TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 762
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....d section 458 of the Companies Act, 2013 in all the three asset classes with registration number IBBI/RV/2018/007 on 20th June, 2018. 2.2 It had come to the notice of the IBBI that PVAI-VPO enrolled Mr. Dhaval Chheda as its member and issued him a certificate on completion of 50 hours of educational course as a member, despite Mr Chheda not being eligible to become a registered valuer. PVAI-VPO also allowed the application of Mr. Nikhil Chandak and Mr. Kapadia Jai Vikram to be forwarded to the IBBI for registration as registered valuers even though they were neither eligible to be enrolled as members of PVAI-VPO nor were eligible to be registered as registered valuers as per clause 9 of Model Bye-Laws of a Registered Valuers Organisation under Part-II of Annexure-III of the Valuer Rules. 2.3 Upon consideration of the material available on record, the Authorised Officer (AO) of the IBBI was of the prima facie opinion that sufficient cause existed to take actions under the rule 17 of the Valuer Rules and accordingly issued SCN dated 17th June, 2020 to PVAI-VPO, addressed to Managing Director of PVAI-VPO, Mr. Avinash Pendse, seeking his written reply within 15 days of its receipt. ....
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.... ensure that all members who are enrolled, satisfy the eligibility criteria as provided in the Valuer Rules. The Circular issued by IBBI in this regard may be referred to. (d) In view of the clarification provided by the IBBI as above, a person in employment during the relevant period is not eligible to be enrolled with an RVO and he cannot submit an application for registration as a registered valuer. However, in the case of Mr. Nikhil Chandak, PVAI-VPO enrolled him as a member, imparted the educational course to him and recommended his name for registration as a registered valuer in the Form A prescribed in the Valuer Rules although Mr. Chandak was in employment at the relevant time. It is evident from Part C of Form A - Application for registration as a valuer filled in by Mr. Chandak wherein it was stated by him that he was in employment at that time. (e) In respect of Mr. Dhaval Chheda, he was not eligible to be a member as he did not have the requisite number of years of experience. However, PVAI-VPO enrolled him as a member and also imparted the educational course to him, as is understood from the certificate issued to him. The issue came to light when Mr. Dhaval Chheda ....
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....values and ethics in respect of valuation. (ii) clause 9 of Model Bye-Laws of a Registered Valuers Organisation under Part-II of Annexure-III of the Valuer Rules stipulates that - " No individual shall be enrolled as a member if he is not eligible to be registered as a registered valuer with the authority...." (iii) Rule 14 of the Valuer Rules stipulating conditions of recognition provides in its clause (e) that - "The recognition granted under rule 13 shall be subject to the conditions that the registered valuers organisation shall- "....(e) comply with any directions, including with regard to course to be conducted by valuation organisation under clause (a) of sub-rule (2) of rule 12, issued by the authority..." (iv) Rule 4 of the Valuer Rules reads as under- "4. Qualifications and experience.- An individual shall have the following qualifications and experience to be eligible for registration under rule 3, namely:- ... (b) a Bachelor's degree or equivalent, in the specified discipline, from a University or Institute established, recognised or incorporated by law in India and at least five years of experience in the specified discipline thereafte....
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.... A without consulting PVAI-VPO. When PVAI-VPO came to know about his engagement in service, it refused to process his application initially, however, with human consideration, they took his resignation letter with an affidavit and processed it further. 4.3 It was further stated in the reply of PVAI-VPO that Mr. Chandak was relieved in 3 days from service much before further processing by the IBBI. Moreover, it was stated that this was the first mistake of PVAI-VPO. Mr. Pendse admitted on behalf of PVAI-VPO that this is a case of human error and he expects relief in this case. 4.4 With respect to the case of Mr. Dhaval Chheda, it was submitted that Mr. Chheda joined PVAI-VPO only for obtaining knowledge. However, the Certificate was issued to him due to oversight which, he tried to utilize instantly, however, he was caught by NISM when he showed less experience. It was stated by PVAI-VPO that the IBBI was relying on the correspondence from Mr. Dhaval Cheda only and, that PVAI-VPO expects relief in this case as the certificate was issued erroneously for the first time and to a person who joined only for knowledge purpose. 4.5 As regards the case of Mr. Kapadia Jai Vikram, it was s....
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....ural issues. 4.8 During the personal virtual hearing dated 13th October, 2020, Mr. Pendse admitted on behalf of PVAI-VPO that the error was inadvertent and unintended. In view of the same, he requested the Authority to take a lenient view. He further submitted that as the valuation profession was still at an emerging stage, the said errors/mistakes were unintentional and inadvertent and he prayed for relief from the IBBI for errors caused by PVAI-VPO as the same were due to lack of clarity as to the procedural issues. 5. Findings and Analysis 5.1 It is noted that during CIRP process, the valuation is to be done by the registered valuers. Regulation 27 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provides that in all CIRPs the resolution professional has to appoint two registered valuers within seven days of his appointment but not later than fourty-seventh day of insolvency commencement date. A valuer to be registered with the IBBI has to first enrol himself/herself with RVO recognized by the IBBI and complete the 50 hours mandatory educational programme. Subsequently, the valuer has to clear the valuatio....
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....quirements, an individual is eligible to be a registered valuer under the Companies (Registered Valuers and Valuation) Rules, 2017 (Rules), if he: (i) is a fit and proper person, (ii) has the necessary qualification and experience, (iii) is a valuer member of a Registered Valuers Organisation (RVO), (iv) has completed a recognised educational course as member of an RVO, (v) has passed the valuation examination conducted by the Authority, and (vi) is recommended by the RVO for registration as a valuer." 5.5 In the case of Mr. Nikhil Chandak, it is found that PVAI-VPO enrolled him as a member while he was in active service and imparted 50 hours educational course to him. Thereafter, PVAI-VPO recommended his application for registration as a registered valuer to the IBBI. At the time of his registration as a registered valuer, he was engaged in employment and this was admitted by him also in Part C of Form A of his application for registration. He also submitted an affidavit to the IBBI mentioning that he would resign from his employment on receiving the registration from the IBBI. In this regard, submission on behalf of PVAI-VPO that initially, it was unaware of the fact....
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....hows that PVAI-VPO had been casual while verifying the contents of the experience certificate and thereafter recommending the application to the IBBI for registration. 5.8 RVOs being the frontline regulators, it is incumbent them to screen the applications for enrollment as member and thereafter for registration as a registered valuer with utmost care and professionalism to ensure that only those people join the profession who meet the prescribed eligibility norms in terms of qualification and experience. Any lapse, whether intentional or by negligence, has huge cost to the profession and users of valuation services. It also frustrates the role assigned to RVOs under the Rules. They must, therefore, have adequate and matching institutional arrangement to ensure compliance with the Rules in law and spirit and must make every endeavour to discharge their responsivities as envisaged under the Rules. 5.9 In the present case, PVAI-VPO is an RVO recognized under sub-rule (5) of rule 13 of the Valuer Rules. It allowed ineligible candidates to be enrolled as members of its organization even though they did not have proper credentials as per the eligibility norms, qualification and forwar....