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

Facts

The Official Liquidator, attached to the High Court for the State of Telangana, filed a Company Application seeking directions for the audit of half-yearly accounts of 101 companies in liquidation for the period from October 1, 2024, to March 31, 2025. The application proposed allocating these companies among three Chartered Accountants' firms. It also sought to dispense with the audit for 18 companies with no transactions and 14 companies with only minimal expenses. The Official Liquidator further requested permission to pay an audit fee of Rs. 500 plus GST per company, as per a previous court order dated April 8, 2022, and to utilize the companies' funds or the Official Liquidator's Estate and Establishment Fund for these payments. The application also requested that the costs of the application be borne by the respective companies in liquidation.

Held

The Court held that the audit work for the period October 1, 2024, to March 31, 2025, is required for all 101 companies. It reasoned that the auditors' work might be less for companies with no transactions, but the total number of companies must be distributed. Consequently, the Court permitted the Official Liquidator to seek assistance from the three specified auditors' firms, allotting them companies in the ratio of 34:34:33. The Court also allowed the Official Liquidator to pay each auditor a fee of Rs. 500 plus GST per company and to submit the audited accounts for approval. The Court did not explicitly address dispensing with the audit for companies with no transactions or minimal expenses, but by ordering the distribution of all 101 companies for audit, it implicitly directed that audit work would proceed for all, albeit potentially with less effort for some. The ratio decidendi is that in matters of liquidation audits, a structured allocation of companies among auditors is permissible, and the fee structure previously approved in similar circumstances can be applied.

Key Issues

1. Whether the allocation of 101 companies in liquidation among three Chartered Accountants' firms, in the ratio of 34:34:33, for the audit of half-yearly accounts for the period October 1, 2024, to March 31, 2025, is to be approved. 2. Whether the appointment and audit of half-yearly accounts for 18 companies with no receipts or payments, and 14 companies with only court fee stamps and notary charges as expenses, for the period October 1, 2024, to March 31, 2025, can be dispensed with. 3. Whether the Official Liquidator is permitted to pay an audit fee of Rs. 500 plus GST per company to the appointed Chartered Accountants, and to make such payments from the respective companies' funds or the Official Liquidator's Estate and Establishment Fund, subject to reimbursement. The Official Liquidator argued that a previous order dated April 8, 2022, in a similar application, squarely covered the subject matter and that a similar order should be passed. The revenue or State did not present any arguments.