M/S. A.P. Steels LTD. And Various Companies (In Liqn) vs. No Respondent

Facts

The Official Liquidator, attached to the High Court of Telangana and Andhra Pradesh, filed a Company Application seeking approval for the allocation of 121 companies in liquidation among three Chartered Accountant firms for the audit of their half-yearly accounts for the period April 1, 2025, to September 30, 2025. The application also sought permission to file audit reports, to take on record statements of accounts for companies with no transactions or only minimal expenses, and to permit payment of audit fees at Rs. 500 plus GST per company. The Official Liquidator referenced a previous order dated April 8, 2022, in a similar matter. The revenue or State was not a party to this application.

Held

The Court held that the audit work for the period April 1, 2025, to September 30, 2025, was required for all 121 companies in liquidation, irrespective of whether they had transactions. The Court reasoned that while the quantum of work might differ, the audit process itself was necessary. Consequently, the Court approved the allocation of the 121 companies among the three Chartered Accountant firms, with approximately 40 companies to be allocated to each auditor. The Court permitted the Official Liquidator to pay an audit fee of Rs. 500 plus GST per company to the Chartered Accountants, in accordance with the previous order dated April 8, 2022. The Court also allowed the Official Liquidator to seek assistance from the specified auditors and submit the audited accounts for approval. The application was ordered accordingly, and any pending miscellaneous petitions were closed.

Key Issues

1. Whether the Court should approve the allocation of 121 companies in liquidation among three Chartered Accountants for the audit of their half-yearly accounts for the period April 1, 2025, to September 30, 2025, and the modalities for payment of audit fees, as per Section 457 and 458 of the Companies Act, 1956, read with Rules 298, 300, 302, 304, 306, and 309, and Rule 9 of the Companies (Court) Rules, 1959. Petitioner's Arguments: The Official Liquidator argued that the audit work for the specified period was necessary and that a previous order dated April 8, 2022, in a similar case (C.A.No.8 of 2022 in RCC.No.2 of 1995) squarely covered the subject matter, suggesting a similar order should be passed. The Official Liquidator sought approval for the allocation of companies, payment of audit fees, and dispensation of audit for companies with no transactions or only minor expenses. Revenue/State's Arguments: No arguments were recorded from the revenue or State as they were not parties to this application.