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2020 (2) TMI 398 - NATIONAL COMPANY LAW TRIBUNAL, MUMBAIApproval of Resolution plan - Whether the adjudicating authority has the jurisdiction of judicial review and appoint an independent valuer to conduct fresh valuation of Intangible assets of CD? - Whether there is any error apparent on the face of valuation reports submitted by the two registered valuerscontrary to the accounted balance sheets of the CD for the year 2018? HELD THAT:- Upon perusal of the warning letters supra, it can be said that warning letters contemplate corrective actions and state that the compliances with CGMP, FDA may withhold approval of any new applications or refusing admission of articles manufactured by CD at Bavla and Vapi units. No record has been placed that these bans were actually imposed and in the absence of the ban, the value of the Intangible assets cannot be zero. The warning letters were only pertaining to drugs export to US and the CD has been exporting drugs to other countries worldwide. It is not the case that CD is exporting the drugs manufactured only to US. The reasoning of the two registered valuers in assigning a NIL value to the intangible assets of CD is absolutely untenable. The Valuation exercise was conducted on certain assumptions that warning letters negate the value of such assets. There was no reasoning provided by the Valuers whether these warning letters prescribe the risk factors and are subject to certain remedy or curative measure/precautionary steps envisaged to be carried out by the proposed Resolution applicant. The Valuers has not referred to any method of valuation in their report, no comparison was drawn of valuing the intangible assets of other Pharmaceutical Companies particularly in relation to the Domestic and International standard of valuation of such Intangible assets worldwide. A critical assessment of risk faced by warning letters ought to have been carried out in the light of available market expectation - Valuation is not exact science and court cannot disregard such report, unless there is a patent error. Thus, assigning nil value to Intangible assets is an error on the face of the two Valuation Reports and hence a fresh valuer needs to be appointed to the limited extent of providing a fair value of Intangible assets. There is no element of fraud but only compares the value assigned to the intangible assets in the financial statement for the year 2017 & 2018 with the Information Memoranda and claims that this is an error apparent on the face of it. I conclude that the Warning letters issued by the USFDA is curable and entails the steps for compliance therein - it is ordered that the Resolution Professional take steps to appoint a fresh Valuer with a limited scope of valuing the Intangible asset considering the International standard of Valuation of a Pharmaceutical Company and submit his report within a period of two weeks of receipt of the order copy and the COC is directed to reconsider the valuation submitted by the third Valuer. Application disposed off.
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