Zero Valuation of ₹960 Cr Assets Shows Gross Negligence: IBBI Appellate Authority Remands Case, Bars Valuershow-cause notice from New Assignments [Read Order]

The Insolvency and Bankruptcy Board of India (IBBI) has barred a valuer from new assignments, holding that zero valuation of assets worth Rs 960 Crore amounts to gross negligence. The matter was remanded.

Mr Vaidyanathan was a registered valuer of Securities or Financial Assets under the Companies (Registered Valuers and Valuation) Rules, 2017. He was issued a show-cause notice (SCN) for his valuation report. The SCN alleged contraventions in assigning ‘zero’ or ‘not determinable’ values to substantial financial assets of the corporate debtor, despite book values aggregating ₹960.45 crore. The IBBI’s Disciplinary Committee suspended his registration for three months in November 2025.

Aggrieved by this, Mr Vaidyanathan appealed under Rule 17(9) of the Valuation Rules, contending that the order was unsustainable both procedurally and substantively

The valuer argued that the SCN was vitiated for non-disclosure of material forming the prima facie opinion under Rule 17(1), violating natural justice.

He further submitted that assigning ‘zero’ value was a bona fide professional judgment, necessitated by the non-availability of ageing schedules, recovery data, and confirmations from the Resolution Professional (RP).

He stressed that valuation concerns commercial reality, not mere legal enforceability, and that receivables, though within limitation, were economically worthless given absence of collections since FY 2019-20.

He also relied on parity with the IBBI’s order in the case of Nitin Ashok Garg, where ‘zero’ values were accepted in circumstances of information unavailability.

The Appellate Authority rejected the procedural challenge, holding that the SCN complied with Rule 17(2) and was based on the valuer’s own report. On merits, it was found that Mr Vaidyanathan’s valuation report lacked adequate reasoning and transparency. And this was giving the impression of an arbitrary assignment of values.

The Authority emphasised that under Regulation 27, read with Regulation 35 of the CIRP Regulations, valuers must determine fair and liquidation values of all assets, including intangibles. A valuer cannot shirk statutory duty by citing scope limitations or lack of cooperation from the RP.

It noted that even cash and cash equivalents worth ₹1.06 crore were marked ‘not determinable’.

Further, the Authority found non-compliance with International Valuation Standards (IVS), particularly IVS 200 and IVS 210, which mandate consideration of both tangible and intangible assets. Despite claiming adherence to IVS, Mr Vaidyanathan failed to apply them properly.

The Appellate Authority held that the three-month suspension imposed earlier was “grossly insufficient” given the gravity of misconduct. It remanded the matter back to the Disciplinary Authority for fresh disposal of the SCN, directing that Mr. Vaidyanathan may submit explanations afresh. Importantly, he has been barred from taking any new valuation assignments until the SCN is finally disposed of.

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