M/S. Tm Tyres Limited(In Liqn) vs. No Respondent

Facts

This matter concerns Company Application No. 137 of 2025, filed by the Official Liquidator attached to the High Court of Telangana and Andhra Pradesh, in relation to Company Petition No. 157 of 2015 concerning M/s. TM TYRES LIMITED (in liquidation). The Official Liquidator sought permission to take on record the half-yearly accounts for the period from 01.10.2022 to 31.03.2023, along with the Auditor's Report dated 10.04.2025. Additionally, the Official Liquidator requested permission to pay an audit fee of Rs. 500/- plus GST to the auditors, M/s. Murthy and Kanth, Chartered Accountants. The application also sought permission to meet the costs of the application from the available funds of the company or the Estate and Establishment Fund, subject to reimbursement upon realization of assets. The application was supported by an affidavit dated 16.07.2025.

Held

The Court held in favor of the Official Liquidator on all counts. Firstly, the Court was satisfied with the reasons provided in the supporting affidavit and, upon considering the half-yearly accounts and the Auditor's Report, ordered that these documents be taken on record. This decision implies that the Court found the accounts and report to be in order and suitable for official recording. Secondly, the Court accorded permission to the Official Liquidator to pay the audit fee of Rs. 500/- plus GST to the auditors, M/s. Murthy and Kanth, Chartered Accountants. This signifies the Court's approval of the fee amount and the necessity of the audit service. Thirdly, the Court granted permission for the Official Liquidator to make the 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 of reimbursement upon realization of the company's assets. The ratio decidendi is that the Court will grant necessary permissions to the Official Liquidator for the proper and efficient conduct of liquidation proceedings, including the acceptance of accounts, payment of audit fees, and utilization of funds, provided the actions are justified and in the best interest of the liquidation process.

Key Issues

1. Whether the Court should take on record the half-yearly accounts of the company in liquidation for the period 01.10.2022 to 31.03.2023 and the accompanying Auditor's Report dated 10.04.2025, as submitted by the Official Liquidator. The Official Liquidator argued that these documents were prepared and submitted in accordance with the Companies Act, 1956, and the Companies (Court) Rules, 1959, and were 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 was reasonable and necessary for the audit of the company's accounts. 3. Whether the Official Liquidator should be permitted to utilize the company's available funds or the Estate and Establishment Fund for the payment of audit fees and application costs, subject to reimbursement. The Official Liquidator argued that such a provision was essential to ensure the smooth functioning of the liquidation process, especially if the company's immediate funds were insufficient. The revenue or State did not appear to have made any arguments as no opposing party was recorded.