High Court Stays Liquidation Auction: Valuation of Plant and Machinery by Ineligible Valuer Held Prima Facie Unsustainable
- REEDLAW
- 8 minutes ago
- 3 min read
REEDLAW Legal News Network reports:Â In a significant intervention in liquidation proceedings, the High Court stayed a proposed auction after finding that the valuation of plant and machinery forming the basis of the sale had been conducted by a person not qualified under the Companies (Registered Valuers and Valuation) Rules, 2017, holding that such procedural infirmity rendered the liquidation process prima facie unsustainable and warranted interim judicial restraint pending adjudication before the NCLT.
The Kerala High Court, while exercising its writ jurisdiction, examined the legality of a liquidation auction premised on a valuation report prepared by an ineligible individual. The Single-Judge Bench of Justice Viju Abraham observed that compliance with the statutory valuation framework under the Companies (Registered Valuers and Valuation) Rules, 2017, was mandatory, and any departure therefrom went to the root of the liquidation process. The Court held that the use of such a valuation prima facie vitiated the auction, justifying interim intervention to restrain the sale until the issue was examined by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016.
The Petitioner had approached the High Court aggrieved by the valuation reflected in the sale notice issued in the course of liquidation proceedings, contending that the valuation of the plant and machinery had been carried out by a person lacking the requisite qualifications under the Companies (Registered Valuers and Valuation) Rules, 2017. It was asserted that the valuer possessed only a civil engineering qualification and was therefore not competent to undertake the valuation of plant and machinery, for which specialised engineering or valuation qualifications were prescribed.
It was noted that upon issuance of the impugned sale notice, the Petitioner had already made an application before the Adjudicating Authority seeking directions to the Liquidator to conduct a fresh valuation. The said application was pending consideration on a future date, and no sale had taken place pursuant to the earlier sale notice. Despite the pendency of the application, the Liquidator had issued a fresh sale notice fixing a date for auction.
Having regard to the submissions advanced and the statutory framework governing valuation, the Court found that a prima facie case was made out, warranting interim protection. Considering that the challenge to the valuation was already pending before the Adjudicating Authority and that the auction was scheduled in the interregnum, the Court granted an interim order as prayed for, staying further action pursuant to the impugned sale notice for a period of two weeks, and directed the matter to be listed for further consideration on the next date.
Mr. K.M. Muhammed Hussain and Mr. Balakrishnan M. Advocates represented the Petitioner.
Standing Counsel appeared for the Respondent No. 4.
Deputy Solicitor General of India appeared for the Respondent No. 5.
This is premium content available to our subscribers.
To access the full content related to this article — including the complete judgment, detailed legal analysis, ratio decidendi, headnotes, cited case laws, and updates on relevant statutes and notifications — we invite you to subscribe to REEDLAW’s premium research platform.
Â
Click here to Subscribe and unlock exclusive access to structured legal analysis, judicial summaries, and a comprehensive legal research database.
REEDLAW Legal Intelligence & Research is India’s most trusted legal publishing and research platform, empowering professionals with structured judicial insights and authoritative legal intelligence since 1985.
The platform offers comprehensive resources spanning Corporate Insolvency, Bankruptcy, Company Law, SARFAESI, Debt Recovery, Contract, MSMEs, Arbitration, Banking, and Commercial Laws. Through curated journals like IBC Reporter and Bank CLR, and an advanced Online Legal Research Database, REEDLAW simplifies complex legal research for professionals, institutions, and academia across India.