| Subject | Insolvency and Bankruptcy Code, 2016 |
| Case Name | M/s. Rana Saria Poly Pack Pvt. Ltd .Vs . Uniworld Suagrs Pvt .Ltd |
| Corporate debtors | M/s Uniworld Sugars Pvt. Ltd |
| Adjudicating Authority | NCALT – NEW DELHI |
| Chair Person | Mr. Justice Ashok Bhushan |
| Judgment Date | 12 Apr-2022 |
Summary of the case
Regulation 27 of CIRP Regulations, 2016 outlines the procedure for appointment of registered valuers for determining the fair value and liquidation value of the corporate debtor. Regulation 35 provides the methodology of determining fair and liquidation value of the corporate debtor. It is laid down in the CIRP Regulations that two registered valuers should be appointed under regulation 27. These two registered valuers so appointed shall submit to the Resolution Professional an estimate of the fair value and liquidation value computed in accordance with internationally accepted valuation standards, after physical verification of the inventory and fixed assets of the corporate debtor. Whether there is a power to call third valuation on fair and liquidation value ?
Facts of the case
1.In the instant case, we find that the first valuation by two registered valuers were made on 28.5.2018 and the two valuations of liquidation value were Rs.126.30 crores and Rs.121.01 crores, leading to average value of Rs.123.66 crores.
2. Moreover, in the present case the third valuation estimates the liquidation value as Rs. 52.69 crores, which is even less than half of the liquidation value estimated earlier and hence significantly different from the two earlier valuations.
3. There fore the procedure of obtaining a third valuation and considering it as basis for deciding the payment .
Decision of the NCALT
Decision of the NCALT is summarised as follows:
- 1.Who has the power to call for third valuation? Procedure of obtaining a third valuation
- The appointment of the registered valuers is to be done in accordance with the stipulated procedure in the CIRP Regulations and also how the fair and liquidation value will be estimated and later communicated to the members of CoC.
- 2. When Third valuation needs to be appointed ?
- The Third valuation has to be undertaken in the event two estimates of valuations are significantly different, where upon the Resolution Professional may appoint a third registered valuer.
JUDGEMENT OF THE CASE :
Regulation 35 stipulates that if in the opinion of Resolution Professional, the two estimates are significantly different, the Resolution Professional may appoint another registered valuer who shall submit an estimate of the value computed in the same manner and the average of two closest estimates of a value shall be considered as the fair value or the liquidation value. These estimations shall be communicated by the Resolution Professional to the members of the CoC after the receipt of the resolution plan, after receiving an undertaking from the members that they shall maintain confidentiality of the same.