Court Can Sanction Professional Fees Of Valuers Exceeding Prescribed Ceiling Post-Assignment: Bombay High Court

"The requirement is, therefore, that an amount in excess of the prescribed ceiling ought not to be paid without prior sanction of the Court. Such an interpretation is also consistent with the practical nature of a valuation assignment." Bombay High Court, in a significant order, held that the requirement for "prior sanction" under the 1994 Guidelines for Valuers does not operate as an absolute bar to payment of fees exceeding the Rs. 25,000 threshold if the sanction is obtained after the completion of the assignment but before the actual disbursement of funds.

A division bench of Justices R.I. Chagla and Farhan P. Dubash observed that administrative omissions in obtaining sanction at the time of appointment cannot deprive a professional of reasonable remuneration for work performed in good faith at the behest of a Court Receiver.

The dispute concerned unpaid professional fees of M/s. AT & TS Associates, a Panel Valuer engaged by the Court Receiver pursuant to a 2003 High Court order to value properties involved in a winding-up matter. Despite completing the valuation in 2004, the Valuer’s bills remained unpaid for over two decades due to the pendency of reports, the closure of the underlying Writ Petition, and the lack of funds in the suit account. The Valuer eventually moved the Court seeking principal, interest, and compensation for the erosion of the rupee's purchasing power.

The court was primarily tasked with determining whether the 1994 Guidelines imposed a rigid ceiling of Rs. 25,000 per assignment or per property, and whether sanction for exceeding this ceiling was a condition precedent to appointment. Additionally, the court examined whether a professional could claim interest and inflation-linked compensation simultaneously, and whether the Court Receiver could be discharged despite pending liabilities.

Applicability of Guidelines

The court clarified that valuation fees must be determined based on the Guidelines in force at the time of the Valuer's appointment. Distinguishing between valuation for sale (1994 Guidelines) and valuation for royalty or compensation (1999 Guidelines), the bench held that the 1994 Guidelines were applicable as the assignment was aimed at facilitating the sale of immovable properties.

Interpretation of 'Prior Sanction'

Rejecting the contention that the Rs. 25,000 ceiling under Clause 9 of the 1994 Guidelines precluded payment of higher amounts if not pre-approved, the court noted that the complexity of valuation cannot always be assessed at the inception. The requirement for sanction relates to the act of payment, not the engagement of the expert.

"The requirement under Clause 9 is satisfied if the Court’s sanction is obtained before payment of the amount exceeding the prescribed ceiling."

Collective vs. Individual Ceiling

On the application of the ceiling, the court ruled that the limit of Rs. 25,000 must be applied separately to each distinct property valued. The bench reasoned that applying a collective ceiling regardless of the number of properties would be anomalous, as it would ignore the additional professional responsibility and time invested by the Valuer.

Grant of Interest

While the 1994 Guidelines are silent on interest, the court invoked its inherent power to grant compensation for the extraordinary delay in payment. Finding the claim of 6% interest reasonable, the court awarded Rs. 8,20,338 in interest, but rejected the Valuer's plea for a further inflation-linked multiplier.

"Once reasonable interest is awarded for the entire period during which the Valuer has been deprived of its professional fees, a further enhancement on account of inflation or erosion in purchasing power would, in the circumstances of the present case, result in overlapping compensation."

No Liability for Receiver

The court held that the Court Receiver and public exchequer could not be held personally liable for the Valuer's dues. The Valuer was granted liberty to lodge its claim before the Official Liquidator, Uttar Pradesh and Uttarakhand, who is tasked with settling the liabilities of the Petitioner Company. The Court Receiver was subsequently discharged without passing accounts, given the suit account was in debit.

The High Court sanctioned the revised principal amount of Rs. 6,51,062 and interest of Rs. 8,20,338, directing the Official Liquidator to process the claim. The judgment serves as a vital precedent for protecting professionals engaged by the Court, emphasizing that administrative lethargy should not result in the denial of legitimate professional dues.

Date of Decision: 03 September 2026