A Practitioner’s Perspective on the New Judicial Expectations for Valuers & Resolution Professionals
Valuation under the Insolvency and Bankruptcy Code (IBC) is no longer a behind-the-scenes technical step — it has become one of the most litigated and judicially scrutinized components of the CIRP. Recent Supreme Court and NCLAT decisions have made one thing clear:
- Valuation is now a quasi-judicial exercise.
- Documentation, methodology and independence matter as much as the numbers.
The shift is profound. Courts are moving from a “hands-off” approach to a framework where valuers and RPs must justify not just what the value is, but how it was reached.
Below is a curated, practitioner-ready analysis of the most influential judgments redefining valuation norms under IBC.
1. Essar Steel (SC) – The Cornerstone of Valuation Discipline
Case: Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2019)
This landmark ruling reiterated that valuation is central to determining feasibility and viability of a resolution plan. The Supreme Court underscored:
- CoC must evaluate plans against realistic liquidation value,
- Valuers must follow uniform, regulated standards,
- The RP must ensure methodological compliance and transparency.
- Though the SC backed the primacy of the CoC, it sent a clear signal:
Valuation must be robust, defensible, and conducted strictly under IBBI regulations.
2. Maharashtra Seamless (SC) – Resolution Value Not Linked to Valuation
Case: Maharashtra Seamless Ltd. v. Padmanabhan Venkatesh (2020)
The Supreme Court held that a resolution plan is not invalid merely because bid value is lower than liquidation value.
This transformed practice:
- Valuation is not a reserve price,
- Liquidation value is reference data, not a binding number,
- Commercial wisdom prevails — but valuation must be defensible.
This judgment protects bidders but simultaneously pushes valuers to ensure accuracy, since a flawed value can skew negotiations and litigation.
3. Rainbow Papers (SC) – Importance of Identifying Encumbrances
Case: State Tax Officer v. Rainbow Papers Ltd. (2022)
Although known for the “government dues = secured dues” controversy, this case highlighted a critical valuation lesson:
- Valuers must correctly recognise, classify and factor statutory charges, liabilities and encumbrances.
This judgment triggered heightened scrutiny on:
- title verification,
- statutory dues mapping,
- contingent liabilities assessment,
- charge registry and perfection.
The valuation is incomplete without a legally sound understanding of encumbrances.
4. Jaypee Infratech (SC) – Independent Valuation & Stakeholder Protection
Case: Jaypee Kensington Boulevard Apartments Welfare Assn. v. NBCC (India) Ltd. (2021)
The Supreme Court emphasised:
- transparent valuation processes,
- fair treatment of dissenting creditors,
- the role of valuation in balancing interests, not just pricing assets.
This case prompted tribunals to demand better valuation reports, especially for complex Real Estate projects involving multiple asset classes.
5. NCLAT on Valuation Reports – Increasing Accountability
Multiple recent NCLAT rulings (2022–2024) have strengthened valuation governance:
i. Appointment of Valuers Must Be Independent
Tribunals have struck down valuations where valuers had conflicts or insufficient independence.
ii. Justification of Methodology Is Mandatory
Orders insist valuers explain:
- asset approach,
- market approach,
- DCF assumptions,
- distress discounts,
- depreciation logic.
A “copy–paste” valuation now risks rejection.
iii. Seek Clarifications → Not a Sign of Bias
NCLAT has held that RPs must question valuers, request supporting documentation, and ensure compliance with IVS + IBBI Valuation Rules.
6. NCLT Orders on “Fresh Valuation” – When Is It Allowed?
NCLTs across Delhi, Mumbai and Chennai benches have clarified:
- Fresh valuation is permissible only in cases of material irregularity, asset omission, or glaring errors.
- CoC cannot seek revaluation simply because it is unhappy with numbers.
- Higher or lower values discovered later do not justify fresh exercise unless methodology was defective.
This protects process sanctity while ensuring higher professional accountability.
7. Liquidation Value Leaks = Serious Misconduct
Recent NCLAT and NCLT decisions treat the leakage of liquidation values as:
- a violation of confidentiality,
- a ground for disciplinary action,
- and a potential reason for challenge to the CIRP process.
Valuers and RPs must now implement strict information barriers.
What This Means for Valuers & Resolution Professionals
The judiciary is shaping a new valuation ecosystem with clear expectations:
1. Valuation must be defensible, not convenient.
Courts increasingly ask for evidence, assumptions, and calculations.
2. Methodology must be customised, not generic.
A one-size-fits-all approach will be rejected.
3. Documentation quality defines litigation risk.
Tribunals want not just numbers — they want the story behind the numbers.
4. Independence is non-negotiable.
Any perceived conflict will delegitimize the report.
5. Asset verification and due diligence matter.
Encumbrances, statutory dues, legal disputes, and physical condition must be verified.
Practical Checklist: What Valuers Must Do Immediately
- Ensure full compliance with IBBI (Valuation) Regulations and IVS
- Provide detailed basis of valuation, workings & assumptions
- Maintain audit-proof documentation
- Conduct thorough site visits and independent asset verification
- Use multiple valuation approaches, justify weighting
- Maintain confidentiality rigorously
- Engage with RP for clarifications, but remain independent
Conclusion — The New Era of Valuation Under IBC
Valuation has shifted from a supporting role to a critical, judicially monitored pillar of the insolvency process.
Supreme Court and NCLAT rulings now expect valuers to act with:
- deeper diligence,
- stronger independence,
- transparent methodology,
- and litigation-ready documentation.
For professionals, the message is unmistakable:
“IBC valuation is no longer just about value — it is about credibility, governance and judicial confidence.”
Those who adapt to this new paradigm will shape the future of resolution effectiveness in India.
I am Insolvency Resolution Professional and have handled/ handling many insolvency cases. In case of any queries related to IBC, you may contact me at Krit Narayan Mishra, kritmassociates@gmail.com | Mob: 9910859116
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