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

Facts

This matter concerns a Company Application filed by the Official Liquidator, representing M/s. A.P. Steels Ltd. & Various Companies (in liquidation). The application sought various directions from the High Court, including approval for the allocation of 110 companies in liquidation to three Chartered Accountant firms for auditing their half-yearly accounts for the period April 1, 2024, to September 30, 2024. The Official Liquidator also sought permission to file audit reports within 60 days of receipt, to file affidavits of no receipts or payments for 24 companies, and to pay auditor fees of Rs. 500/- plus GST per company. The application also requested permission for payments to be made from respective company funds or, if insufficient, from the Official Liquidator's Estate and Establishment Fund, subject to reimbursement. The Court was asked to order that the costs of the application come out of the funds of the respective companies.

Held

The Court held that the audit work for the period April 1, 2024, to September 30, 2024, was similar for each company, regardless of whether transactions occurred. The Court found that the total number of companies, 176, should be distributed proportionately among the three auditors. Consequently, the Official Liquidator was permitted to seek assistance from the three listed audit firms, allotting approximately 37 companies to each. The Court also permitted the Official Liquidator to pay each auditor a fee of Rs. 500/- plus GST per company and to submit the audited accounts to the Court for approval. The Company Application was accordingly ordered, and any pending miscellaneous petitions were closed. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the Court should approve the allocation of 110 companies in liquidation to three Chartered Accountant firms for the audit of half-yearly accounts for the period April 1, 2024, to September 30, 2024, as proposed by the Official Liquidator under Sections 457 and 462 of the Companies Act, 1956, read with Rules 298, 300, 302, 304, 306, 309, and Rule 9 of the Companies (Court) Rules, 1959? Petitioner's Argument: The Official Liquidator argued that the proposed allocation of companies to the Chartered Accountants was proportionate and in line with the Court's previous order dated April 8, 2022, in C.A. No. 8/2022 in R.C.C. No. 2/1995, which dealt with similar matters. The Official Liquidator sought approval for the fee structure and payment modalities as outlined in the application. Revenue/State's Argument: No specific argument was recorded for the revenue or state in the provided judgment.