M/S.Merbanc Financial Services Limited.(In Liqn) vs. No Respondent

Facts

The Official Liquidator, attached to the High Court of Telangana, filed a Company Application (No. 21 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. Monarch Finlease Limited (in liquidation) for the period from April 1, 2022, to September 30, 2022, along with the Auditor's Report dated June 17, 2024, submitted by M/s. KBS and Associates. The Official Liquidator also sought 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. The application was supported by an affidavit and heard by the High Court.

Held

The Court accepted the prayer of the Official Liquidator. The half-yearly accounts of M/s. Monarch Finlease Limited (in liquidation) for the period from April 1, 2022, to September 30, 2022, along with the Auditor's Report submitted by M/s. KBS and Associates, were taken on record. The Court also ordered that the Company Application be disposed of accordingly. While the application sought permission for payment of audit fees and costs, the operative part of the order only explicitly states that the accounts and reports are taken on file and the application is ordered accordingly. The specific permission for payment of audit fees and costs, though prayed for, is not explicitly detailed in the final order but is implicitly covered by ordering the application accordingly. The Court's reasoning was based on perusing the Auditor's Reports with the assistance of the counsel for the Official Liquidator, and finding the prayer acceptable. The ratio decidendi is that the High Court, in its supervisory role over liquidations, will approve the submission and recording of accounts and reports by the Official Liquidator when found in order.

Key Issues

1. Whether the Court should take on record the half-yearly accounts and the Auditor's Report of the company in liquidation for the period April 1, 2022, to September 30, 2022? (Question of fact and procedure, turning on the Official Liquidator's duty under the Companies Act and Rules). 2. Whether permission should be granted to pay the audit fee of Rs. 500 plus GST to the auditor? (Question of fact and procedure, turning on the Official Liquidator's powers and the necessity of audit fees). 3. Whether the costs of the application can be met from the company's funds or the Estate and Establishment Fund? (Question of fact and procedure, turning on the Official Liquidator's financial management powers). Arguments: Petitioner (Official Liquidator): Submitted the half-yearly accounts and Auditor's Report for the specified period and sought permission for payment of audit fees and application costs, as per statutory requirements and the need for proper liquidation proceedings. Relied on the Companies Act, 1956, and the Companies (Court) Rules, 1959. Revenue/State: No arguments were recorded for the Revenue or State in the judgment.