IBBI cancels a Valuer's registration over false declaration

IBBI cancels a Valuer's registration over false declaration

IBC requires the resolution professional to engage registered valuers with integrity and unblemished reputation for the purpose of valuation of the corporate debtor

The Insolvency and Bankruptcy Board of India (IBBI) on 9 February 2021 cancelled the registration of Sagar Dattatray Goge as Registered Valuer for the violation of Rule 3(1)(k), 7(a), 7(b) and 7(g) of the Companies (Registered Valuers and Valuation) Rules, 2017 and Clause 2 and 3 of the Model Code of Conduct for Registered Valuers under Annexure-I of the Rules.

Herein, Sagar Dattatray Goge, who was a member of the IIVIRVF was registered with the IBBI as Valuer in the asset class of Land and Building. It had come to the notice of the IBBI that the Valuer gave a false declaration in his application submitted to IBBI that no criminal proceedings were pending against him even though a charge sheet was filed before the Special Judge of the CBI Court, Aurangabad, on 29 December 2015 which is pending for adjudication.

The Valuer in his written statement submitted that he had inadvertently mentioned that no criminal proceeding was pending in the application form. He was under the impression that framing of charge will amount to start of the criminal proceeding and when the charge is framed by the Court, only then can it be said that criminal proceeding is pending. Though charge sheet is filed before Special Judge, Aurangabad, till this date charges are not framed.

The Authority delegated by the Central Government noted that the criminal case was filed on 29.12.2015 and that Mr Goge had appeared before the Special Judge and was granted bail on furnishing surety. The submission of Mr Goge that only charge sheet had been filed against him but he was not arrested and no formal charges had been framed against him by the Special Judge, could not be accepted as he deliberately concealed and misrepresented the facts, especially where such information was expressly required or sought to be disclosed by him in the application.

The Valuer further submitted that there was no substance in the charge sheet filed against him and he would file an application for discharge. Therefore, the Authority was of the considered opinion that the Valuer concealed the fact of pendency of criminal proceedings against him to obtain registration as a registered valuer with the IBBI.

The Authority further noted that the offences alleged in the criminal proceedings were in relation to the professional conduct of a valuer - section 120B of the IPC relating to criminal conspiracy, Section 409 of the IPC relating to criminal breach of trust by a public servant, or by banker, merchant or agent and Section 420 of the IPC relating to cheating and dishonestly inducing delivery of property are serious in nature and are punishable with imprisonment up to seven years. The concealment of information of the criminal proceedings of this nature by the Valuer was a gross violation of the Model Code of Conduct.

The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 mandates under Regulation 27 that valuation is to be conducted for the purpose of the corporate insolvency resolution process (CIRP) by two registered valuers to estimate the fair value and liquidation value of the assets of the corporate debtor, so that it would enable the Committee of Creditors (CoC) and the prospective resolution applicants in making an informed decision on the fate of corporate debtor and that of its stakeholders.

It is the objective of the Code is to have transparency, credibility and consistency in the determination of the value of assets of the corporate debtor and the same may be ensured by adopting uniform valuation standards and best practices. Further, on the basis of the information supplied in the valuation report, the CoC takes an informed decision as to whether to continue with the resolution process or resolve to liquidate. Moreover, it also facilitates the resolution professional to invite prospective resolution plans and inaccuracies in determining the liquidation value could undermine the resolution plan that may be approved on the basis of an incorrect liquidation value.