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 176 companies in liquidation to three Chartered Accountant firms for the audit of their half-yearly accounts for the period April 1, 2021, to September 30, 2021. The OL also sought permission to file audit reports, file affidavits of no receipts or payments for 30 companies, and to pay fees to the Chartered Accountants at a rate of Rs. 400 plus GST per company, as per a previous court order. The payment of auditor fees was to be made from the respective companies' funds or, if insufficient, from the OL's Estate and Establishment Fund, subject to reimbursement. The cost of the application was also to be borne by the companies. The counsel for the OL submitted that a previous order dated January 3, 2014, in a similar case squarely covered the subject matter.

Held

The Court held that the audit work for the period 01.04.2021 to 30.09.2021 was required to be done by the auditors. It was observed that the nature of the work is similar for each company, irrespective of whether there are transactions or not, although the auditors' work might be less in companies with no transactions. The Court found that the total number of companies, 176, should be distributed equally among the three auditors. The Official Liquidator was permitted to seek assistance from the three listed auditor firms, allotting approximately 58 companies to each. The Court further permitted the Official Liquidator to pay each auditor a fee quantified at Rs. 500/- (Rupees five hundred only) plus GST per company, which was a modification from the Rs. 400/- plus GST initially sought, and to submit the audited accounts to the Court for approval. The Company Application was accordingly ordered.

Key Issues

1. Whether the allocation of 176 companies in liquidation to three Chartered Accountants for the audit of half-yearly accounts for the period 01.04.2021 to 30.09.2021 should be approved on an equal basis or as deemed fit by the Court, as per Section 457 of the Companies Act, 1956 and Rules 298, 300, 302, 304, 306, and 309 of the Companies (Court) Rules, 1959. 2. Whether the Official Liquidator should be permitted to pay fees to the Chartered Accountants at the rate of Rs. 400/- plus GST per company, as per the order dated 03.01.2014 in C.A.No.6/2014 in RCC.No 2/1995. Petitioner's Arguments: The Official Liquidator argued that the allocation of companies and the payment of auditor fees should be approved based on the established practice and the previous order of the Court in a similar matter. The OL relied on the affidavit filed and the previous order dated 03.01.2014 in C.A.No.6/2014 in RCC.No 2/1995, stating it squarely covered the subject matter. Revenue/State's Arguments: No arguments were recorded for the revenue or State in the judgment.