M/S. Global Drugs Private 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. Global Drugs Private Limited (in liquidation) for the period from 01.10.2022 to 31.03.2023, along with the Independent Auditors' Report dated 13.12.2024. The Official Liquidator also prayed for permission to make a payment of Rs. 500/- plus GST as audit fee to the auditor, M/s. Padmanabha Rao & Co., Chartered Accountants, and for the cost of the application to be met from the company's available funds or the Estate and Establishment Fund. The application was supported by an affidavit filed by Sri Uttam Kumar Sahoo, Official Liquidator.

Held

The Court held that the half-yearly accounts of the subject company (in liquidation) for the period from 01.10.2022 to 31.03.2023, along with the Independent Auditors' Report dated 13.12.2024, should be taken on record. The Court perused the auditors' report with the assistance of the counsel for the Official Liquidator and, being satisfied, ordered that it be taken on record. Furthermore, the Court accorded permission to the Official Liquidator to make the payment of the audit fee of Rs. 500/- plus GST to the auditor. The cost of the application was also permitted to be met from the available funds of the company (in liquidation). The Court also noted that as a sequel thereto, miscellaneous petitions, if any, pending in the Company Application shall stand closed. There was no order as to costs.

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, along with the Independent Auditors' Report. This issue turns on the procedural requirements for liquidators to present accounts and reports to the Court. The petitioner, the Official Liquidator, argued that these steps are necessary for the proper administration of the liquidation process. The revenue or State did not present any arguments as this is a company application concerning the internal administration of a company in liquidation, not a dispute with tax authorities. 2. Whether permission should be granted to the Official Liquidator to pay an audit fee of Rs. 500/- plus GST to the auditors. This issue concerns the authority of the Official Liquidator to incur expenses for auditing the company's accounts and the reasonableness of the fee. The petitioner argued for the necessity of this payment to facilitate the audit and the liquidation process. No arguments were recorded for the revenue or State.