M/S.Chatura Chit Fund And Finance Private Limited(In Liqn) vs. Nil

Facts

The Official Liquidator, attached to the High Court for the State of Telangana, filed a Company Application seeking permission to take on record the half-yearly accounts of M/s Chatura Chit Fund and Finance Private Limited (in liquidation) for the period from April 1, 2023, to September 30, 2023. The application also requested permission to pay an audit fee of Rs. 500/- plus GST to the auditors, Murthy and Kanth, Chartered Accountants, and to meet the costs of the application from the company's available funds or the Estate and Establishment Fund, subject to reimbursement upon realization of assets. The Official Liquidator submitted the supporting affidavit and the auditor's report. The matter was heard by the High Court.

Held

The Court held that the half-yearly accounts of the subject company, M/s Chatura Chit Fund and Finance Private Limited (in liquidation), for the period from 01.04.2023 to 30.09.2023, along with the Auditor's Report dated 27.05.2025 submitted on 03.06.2025 by Murthy & Kanth, Chartered Accountants, should be taken on record. The Court also granted permission to the Official Liquidator to pay an 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 account if company funds were unavailable, with the condition that such payments would be subject to reimbursement from the company's funds upon realization of its assets. The Court was satisfied with the reasons stated in the supporting affidavit and considered the filed half-yearly accounts. The ratio decidendi is that the Court has the power and duty to oversee and approve the actions of the Official Liquidator in managing the affairs of a company in liquidation, including the acceptance of accounts, payment of professional fees, and management of liquidation expenses, provided these actions are justified and in accordance with the law.

Key Issues

1. Whether the Court should take on record the half-yearly accounts of the company in liquidation for the period from 01.04.2023 to 30.09.2023, along with the Independent Auditors' Report. This issue turns on the procedural requirements for winding up proceedings under the Companies Act, 1956, and the Companies (Court) Rules, 1959. 2. Whether permission should be granted to the Official Liquidator to make payment of the audit fee of Rs. 500/- plus GST to the auditors. This issue concerns the authority of the Official Liquidator to incur such expenses and the court's oversight on these expenditures. 3. Whether the costs of the application may be permitted to be met out by the Official Liquidator from the available funds of the company (in liquidation) or the Estate and Establishment Fund account, subject to reimbursement. This issue relates to the management of liquidation funds and the recovery of expenses. Petitioner's arguments: The Official Liquidator, through their counsel, presented the application and supporting documents, implicitly arguing for the approval of the accounts, the payment of audit fees, and the reimbursement of costs, based on the necessity of these actions for the proper conduct of the liquidation proceedings. Revenue/State's arguments: No arguments were recorded for the revenue or state in the judgment.