M/S.Shakthi Sai Flowers And Tissues Public LTD., (In Liqn.) vs. No Respondent
Facts
The Official Liquidator (OL) for M/s. Shakthi Sai Flowers and Tissues Public Ltd. (in liquidation) filed a company application seeking ratification of an action taken. The OL had appointed M/s. Secret Investigation and Security Services to deploy two security guards per shift, for 24-hour vigil, to protect the company's land measuring Ac.29.04 Gts. situated in Sy. Nos. 180, 182, and 186 at Duddeda Village, Kondapak Mandal, Siddipet District. The OL also sought permission to pay Rs. 10,000 per month per guard, plus GST, for these services, effective from April 11, 2022, from the company's funds. The company was ordered to be wound up on March 6, 2002, and the OL took possession of its properties on April 11, 2022.
Held
The Court held that the Official Liquidator's action in appointing M/s. Secret Investigation and Security Services for the deployment of security guards to protect the company's land was permissible and ratified. The Court granted permission to the Official Liquidator to pay Rs. 10,000 per month per guard, plus GST, for these services, effective from April 11, 2022, to be reimbursed from the funds of the company in liquidation. The Court reasoned that such expenditure is a necessary cost for the preservation of the company's assets during the liquidation process. The application was allowed, and interim orders, if any, were directed to stand vacated. There was no order as to costs.
Key Issues
1. Whether the Official Liquidator's action in appointing a private security agency to guard the company's property is permissible and requires ratification by the Court, under Section 457(1)(e) of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959? Petitioner's Arguments (Official Liquidator): The Official Liquidator contended that the appointment of security guards was a necessary measure to safeguard the company's valuable land from encroachment or damage, especially after taking possession of the company's assets. The expenditure incurred for watch and ward services, including the Goods and Services Tax (GST) payable on such services, is a legitimate cost of preserving the company's assets during the liquidation process and should be borne by the company's funds. The OL relied on the general powers vested in it under the Companies Act for the management and preservation of assets of a company in liquidation. Revenue/State's Arguments: The judgment does not record any specific arguments from the revenue or state authorities regarding this application.
Sections Cited
Section 457(1)(e), Rule 9
AI-generated summary — verify with the full judgment below
[ 3405 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYOERABAD THUR AY, THE SEVENTEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE JUSTICE MOUSHUMI BHATTACHARYA COMPA NY APPLICATION No. 47 o12022 IN GOMPANY PETITION NO: 174 of 2001 ln the Matter of the Companies Act, 1956 AND ln the Matter of M/s.shakthi Sai Flowers and Tissues Public Ltd.' (ln Liqn.), Between: M/s. Shakthi Sai Flowers and Tissues Public Ltd., (ln Liqn.), Rep. by the Official Liquidator (l/C) For the States of Telangana and Andhra Pcdesh,#I[Xei?bad Application under Section a57(1) (e) of the Companies Act, 19^56 read with Rute I otine Companies (Court) Rule, i959, praying that this Hon'ble Court may be pleased to: i. ratify the action taken by the Official Liquidator of .appointing M/s. Secret lnvestigation dnd Security Servicqs for deployment of two (2) security guards in each shift (three shifts for 24 hours vigil) to pioiect and iafeguard the land of the -company .admeasuring Ac.29.04 Gts. at Syi Nos. '1 80, 182 and '186 situated at Duddeda Viliage of Kondapak Mandal, Siddipet District ii. permit the Official Liquidator to pay- the watch and ward salaries i 0,000 per month per guar
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