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

Facts

The Official Liquidator (OL) filed a Company Application seeking approval for the allocation of 75 companies under liquidation to three Chartered Accountant firms for the audit of their half-yearly accounts for the period October 1, 2023, to March 31, 2024. The OL requested permission to appoint these firms on an equal basis (25 companies each) and to pay them a fee of Rs. 500 plus GST per company, as per a previous court order. The application also sought to dispense with the filing of half-yearly accounts for 59 companies with no transactions during the period and to allow payments from the companies' funds or the OL's Estate and Establishment Fund. The application was supported by an affidavit and argued by the learned counsel for the OL.

Held

The Court held that the audit work for the period October 1, 2023, to March 31, 2024, is similar for each company, irrespective of whether there are transactions. While the auditors' work might be less for companies with no transactions, the overall task requires distribution. The Court permitted the Official Liquidator to seek assistance from the three specified Chartered Accountant firms, allotting approximately 25 companies to each. The Court also permitted the Official Liquidator to pay each auditor a fee of Rs. 500 plus GST per company. The application was ordered accordingly, allowing the payment of fees from the respective companies' funds or, if insufficient, from the OL's Estate and Establishment Fund, subject to reimbursement. The Court also implicitly allowed the dispensing with accounts for companies with no transactions by approving the overall scheme presented by the OL. The ratio decidendi is that the Court can approve the Official Liquidator's proposed scheme for auditing companies in liquidation, including fee structures and allocation of work, based on previous orders and the OL's report.

Key Issues

1. Whether the Court should approve the allocation of 75 companies under liquidation to three Chartered Accountants for the audit of their half-yearly accounts for the period October 1, 2023, to March 31, 2024, on an equal basis (25 companies each)? 2. Whether the Court should permit the Official Liquidator to pay a fee of Rs. 500 plus GST per company to the appointed Chartered Accountants? 3. Whether the Court should permit the Official Liquidator to make payments from the funds of the respective companies in liquidation or from the Estate and Establishment Fund Account of the Official Liquidator? 4. Whether the Court should dispense with the filing of half-yearly accounts and audit thereof for 59 companies with no transactions during the specified period? Petitioner's Arguments: The learned counsel for the Official Liquidator submitted that a previous order dated April 8, 2022, in C.A. No. 8 of 2022 in R.C.C. No. 2 of 1995, which dealt with similar matters including the modalities for fees and categorization of companies, squarely covers the present application. The OL sought a similar order for the current period. Revenue/State's Arguments: No arguments were recorded for the revenue or state.