IBBI Upholds Suspension of Registered Valuer: A Wake-Up Call on Transparency and Compliance in Valuation Reporting
CTN Press | Dated: August 1, 2025
In a landmark decision underscoring the sanctity of transparency and accountability in the insolvency ecosystem, the Insolvency and Bankruptcy Board of India (IBBI) has upheld the suspension of a Registered Valuer (RV), Mr. Vipan Kumar, for failing to adhere to disclosure norms under the Companies (Registered Valuers and Valuation) Rules, 2017. The decision has sent ripples through the valuation fraternity and serves as a vital lesson for professionals engaged in the Corporate Insolvency Resolution Process (CIRP).
The Case in Brief
Mr. Vipan Kumar, registered to value Land and Building assets, was engaged during the CIRP of M/s Base Corporation Limited. His valuation reports for properties situated in Hosur and Solan were found lacking in essential data disclosures. Notably, the reports failed to mention circle rates, market comparables, and did not substantiate the heavy discounting applied—a 40% discount for fair value determination, followed by an additional 30% for liquidation value estimation.
These omissions formed the basis of a Show Cause Notice (SCN) issued by the IBBI, culminating in a three-month suspension of Mr. Kumar’s registration via an order dated 26th March 2025. His appeal against the decision, filed on 8th May 2025, was ultimately dismissed, with the IBBI emphasizing that the integrity of the CIRP relies heavily on transparent, well-documented, and legally compliant valuation reports.
Legal Framework: The Backbone of Valuation Practice
Valuation professionals in India operate under the regulatory framework established by the Insolvency and Bankruptcy Code, 2016 and the Companies (Registered Valuers and Valuation) Rules, 2017. Specifically, Rule 8(3)(g) of the Valuation Rules mandates that every valuation report must clearly disclose the nature and source of all data used. The rule is not a mere procedural formality—it is central to ensuring that stakeholders such as the Committee of Creditors (CoC), Resolution Professionals (RPs), and Adjudicating Authorities can objectively rely on the valuer’s conclusions.
The omission of data sources and rationale for adjustments in Mr. Kumar’s report rendered it non-transparent and therefore non-compliant, as per the IBBI’s findings.
Professional Judgment vs. Regulatory Compliance
While Mr. Kumar argued that his valuations reflected industry practice and were shaped by data unavailability during the COVID-19 pandemic, the IBBI was clear in its stance—professional judgment does not override legal obligation. The regulatory expectation is that all assumptions, especially those affecting asset value materially (like discounting), must be clearly justified and documented.
The Board also rejected his defense that the Resolution Professional and CoC had not objected to the report, clarifying that lack of objection does not imply compliance. The responsibility for legal and professional adherence lies squarely with the valuer.
Why This Matters: Implications for Aspiring Valuers
This case is a powerful reminder to valuation aspirants and practicing professionals alike that valuation is not just a financial exercise—it is a fiduciary responsibility. Especially in insolvency proceedings, valuation reports directly impact outcomes like asset realization, claim settlements, and resolution plan viability.
Key takeaways for aspirants:
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Transparency is Non-Negotiable: Always disclose the source and nature of data. Use circle rates, comparable sales, third-party data, and document their relevance.
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Substantiate All Adjustments: Any discounting or premium applied must be backed by rational justification—preferably with market benchmarks or economic logic.
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Maintain Complete Working Papers: All workings, site reports, assumptions, surveys, and disclaimers should be archived and accessible for audit or inquiry.
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Rule 8 is Binding: It lays down the minimum content of a valuation report and must be complied with regardless of market conditions or peer practices.
A Call for Ethical and Competent Valuation Practice
The IBBI’s upholding of Mr. Kumar’s suspension sends a strong signal to the valuation community: Compliance and ethics are paramount. Valuation professionals must not only possess technical skills but also an unwavering commitment to transparency and regulatory adherence.
As the insolvency regime in India matures, the role of RVs becomes increasingly critical. They are expected to be custodians of fairness in high-stake corporate distress scenarios. This decision must therefore be seen not as punitive, but as instructive—a benchmark for enhancing professionalism in valuation practice.
