A registered valuer’s report is an expert opinion, not a conclusive determination. The NCLT and the NCLAT can reject or modify the report where it is vitiated by a defect that goes to its reliability. The challenge is directed at the process and the methodology, not at the valuer’s commercial judgment.
The Grounds
The first ground is the valuer’s lack of independence. Where the valuer is related to the promoter, has a financial interest in the transaction, or has been appointed without the audit committee’s approval, the report’s reliability is compromised. The second ground is the methodology: a valuation that uses an asset-based approach for a technology company, or a DCF that ignores the company’s actual cash flows, is vulnerable. The third ground is the assumptions: a valuation that is based on unaudited figures, that ignores a material liability, or that projects unrealistic growth is a defective report.
The Procedure
The challenge is raised in the NCLT proceedings through the objections to the scheme or the application. The objector must file the grounds and the supporting evidence, and the Tribunal may direct the valuer to explain the report. The NCLT can reject the report, direct a fresh valuation, or modify the scheme.
The NCLAT’s review is limited. The NCLAT will not substitute its own valuation for the valuer’s, but it will interfere where the NCLT’s acceptance of the report is perverse or based on no evidence.
The Practical Approach
A party that wishes to challenge a report should obtain an independent valuation or an expert opinion that identifies the specific defect. The challenge should focus on the demonstrable error, not on the disagreement with the outcome. A broad challenge that seeks a re-valuation without identifying a defect is unlikely to succeed.
A technically sound challenge is precise, evidence-based, and directed at the process, not at the commercial judgment.
Call to Action
Anuj Desai & Associates advises companies and objectors on the challenge to a registered valuer’s report—from the grounds and the evidence to the NCLT procedure and the NCLAT appeal. If you are challenging a valuation, we can help you build the case.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230
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