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

Held

The Court decided to appoint M/s. Padmanabha Rao & Co., Chartered Accountants, to audit the Estate and Establishment Fund Account and the Company Paid Staff Terminal Benefit Fund Account for the period from April 1, 2023, to March 31, 2025. The Court found the requested audit fee of Rs. 40,000/- (Rupees Forty Thousand only) plus applicable GST to be reasonable. Consequently, the Court permitted the Official Liquidator to pay the audit fee, as well as the costs of the application and any other office expenses, from the funds of the Estate and Establishment Fund Account. The application was ordered accordingly, with no costs awarded. The Court did not expressly leave any issues undecided.

Facts

The Official Liquidator, attached to the High Court of Telangana and Andhra Pradesh, filed a Company Application seeking the appointment of an auditor for the Estate and Establishment Fund Account and the Paid Staff Terminal Benefit Fund Account for the financial years 2023-24 and 2024-25. The application also requested the court to fix an audit fee of Rs. 40,000 plus applicable GST and permit the Official Liquidator to pay this fee from the Estate and Establishment Fund Account. The Official Liquidator submitted an affidavit in support of the application, and the court heard arguments from the counsel for the Official Liquidator. The court noted that an auditor had been appointed for a previous period (2021-22) for similar accounts.

Key Issues

1. Whether the Court should appoint an auditor for the Estate and Establishment Fund Account and the Paid Staff Terminal Benefit Fund Account for the financial years 2023-24 and 2024-25, and if so, from which empanelled list or any other suitable Chartered Accountants? 2. What would be a reasonable audit fee, including applicable GST, for the appointed auditor? 3. Whether the Official Liquidator should be permitted to pay the audit fee and other miscellaneous expenses from the Estate and Establishment Fund Account? The petitioner, the Official Liquidator, argued for the necessity of appointing an auditor for the specified financial years to ensure proper accounting of the company's funds in liquidation. The petitioner also sought approval for an audit fee of Rs. 40,000 plus GST, considering it reasonable, and requested permission to disburse these costs from the company's funds. The revenue or State did not present any arguments as this was an application by the Official Liquidator for administrative purposes.