M/S. Shakti Sai Agros And Forests (I) Limited(In Liqn) vs. No Respondent

Facts

The Official Liquidator, attached to the High Court for the State of Telangana and Andhra Pradesh, filed a Company Application under Section 462 of the Companies Act, 1956, read with Rules 298 and 306 of the Companies (Court) Rules, 1959. The application sought to take on record the half-yearly accounts of M/s Shakti Sai Agros and Forests (I) Limited (in liquidation) for the period from 01.04.2023 to 30.09.2023, along with the Independent Auditors' Report dated 31.05.2025. The Official Liquidator also prayed for permission to pay an audit fee of Rs. 500/- plus GST to the auditors, M/s. KBS and Associates, Chartered Accountants, and to meet the application costs from the company's funds or the Estate and Establishment Fund, subject to reimbursement.

Held

The Court, having been satisfied with the reasons mentioned in the supporting affidavit and having considered the half-yearly accounts filed by the Official Liquidator, ordered as follows: (a) The half-yearly accounts of the subject company, which is in liquidation for the period from 01.04.2023 to 30.09.2023, along with the Auditor's Report dated 31.05.2025 submitted by M/s. KBS & Associates, Chartered Accountants, are taken on record. (b) Permission is accorded to the Official Liquidator to pay an audit fee of Rs. 500/- plus GST to the Auditor. (c) Permission is also accorded to the Official Liquidator to make the said payment from the available funds of the Company (in liquidation), or from the Estate and Establishment Fund account if no fund is available in the Company's account, subject to reimbursement from the funds of the Company (in liquidation) upon realization of its assets. The ratio decidendi is that the Court has the power to sanction necessary expenses for the proper conduct of liquidation proceedings, including audit fees and application costs, provided they are reasonable and supported by proper documentation.

Key Issues

1. Whether the Court should take on record the half-yearly accounts of the company in liquidation for the period 01.04.2023 to 30.09.2023, along with the Independent Auditors' Report dated 31.05.2025, as submitted by the Official Liquidator. The Official Liquidator argued that these documents are necessary for the proper administration of the liquidation proceedings. 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 fee is a legitimate expense for the services rendered in auditing the company's accounts. 3. Whether the Official Liquidator should be permitted to meet the costs of the application from the available funds of the company in liquidation or the Estate and Establishment Fund, subject to reimbursement. The Official Liquidator argued that this is a standard procedure to ensure the smooth functioning of the liquidation process. The revenue or State did not record any arguments.