The airline, part of Vijay Mallya-led UB Group, has been grounded since October 2012, after being bogged down by huge and mounting losses.
The Ministry is closely looking at possible violations of companies law by Kingfisher Airlines, especially with regard to accounting practices, sources said.
Taking note of the observations made by the carrier's statutory auditors, the Ministry has also sought an update from the Registrar of Companies (RoC) about the financial aspects of the company for the 2013-14 financial year.
The carrier, which is registered with RoC Bangalore, is yet to submit its annual financial results for the 2013-14 period to the stock exchanges.
In a filing to the BSE on August 26, the carrier had said that steps were being taken to appoint directors in order to comply with provisions of the Companies Act, 2013 and listing agreement with the stock exchanges.
"Thereafter, steps will be taken towards publishing the audited results for the year ended March 31, 2014 and for the quarter ended June 30, 2014," it had said.
Back in May, Kingfisher had informed stock exchanges that "there are hardly any employees attending office and the company is currently operating with skeletal staff making it difficult to audit and publish the results in time."
For the year ended March 2013, the carrier saw its net loss widen to Rs 4,301.12 crore. During that period, the gross income stood at Rs 683.46 crore.
In September, state-owned United Bank of India had declared Kingfisher Airlines, its promoter Vijay Mallya and other directors as wilful defaulters but the decision is currently stayed by the Calcutta High Court.
UBI's exposure to Kingfisher Airlines was around Rs 350 crore as part of consortium led by State Bank of India.
The consortium of 17 banks, has an outstanding debt of about Rs 6,521 crore from the now-grounded carrier and outside the consortium, the bank gave about Rs 60 crore loan for pre-delivery payment.
As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of its group companies United Spirits Ltd and Mangalore Chemicals & Fertilizers Ltd, Mallya's Goa villa, Kingfisher House in Mumbai and the Kingfisher brand, which was valued at over Rs 4,000 crore at the time it was pledged.