IBBI CANCELLED REGISTRATION OF A REGISTERED VALUER
NEW DELHI (TECHNO REPORTER) 18/08/2023: Authority IBBI (Authority delegated by the Central Government vide notification no. GSR 1316(E) dated18.10.2017 under section 458 of the Companies Act, 2013 read with rule 2(1)(b) of the Companies (Registered Valuers and Valuation) Rules, 2017) vide its Order No-IBBI/Valuation/Disc./19/2023 dated 14 th August 2023 cancelled the registration of a registered valuer as RV had obtained registration with IBBI in the year 2019 and yet he continued to be employed with a Technical Consultancy Organisation.
The Authority in exercise of powers conferred vide notification of Central Government no. GSR 1316(E) dated 18th October 2017, under Section 458 of the Companies Act, 2013 and in pursuance of rule 15 and rule 17 of the Valuation Rules canceled the registration of the said RV. Further, he is barred from seeking fresh registration as Registered Valuer with IBBI, under the Valuation Rules for a period of two years from the date of coming into effect of the Order.
Order said “In terms of rule 3(1)(a) of the Valuation Rules, being a member of a registered valuers organisation is a necessary eligibility condition for an individual to become a Registered valuer. Rule 7(a) of the Valuation Rules further makes it mandatory for a Registered Valuer to all time possess the necessary eligibility criteria as specified under rule 3. Further, rule 7 (b) of the Valuation Rules prescribes that the registration of the valuer is subject to the condition that the valuer shall at all times comply with the provisions of the Act and the Rules. Furthermore, rule 7 (g) of the Rules prescribe that the registration of the valuer is subject to the condition that the valuer shall comply with the Model Code of Conduct (as per Annexure-I of the Rules) of the registered valuers organisation of which he is a member.”
IMPORTANT KEY POINTS AS CASE STUDY
1. As per SCN the above RV has obtained the registration by making false statement, misrepresentation, and untrue statement. The SCN alleges that this conduct of RV has made him not ‘fit and proper’ person under rule 3(1)(k) to be registered as Registered Valuer under the Valuation Rules and has also violated clause 2 and 3 of the Model Code of Conduct.
2. The regulatory regime for the valuation professional under the Valuation Rules framed under section 247 of the Companies Act, 2013 provides for a dual monitoring mechanism on the registered valuers. The Registered Valuers Organisations act as front-line regulators for the registered valuers. They exercise monitoring powers on such registered valuers who are enrolled with it as member. In this furtherance, the RVO can undertake necessary disciplinary actions against its members. This monitoring power exercised by RVO is independent and separate from the monitoring powers exercised by the IBBI under the Valuation Rules.
3. Rule 7(a) read with rule 3(1)(a) of Valuation Rules requires an RV to all time possess the membership of a Registered Valuers Organisation. In this perspective, once the RV ceases to be member of any RVO, he loses his registration with IBBI also. Therefore, in
the instant case too, the registration of RV needs to be revoked in light of the order of Disciplinary Committee of the concerned RVO.
4. There is the intentional omission on part of the RV while filling form of registration in order to secure registration from IBBI.
5. Rule 3(1)(k) of the Valuation Rules makes it mandatory that a person being registered as valuer must be ‘fit and proper’ person. For determining the ‘fit and proper’ status, the authority may take into account any relevant consideration inter alia including integrity, reputation and character. The conduct of RV as mentioned in paras above, impinges on his integrity and character. The Authority find the said RV in violation of rule 3(1)(k) and also clause 2 and 3 of the Model Code of Conduct which provides as follows- “2. A valuer shall maintain integrity by being honest, straightforward, and forthright in all professional relationships. 3. A valuer shall endeavor to ensure that he/it provides true and adequate information and shall not misrepresent any facts or situations.”
6. The order clearly highlighted that the profession of valuation hinges on the trust of stakeholders on the professionals conducting valuation exercise. The presence of a regulatory regime for professionals increases the trust of the stakeholders on the ecosystem of the regulated profession. In such a scenario, the suppression of material facts with the regulatory authority by the RV, undermines the credibility not only of the RV himself but also the regulatory authority, which needs to be protected.
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