M/S.Kode Chit Fund (P) Limited (In Liqn.) vs. A

Facts

The Official Liquidator, attached to the High Court of Telangana and Andhra Pradesh, filed a Company Application (No. 38 of 2024) 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. Kode Chit Fund (P) Limited (in liquidation) for the period from 01.04.2022 to 30.09.2022, along with the Auditor Report dated 12.06.2024 submitted by M/s. Padmanabha Rao and Co., Chartered Accountants. The Official Liquidator also prayed for permission to make the payment of audit fee of Rs. 5000/- plus GST and for miscellaneous expenses to be met from the company's funds or the Estate and Establishment Fund Account. The application was supported by an affidavit and heard by the High Court.

Held

The Court accepted the prayer made by the Official Liquidator. It held that the half-yearly accounts of M/s. Kode Chit Fund (P) Limited (in liquidation) for the period from 01.04.2022 to 30.09.2022, along with the Auditor Report dated 12.06.2024 submitted by M/s. Padmanabha Rao and Co., Chartered Accountants, should be taken on file. The Court's reasoning was based on the perusal of the Auditor Reports with the assistance of the learned counsel for the Official Liquidator. The operative direction was to order the Company Application accordingly, thereby taking the accounts and reports on record. No specific issue was expressly left undecided. The principle that can be cited from this judgment is that High Courts will approve the recording of liquidation accounts and auditor reports when filed correctly by the Official Liquidator under the Companies Act and Rules, in the absence of any contrary submissions.

Key Issues

1. Whether the half-yearly accounts and the auditor's report for the period 01.04.2022 to 30.09.2022 of M/s. Kode Chit Fund (P) Limited (in liquidation) should be taken on record by the Court, as prayed by the Official Liquidator under Section 462 of the Companies Act, 1956, read with Rules 298 and 306 of the Companies (Court) Rules, 1959? The Official Liquidator argued that the application was filed in accordance with the relevant provisions of the Companies Act and Rules, seeking the Court's approval to record the financial statements and auditor's report. The revenue or State did not appear to have made any arguments or submissions in this matter, as the judgment records no argument for the revenue or State. The core of the issue revolves around the procedural acceptance of the company's liquidation accounts and audit findings by the Court.