In The Matter Of M/S. Obra Chemicals Limited(In Liqn) vs. No Respondent

Facts

The Official Liquidator, attached to the High Court of Telangana, filed Company Application No. 117 of 2025 in Company Petition No. 158 of 1997. The application sought permission to take on record the half-yearly accounts of M/s. Obra Chemicals Limited (in liquidation) for the period from April 1, 2023, to September 30, 2023, along with the Independent Auditor's Report dated May 27, 2025. The Official Liquidator also prayed for permission to pay an audit fee of Rs. 500/- plus GST to the auditor and to meet the costs of the application from the company's funds or the Estate and Establishment Fund, subject to reimbursement upon realization of assets. The application was supported by an affidavit and heard by the High Court.

Held

The Court held that the application should be ordered. Firstly, the half-yearly accounts of M/s. Obra Chemicals Limited (in liquidation) for the period from April 1, 2023, to September 30, 2023, along with the Independent Auditor's Report dated May 27, 2025, submitted by M/s. Padmanabha Rao & Co., Chartered Accountants, were taken on record. Secondly, permission was accorded to the Official Liquidator to pay an audit fee of Rs. 500/- plus GST to the auditor. Thirdly, permission was also granted 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 funds were available in the company's account, subject to reimbursement from the funds of the Company (in liquidation) upon realization of its assets. The Court was satisfied with the reasons mentioned in the supporting affidavit.

Key Issues

1. Whether the half-yearly accounts of the company in liquidation, along with the Independent Auditor's Report, should be taken on record by the Court? The petitioner (Official Liquidator) argued that these documents are essential for the proper administration of the liquidation proceedings and require the Court's approval. The revenue or State did not present any arguments as this was an application by the Official Liquidator for administrative purposes. 2. Whether permission should be granted to pay the audit fee of Rs. 500/- plus GST to the auditor? The petitioner contended that the auditor's services are necessary for the preparation of the accounts and that the fee, along with applicable GST, is a legitimate expense of the liquidation. No arguments were recorded for the revenue or State. 3. Whether the costs of the application and the audit fee payment should be permitted to be met from the company's funds or the Estate and Establishment Fund, subject to reimbursement? The petitioner argued for the necessity of utilizing available funds to ensure the smooth functioning of the liquidation process, with a provision for reimbursement upon asset realization.