KNOWLEDGE BANK FROM B KANAGA SABAPATHY 

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Message from B. K. sir 08/04.2023

Question :

The property under valuation is a quarry land. The owner executed the lease in favour of his wife and the owner has obtained the mines lease from the collector to dig the minerals (size stone and fencing stone). Now, the account becomes NPA. The property was offered as primary security. The lease period was over. i.e. 23.02.2023.

The bank wants latest valuation. I have visited the property. It was almost down to low level. The bank want’s nil value of the land so that the bank can proceed with DRT. Can I give the valuation as on date.

Opinion by Mr. A. Anbazhagan :

I understand that lease is over. But the licence for quarrying may still be valid. (Normally it is issued for 10 years). There may be quarrying potential left in the quarry. A mines valuer should be right person to certify the value.

In a similar case, where I came across, the lender was more interested in getting a least possible value for such a quarry (granite), I took the help of a quarry & mines valuer. We did a joint inspection. He evaluated the feasibility and the potential left in that quarry and arrive at a value by income approach. To my surprise, it was 100 times more than the fair market value I would have certified assuming it as a vacant land. I certified the value annexing his report.

So, definitely we need to take an expert opinion on this. Certifying zero value for the purpose you have mentioned is not fair as it could cause loss to the bank. The bank may be interested in closing this somehow, but it is the public money at stake, one should remember.

 

With best wishes,

B. KANAGA SABAPATHY
bkvaluer@gmail.com
www.bkanagasabapathy.com

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