Section 128 — Investigation of certain matters.

128. Investigation of certain matters.–(1) The Appropriate Commission may, on being satisfied that 
a licensee has failed to comply with any of the conditions of licence or a generating company or a 
licensee has failed to comply with any of the provisions of this Act or the rules or regulations made 
thereunder, at any time, by order in writing, direct any person (hereafter in this section referred to as 
“Investigating Authority”) specified in the order to investigate the affairs of any generating company or 
licensee and to report to that Commission on any investigation made by such Investigating Authority: 

Provided that the Investigating Authority may, wherever necessary, employ any auditor or any other 
person for the purpose of assisting him in any investigation under this section. 

(2) Notwithstanding anything to the contrary contained in section 235 of the Companies Act, 1956   
(1 of 1956), the Investigating Authority may, at any time, and shall, on being directed so to do by the 
Appropriate Commission, cause an inspection to be made, by one or more of its officers, of any licensee 
or generating company and his books of account; and the Investigating Authority shall supply to the 
licensee or generating company, as the case may be, a copy of his report on such inspection. 

(3) It shall be the duty of every manager, managing director or other officer of the licensee or 
generating company, as the case may be, to produce before the Investigating Authority directed to make 
the investigation under sub-section (1), or inspection under sub-section (2), all such books of account, 
registers and other documents in his custody or power and to furnish him with any statement and 
information relating to the affairs of the licensee or generating company, as the case may be, as the said 
Investigating Authority may require of him within such time as the said Investigating Authority may 
specify. 

(4) Any Investigating Authority, directed to make an investigation under sub-section (1), or 
inspection under sub-section (2), may examine on oath any manager, managing director or other officer of 
the licensee or generating company, as the case may be, in relation to his business and may administer 
oaths accordingly. 

 (5) The Investigating Authority, shall, if it has been directed by the Appropriate Commission to 
cause an inspection to be made, and may, in any other case, report to the Appropriate Commission on any 
inspection made under this section. 

(6) On receipt of any report under sub-section (1) or sub-section (5), the Appropriate Commission 
may, after giving such opportunity to the licensee or generating company, as the case may be, to make a 
representation in connection with the report as in the opinion of the Appropriate Commission seems 
reasonable, by order in writing– 

(a) require the licensee or the generating company to take such action in respect of any matter 
arising out of the report as the Appropriate Commission may think fit; or  

(b) cancel the licence; or  

(c) direct the generating company to cease to carry on the business of generation of electricity. 
(7) The Appropriate Commission may, after giving reasonable notice to the licensee or the generating 

company, as the case may be, publish the report submitted by the Investigating Authority under           
sub-section (5) or such portion thereof as may appear to it to be necessary.  



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(8) The Appropriate Commission may specify the minimum information to be maintained by the 
licensee or the generating company in their books, the manner in which such information shall be 
maintained, the checks and other verifications to be adopted by licensee or the generating company in that 
connection and all other matters incidental thereto as are, in its opinion, necessary to enable the 
Investigating Authority to discharge satisfactorily its functions under this section. 

Explanation.–For the purposes of this section, the expression “licensee or the generating company” 
shall include in the case of a licensee incorporated in India– 

(a) all its subsidiaries formed for the purpose of carrying on the business of generation or 
transmission or distribution or trading of electricity exclusively outside India; and 

(b) all its branches whether situated in India or outside India. 
(9) All expenses of, and incidental to, any investigation made under this section shall be defrayed by 

the licensee or the generating company, as the case may be, and shall have priority over the debts due 
from the licensee or the generating company and shall be recoverable as an arrear of land revenue.