KERALA VALUER WINS LANDMARK CASE AGAINST SBI: A VICTORY FOR PROFESSIONALS AND A WAKE-UP CALL FOR BANKS

Kerala’s efforts to secure justice for delayed payments in the valuation sector have recently borne fruit, as a prominent valuer received a favorable judgment from a responsible forum i.e. MSME Facilitation Council, sending ripples through the banking and professional communities alike.

In a bold and determined move, a valuer from Kerala successfully contested the State Bank of India’s (SBI) failure to settle his dues for valuation services. The bank had delayed the payment of his professional fees, which led to a legal battle that has now culminated in a significant victory. The case highlights not only the issue of delayed payments but also sets an important precedent for valuation professionals across the country.

The Case: Delayed Payment and the Power of the Forum

The valuer, who had provided his services to SBI on August 21, 2020, was entitled to a fee of Rs. 7,080 for his work. However, despite repeated follow-ups, the payment was delayed for an extended period, prompting the valuer to take legal action. The case was brought before a responsible forum, which meticulously reviewed the matter and delivered a landmark verdict that has sent a strong message to the banking industry.

As per the MSME Council’s ruling, the bank was not only ordered to pay the original valuation fee but was also directed to compensate the valuer for the delay through compounded interest, which amounted to a substantial Rs. 42,777 (as of August 12, 2024). This ruling marks a significant step toward ensuring that professionals, including valuers, are not left at the mercy of delayed payments or indifferent attitudes from clients, particularly large institutions like banks.

A Lesson for Banks and Their Staff

The ruling serves as a powerful reminder for banks, particularly the staff handling financial transactions and accounts, about the consequences of ignoring or delaying payment to service providers. The judgment is seen as a form of “shock treatment” for those in the banking sector who deliberately disregard the importance of timely payments. It underscores that such delays can lead to serious financial and reputational repercussions for institutions, and that they should adopt a more responsible approach when it comes to settling dues with professional service providers.

The MSME Council’s decision also sends a clear message to the erring bank officials involved in the delay. The compounding interest levied on the outstanding amount is a direct consequence of their negligence, making it clear that delayed payments cannot be taken lightly. The bank, the ruling states, must recover this compounded interest amount from the responsible staff members, further reinforcing accountability within the banking institution.

A Win for Valuers and a Guiding Precedent

For valuation professionals across India, the case offers a crucial lesson in the importance of enforcing their rights when it comes to payment delays. The judgment clarifies that valuers are well within their rights to demand prompt payments for services rendered. Additionally, the forum’s ruling emphasizes that if a bank or financial institution does not provide an opinion on a valuation report within 15 days, the report should be considered as accepted. This is an important clarification, as it removes ambiguity and protects the interests of valuers, who often face significant delays from financial institutions.

The ruling also makes it clear that valuers should no longer accept unexplained delays, particularly when there is no legitimate reason for the holdup. It serves as a powerful reminder that valuers can now use this legal precedent to demand timely payments, ensuring that they are compensated fairly for their services without undue delay.

Implications for the Banking Sector

The decision is expected to have a far-reaching impact on the banking sector, which frequently engages with valuers for property assessments, collateral valuations, and other financial services. Banks, especially those with large volumes of transactions, will likely be more cautious in handling payments to valuers and other service providers. The ruling could prompt a review of internal protocols and timelines to avoid similar issues in the future.

The judgment also reinforces the principle that financial institutions must act transparently and efficiently when dealing with professionals. By establishing a clear timeframe within which to either approve or reject a valuation report, banks can avoid potential legal confrontations and ensure smoother relationships with their service providers.

A Victory for Justice and Accountability

The Kerala valuer’s victory is a significant milestone not just for the individual, but for the entire professional community. It serves as a reminder that timely payments are a basic right for service providers, and that delays caused by large institutions like banks can no longer be swept under the rug. This case also highlights the importance of responsible and transparent practices within the banking sector and sends a strong message about the need for fair treatment of professionals in all industries.

For valuers across the country, the case is a beacon of hope, showing that even in the face of seemingly insurmountable odds, justice can prevail. With this landmark judgment, they can now take confidence in knowing that their rights will be protected, and that they too can hold institutions accountable for their actions.

As the ruling sets a new standard, banks and other financial institutions are expected to reassess their payment practices, ensuring that they are not only complying with regulations but also respecting the professionalism and dedication of those who provide essential services in the financial ecosystem.