M/S.Gsn Ferro Alloys Private Limited (In Liqn.) vs. No Respondent

Facts

The Official Liquidator, attached to the High Court of Telangana and Andhra Pradesh, filed a Company Application No. 38 of 2026. The application sought permission to take on record the half-yearly accounts of M/s. GSN Ferro Alloys Private Limited (in liquidation) for the period from 01.04.2024 to 30.09.2024, along with the Independent Auditors' Report dated 12.01.2026. Crucially, the application also requested permission to pay an audit fee of Rs. 500/- plus GST to the auditors, M/s. KBS and Associates, Chartered Accountants. The Official Liquidator also sought permission to meet the costs of the application from the company's funds or the Estate and Establishment Fund, subject to reimbursement. The application was filed under Section 462 of the Companies Act, 1956, and Rule 306 of the Companies (Court) Rules, 1959.

Held

The Court held that the half-yearly accounts of M/s. GSN Ferro Alloys Private Limited (in liquidation) for the period from 01.04.2024 to 30.09.2024, along with the Independent Auditors' Report dated 12.01.2026, should be taken on record. The Court also granted permission to the Official Liquidator to pay the audit fee of Rs. 500/- plus GST to the auditors. Furthermore, permission was accorded to the Official Liquidator to make this payment from the available funds of the company in liquidation, or from the Estate and Establishment Fund if company funds were unavailable, subject to reimbursement from the company's assets upon their realization. The Court found the reasons stated in the accompanying affidavit to be valid and considered the accounts filed by the Official Liquidator. The ratio decidendi is that the High Court, in its supervisory role over companies in liquidation, will permit necessary administrative and professional expenses, including audit fees and applicable GST, to facilitate the liquidation process, provided such expenses are reasonable and properly documented.

Key Issues

1. Whether the Court should take on record the half-yearly accounts of the company in liquidation and the accompanying Independent Auditors' Report for the period 01.04.2024 to 30.09.2024. The Official Liquidator argued for this to be taken on record as part of the standard procedure for managing the company's affairs during liquidation. 2. Whether permission should be granted to the Official Liquidator to pay an audit fee of Rs. 500/- plus GST to the auditors. The Official Liquidator contended that this payment was necessary for the services rendered by the auditors in preparing the report and that GST was applicable as per law. 3. Whether the costs of the application could be met from the company's available funds or the Estate and Establishment Fund. The Official Liquidator sought this permission to ensure the smooth functioning of the liquidation process, with a provision for reimbursement upon realization of assets. The Revenue or State did not appear to have made any arguments as the matter was an application by the Official Liquidator before the High Court.