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

Facts

The Official Liquidator filed a Company Application seeking directions from the High Court. The application requested approval for the allocation of 131 companies in liquidation to three Chartered Accountants for the audit of their half-yearly accounts for the period April 1, 2022, to September 30, 2022. The Official Liquidator also sought permission to file audit reports, affidavits of no receipts or payments for certain companies, and to pay fees to the auditors from the companies' funds or the Official Liquidator's Estate and Establishment Fund, subject to reimbursement. The application further sought directions regarding the costs of the application and miscellaneous costs.

Held

The Court held that the audit work for the period April 1, 2022, to September 30, 2022, needed to be conducted by auditors for each company, irrespective of whether there were transactions. The Court noted that if a company had no transactions, the auditor's work might be less. Considering that three auditors expressed willingness, the Court directed that the total number of companies be distributed equally among them, with each auditor being allocated approximately 43 to 44 companies. The Official Liquidator was permitted to appoint these auditors and pay them a fee of Rs. 500/- plus GST per company. The Court also directed the Official Liquidator to ensure, to the extent possible, that the appointed auditors had not audited the accounts of the same companies in the previous financial year. The Court approved the allocation and permitted the Official Liquidator to proceed with the audit and filing of reports.

Key Issues

1. Whether the Court should approve the allocation of 131 companies in liquidation to three Chartered Accountants for the audit of their half-yearly accounts for the period April 1, 2022, to September 30, 2022, and pass any other appropriate order. This issue turns on the Court's discretion under Sections 457 and 462 of the Companies Act, 1956, read with Rules 298, 300, 302, 304, 306, and 309, and Rule 9 of the Companies (Court) Rules, 1959. Contentions: Petitioner (Official Liquidator): Submitted that three Chartered Accountants have expressed willingness to act as auditors. Relied on a previous order of the Court in Company Application No. 8 of 2022 in RCC No. 2 of 1995, where auditors were appointed in similar circumstances. Revenue/State: No arguments recorded.