SCN issued to valuer w.r.t eligibility quashed in absence of direct allegation against her: IBBI

Case Details: Ms.Esther Rani Jakkula, In re - [2022] 137 taxmann.com 292 (IBBI)

Judiciary and Counsel Details

• • Dr. Mukulita Vijayawargiya, Member

Facts of the Case

In the instant case, an FIR was filed under section 120B, read with sections 420, 468 and 471 of Indian Penal Code, 1860 by the Central Bureau of Investigation (CBI) on the basis of a complaint made by State Bank of India in respect of providing inflated valuation of properties which were kept as collateral for a loan amount disbursed by SBI to Mr. Paruchiru Kumar (‘P’).

The authority sent an e-mail to Ms. Rani (‘R’), a member of IOV Registered Valuers Foundation (IOVRVF) and registered with Insolvency and Bankruptcy Board of India (IBBI) as a valuer in asset class of Land and Building, seeking clarification from her regarding the said FIR, along with the submission of necessary documents.

However, no response was received from ‘R’. Thereafter, the authority issued a Show Cause Notice (SCN) under rule 17 of Valuer Rules to ‘R’ for contravention of rule 3(1) of Valuer Rules providing for eligibility of registered valuer. However, ‘R’ did not respond to show cause notice. In fact, ‘R’ submitted that she didn’t receive any information from CBI regarding FIR and came to know about the same from IOVRVF.

Further, she also submitted that valuation report submitted by her was correct and no inflated rates of the said properties were valued by her. Later on, it was found that ‘R’ was not aware of SCN because of some problem in her computer.

IBBI Held

It was held that since, ‘R’ had not been named as accused in FIR registered by CBI, and there was no direct allegation on her and the case was under investigation, the contraventions alleged in SCN did not appear to be established. Thus, the SCN was disposed of without any further directions and ‘R’ was advised to be extremely careful, diligent, and responsive while performing her duties as a registered valuer under the Valuer Rules.

List of Cases Referred to

• • Cushman & Wakefield India (P.) Ltd. v. Union of India [2019] 102 taxmann.com 102/152 SCL 516 (Delhi) (para 4.2).