case may be, shall obtain approval of the Tribunal of the action proposed against the employee and if the Tribunal has any objection to the action proposed, it shall send by post notice thereof in writing to the company, other body corporate or person concerned. (2) If the company, other body corporate or person concerned does not receive within thirty days of making of application under sub-section (1), the approval of the Tribunal, then and only then, the company, other body corporate or person concerned may proceed to take against the employee, the action proposed. (3) If the company, other body corporate or person concerned is dissatisfied with the objection raised by the Tribunal, it may, within a period of thirty days of the receipt of the notice of the objection, prefer an appeal to the Appellate Tribunal in such manner and on payment of such fees as may be prescribed. (4) The decision of the Appellate Tribunal on such appeal shall be final and binding on the Tribunal and on the company, other body corporate or person concerned. (5) For the removal of doubts, it is hereby declared that the provisions of this section shall have effect without prejudice to the provisions of any other law for the time being in force.
Introduction
It applies during investigations under sections 210, 212, 213, 216 or 219, and during proceedings under Chapter XVI (oppression and mismanagement) against persons concerned in the company’s management. If the Tribunal does not respond within thirty days, the company may act; if it objects, the company may appeal to the Appellate Tribunal within thirty days.
Section 218 commenced on 1 June 2016 under S.O. 1934(E). The India Code shows no amendment, and its text matches the 2013 Gazette.
Key takeaways
Prior Tribunal approval
Needed to discharge, suspend, punish or change terms to the employee’s disadvantage.
Deemed approval
If approval is not received within thirty days of the application, the company may proceed.
Appeal
An objection can be appealed to the Appellate Tribunal within thirty days; its decision is final.
Overrides other law
It applies notwithstanding any other law, without prejudice to other laws.
When protection applies
Sub-section (1) applies during an investigation of a company, other body corporate or person under section 210, 212, 213 or 219, or of membership and ownership under section 216, and during the pendency of any proceeding under Chapter XVI against a person concerned in the conduct and management of the company.
Actions that need approval
If the company, body corporate or person proposes to discharge or suspend any employee, punish him by dismissal, removal, reduction in rank or otherwise, or change his terms of employment to his disadvantage, it must obtain the Tribunal’s approval. If the Tribunal objects, it sends written notice by post.
Timelines and appeal
Under sub-section (2), if the Tribunal’s approval is not received within thirty days of the application, the company may then, and only then, proceed. Under sub-section (3), a company dissatisfied with an objection may appeal to the Appellate Tribunal within thirty days of receiving the notice, as prescribed. Under sub-section (4) the Appellate Tribunal’s decision is final and binding. Sub-section (5) preserves other laws.
Practical preparation
Before any adverse HR action, check whether an investigation or Chapter XVI proceeding is pending; if so, apply to the Tribunal first; diarise the thirty-day periods; keep records of the application and any objection.
Investigation provisions are applied case by case by the Central Government, the Tribunal, the Special Court or the inspector; this guide explains the statutory text and is not a substitute for advice on a live matter.
Practical checklist
Do
- Screen every termination, suspension or demotion against pending investigations.
Avoid
- Do not act against an employee before the thirty days run out or approval is received.
Illustrative example
Hypothetical: dismissing an employee during an investigation
A company under a section 213 investigation wants to dismiss an accounts manager for misconduct.
Application
It applies to the Tribunal for approval.
Objection
The Tribunal objects, sending written notice by post.
Appeal
The company appeals to the Appellate Tribunal within thirty days of the notice.
Outcome
- The company follows the statutory route instead of acting unilaterally against a potential witness.
Glossary
- Appellate Tribunal
- The National Company Law Appellate Tribunal constituted under section 410.
- Chapter XVI
- The Chapter of the Act on prevention of oppression and mismanagement.
Frequently asked questions
Does section 218 cover transfers or pay cuts?
It covers any change in terms of employment to the employee’s disadvantage, besides discharge, suspension and punishment.
What if the Tribunal does not respond?
If approval is not received within thirty days of the application, the company may proceed with the proposed action.
Need help applying this provision to your situation?
Contact BizeneedLast updated 12 October 2026