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

Facts

The Official Liquidator (OL) filed a Company Application before the High Court seeking approval for the allocation of 166 companies in liquidation to three Chartered Accountant firms for the audit of their half-yearly accounts for the period October 1, 2021, to March 31, 2022. The OL also sought permission to file audit reports within 60 days of receipt, to file affidavits of 'no receipts or payments' for 19 companies, and to pay the auditors' fees. The fees were to be paid as per a previous court order dated April 8, 2022, and could be drawn from the respective companies' funds or, if insufficient, from the OL's Estate and Establishment Fund Account, subject to reimbursement. The application also requested that the costs of the application be borne by the respective companies. The High Court had previously ordered the winding up of M/s. A.P. Steels Limited in 1995.

Held

The Court held that the Company Application was allowed as prayed for. Specifically, the Court approved the allocation of 166 companies in liquidation to the three Chartered Accountant firms for the audit of their half-yearly accounts for the period October 1, 2021, to March 31, 2022, in accordance with Rule 302 of the Companies (Court) Rules, 1959. The Court also permitted the Official Liquidator to file the audit reports within 60 days of receipt from the Chartered Accountants. Furthermore, the Official Liquidator was permitted to file an Affidavit of 'No Receipts or Payments' for 19 companies in liquidation for the specified period, as per Rule 300 of the Companies (Court) Rules, 1959. The Court allowed the payment of fees to the Chartered Accountants in accordance with its previous order dated April 8, 2022, and permitted these fees to be paid from the funds of the respective companies or, if insufficient, from the Estate and Establishment Fund Account of the Official Liquidator, subject to reimbursement. The costs of the application were also ordered to be borne by the respective companies in liquidation. The ratio decidendi is that the Court has the discretion to approve such administrative arrangements for the efficient conduct of liquidation proceedings, including the appointment of auditors and the management of their fees, as long as they are in accordance with the relevant rules and previous court orders.

Key Issues

1. Whether the Court should approve the allocation of 166 companies in liquidation to three Chartered Accountants for the audit of their half-yearly accounts for the period October 1, 2021, to March 31, 2022, as per Rule 302 of the Companies (Court) Rules, 1959? 2. Whether the Official Liquidator should be permitted to file audit reports within 60 days of receipt from the allotted Chartered Accountants, as per the prayer? 3. Whether the Official Liquidator should be permitted to file an Affidavit of 'No Receipts or Payments' in respect of 19 companies in liquidation for the period October 1, 2021, to March 31, 2022, pursuant to Rule 300 of the Companies (Court) Rules, 1959? 4. Whether the Official Liquidator should be permitted to pay fees to the Chartered Accountants as per the Court's order dated April 8, 2022, and to draw such fees from the funds of the respective companies or the OL's Estate and Establishment Fund Account, subject to reimbursement? 5. Whether the costs of the application should be borne by the respective companies in liquidation? Contentions: Petitioner (Official Liquidator): Argued for the approval of the allocation of audit work, permission to file reports and affidavits as specified, and for the payment of auditors' fees from company funds or the OL's fund, with reimbursement. Relied on Rules 300 and 302 of the Companies (Court) Rules, 1959, and the Court's previous order dated April 8, 2022. Revenue/State: No arguments recorded for the revenue or State in the judgment.