Introduction:
This case study relates to the valuation opinion given by me in an arbitration matter. The plaintiff was a Builder/Developer firm from the metropolitan city in India. The defendant was a private non profit organization engaged in research.
The defendants owned a large piece of land in the suburban areas of the metropolitan city in India. The plaintiffs offered to purchase sizeable portion of the said land. The terms of contract were reduced in writing. However subsequently the defendants started avoiding their commitments. This caused the dispute which was referred to the arbitration. Our valuation opinion was taken by the plaintiff.
Overview of key issues:
Around year 2003, the plaintiff offered to purchase part of the land of owned by the defendants. The terms of the contract were concluded and were reduced in writing. The agreement proposed to be executed between the two sides was stamped and sent to the defendants for execution but they refused to execute the same. Therefore, in the year 2009 the plaintiff filed a suit in the High Court and demanded for the specific performance of the contract and in the alternative made claim for damages. However, the dispute was referred to arbitration. In order to substantiate their claim of the damages the plaintiffs took my valuation opinion. The assignment was given to us in year 2015. The relevant date of valuation was of 2009.
Our role and involvement:
We were required to prepare a well justified and well documented valuation report. Our Director was cross examined also. The cross examination lasted for three working days.
As a valuer, our role was to study the documents, visit the subject property, do the local enquiry with estate brokers, collect comparable sale instances, analyses the data collected, arrive at the fair market value at the relevant date.
Our team also interacted the lawyers of the plaintiff so as to understand the matter in detail. Based on all this information we prepared our well justified valuation report.
Problems faced and how we resolved them:
Due to the dispute, the defendants refused to allow our entry to the subject property. Secondly sale transaction of exactly identical lands were not available in the said neighborhood.
The above problems were effectively tackled by using following approach :
Entry and inspection
The said land was provided with compound wall and entrance gates on all sides and had roads along three boundaries. On the fourth side it was bounded by a private property, At the time of external site inspection we could see that the land is really vacant and there is no encroachment. The point was confirmed by observing the google map also.
Selection of sale instances
The sale instances of few residential flats which were located in the neighboring projects were selected. Around the relevant date of the valuation, we had valued number of flats in the neighboring properties. That data proved useful. Registered sale deed of land which were slightly away but having similar attributes were also obtained. Local enquiry was done with brokers and also through internet. Letters were taken from the broker about the then prevailing market rates.
The outcome and conclusions
The inputs and methodology of the valuation reports were appreciated by the learned lawyers of the plaintiff. The cross examination went on for three full days and all the questions were answered with confidence, based on the principles of valuation. It is understood that the arbitration proceedings are still not complete.