Court-Appointed Valuer Entitled To Fees Despite Lack Of Prior Sanction Of Payment: Bombay High Court

The Bombay High Court has held that a Valuer engaged by a Court Receiver is entitled to treat the assignment as court-authorised. An administrative failure to obtain prior sanction before paying fees above the prescribed limit cannot, by itself, deprive the Valuer of reasonable payment for work actually carried out and accepted.

“More importantly, a Valuer appointed at the instance of the Court Receiver is entitled to proceed on the basis that the assignment entrusted to it is a legitimate Court-authorised assignment. If the officer of the Court engaging the Valuer does not obtain a sanction which may subsequently be required before payment of fees exceeding the prescribed ceiling, that administrative omission cannot, by itself, operate to deprive the Valuer of reasonable remuneration for work actually performed and accepted,” observed a division bench of Justices R.I. Chagla and Farhan P. Dubash.

The court sanctioned professional fees of about ₹6.51 lakh payable to AT & TS Associates, the court-appointed Valuer. It also awarded about ₹8.20 lakh as interest up to May 2025. Further simple interest at six per cent per annum will run on the principal amount from June 1, 2025 until actual payment.

The Valuer was permitted to lodge its sanctioned claim before the concerned Official Liquidator. Kuber Mutual Benefits Ltd, whose properties were involved in the proceedings, was stated to be under liquidation.

The case arose from proceedings concerning properties attached under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999. In December 2003, the court directed the Court Receiver to inspect the properties and report on their condition. It was also asked to explore options for their completion and sale.

The Court Receiver was permitted to obtain technical assistance for this exercise. It subsequently engaged AT & TS Associates.

The Valuer completed the assignment and submitted its reports in May 2004. It raised six bills totalling about ₹7.02 lakh. The claim was later revised to about ₹6.51 lakh after the service tax component was excluded. The fees remained unpaid for more than two decades.

The Valuer sought interest for the delay. It also sought additional compensation linked to the erosion in the purchasing power of the rupee.

The Amicus Curiae appointed to assist the court supported sanction of the revised principal amount. The Amicus also supported interest of about ₹8.20 lakh up to May 2025 and further interest at six per cent per annum. However, the Amicus opposed the additional inflation-linked enhancement.

The dispute also involved Clause 9 of the 1994 Guidelines governing the remuneration of court-appointed Valuers. The court ruled that the clause does not require prior sanction for appointing a Valuer. Prior sanction is required before payment of fees exceeding ₹25,000.

“On a plain reading of Clause 9, we find no stipulation requiring the Court's sanction to be obtained before appointment of the Valuer. The expression 'prior sanction' must be understood in relation to the act which requires sanction, namely, payment of fees exceeding Rs. 25,000/-,” the bench observed.

There was no dispute over the work carried out by the Valuer. The court noted that nobody had alleged that the work was perfunctory or defective. There was also no allegation that the bills were inflated. The valuation reports had been accepted.

The court therefore found sufficient grounds to sanction the entire revised principal claim.

Although the Guidelines do not expressly provide for interest on unpaid fees, the court ruled that reasonable compensation could be awarded. This was justified by the extraordinary delay in paying fees legitimately earned through a court-authorised assignment.

The court consequently awarded about ₹8.20 lakh as interest up to May 2025. Further simple interest at six per cent per annum will run on the principal amount of about ₹6.51 lakh from June 1, 2025 until actual payment.

The court rejected the Valuer's separate claim for inflation-linked compensation. It ruled that interest was already being awarded to compensate for the delay in payment. A further enhancement for inflation over the same period would result in overlapping compensation.

Expressing regret over the delay of more than two decades, the court observed that appropriate administrative mechanisms must identify outstanding professional fees before a Court Receiver is discharged or proceedings are closed. Appropriate directions for their payment or recovery must also be obtained.

The Court Receiver was directed to forward the order to the concerned Official Liquidator within three weeks. It must also forward the valuation reports, revised invoices, and other relevant material. The Court Receiver will thereafter stand discharged.

No personal liability was imposed on the Court Receiver, Official Liquidator, State Government, Rowena Sharma or any other person merely because of the order.

Sharad Bansal, Amicus Curiae.

For State: N. C. Walimbe with A. K. Naik, AGP

For Respondent CIDCO: G. S. Hegde, Senior Advocate with Advocate P. M. Bhansali & Amit Gala

B. V. Baravkar, Court Receiver with Ms. E. S. D'souza, Section Officer, Mr. T. K. Sinha, AT & TS Associates, Valuer