The Registrar of Companies, Mumbai sent an order to M/s. LRM Container Services Ltd. that it would conduct investigation relating to the financial matters of the Company for the Financial Year commencing from 2016 to 201

Answer 1(c) Section 218 of the Companies Act, 2013 provides protection to employees during investigation. During the course of any investigation and during pendency of any proceeding against any person concerned in the conduct and management of the affairs of a company, such company, other body corporate or person shall not discharge or suspend or punish any employee without approval of the National Company Law Tribunal (NCLT). This protection is available to employees during the investigation of the affairs or other matters of or relating to a company, other body corporate or person or of the membership, ownership of shares or debentures. Following action are not permitted without approval of the NCLT: To discharge or suspend any employee; To punish any employee, whether by dismissal, removal, reduction in rank or otherwise; or To change the terms of employment to his disadvantage. If the applicant does not receive within thirty days of making of application, the approval of the NCLT, only then applicant concerned may proceed to take against the employee the action proposed. If the applicant is dissatisfied with the objection raised by the NCLT, it may within a period of thirty days of the receipt of the notice of the objection, prefer an appeal to the Appellate Tribunal. The decision of the Appellate Tribunal on such appeal shall be final and binding on the Parties concerned. Hence, in the given case, management should not out rightly terminated the concerned head of the Finance Department and its employees. The company should have sought the prior approval of NCLT. The company may establish an internal enquiry committee, peruse such report, and the recommendation of the committee should be perused before NCLT for punishment or termination as per the involvement of the staff in the matter. Hence, the action of management of LRM Container Services Ltd, is in violation of section 218 of the Companies Act, 2013.