IBBI warns PVAI-VPO to be extremely careful in enrolment, recommendation of valuersIt came to the notice of the IBBI that the RVO had enrolled members and issued them certificates despite their ineligibility to become registered valuersThe Insolvency and Bankruptcy Board Of India (IBBI) has warned the PVAI Valuer Professional Organisation (PVAI-VPO) that it should be extremely careful,...
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IBBI warns PVAI-VPO to be extremely careful in enrolment, recommendation of valuers
It came to the notice of the IBBI that the RVO had enrolled members and issued them certificates despite their ineligibility to become registered valuers
The Insolvency and Bankruptcy Board Of India (IBBI) has warned the PVAI Valuer Professional Organisation (PVAI-VPO) that it should be extremely careful, diligent and take effective steps to improve the process of enrolling members, providing the educational course and certificate thereof as also recommending the applications to the IBBI for registration as valuers in accordance with the Companies (Registered Valuers and Valuation) Rules, 2017.
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 they eligible to be registered as registered valuers as per clause 9 of the Model By-Laws of a Registered Valuers Organisation under Part-II of Annexure-III of the Valuer Rules.
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 a Show Cause Notice (SCN)to PVAI-VPO, addressed to the Managing Director of PVAI-VPO, Mr. Avinash Pendse.
It was submitted on behalf of the PVAI-VPO that IBBI found four errors by PVAI-VPO, over the period from June 2018 to June 2020 i.e. two years. It was stated that in the last two years, PVAI-VPO had processed 2000 applications, trained more than 1200 students, out of which at least 700 went for the examination and at least 350 successfully passed exam, which is very good performance compared to many other RVOs in terms of percentage, number and that too in all three classifications.
It was further submitted that the margin of error was less than 1%, which he requested to be considered as a human error. He submitted that PVAI-VPO is learning "hands-on" as there was no formal training and experience to run a regulatory body extension organisation of this nature. He stated that PVAI-VPO being a welfare Organisation, takes time to change governance and functioning to become a regulatory body.
The Whole Time Member of IBBI(Dr. Mukulita Vijayawargiya) stated that in the present case, PVAI-VPO is a RVO recognized under the 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, qualifications and forwarded the applications of candidates who did not meet the length of experience required for an individual to be registered as a valuer to the IBBI.
It failed in its institutional obligations in not scrutinizing the credentials of some of the candidates in a professional manner while enrolling, granting certificate of completion of educational course and forwarding the applications to IBBI for registration.
It was also affirmed that that PVAI-VPO took corrective course of action after taking notice of the aforesaid irregularities. In case of Mr. Nikhil Chandak, when PVAI-VPO came to know about his engagement in service, it refused to process his application initially, however, PVAI-VPO took his resignation letter with an affidavit and processed it further.
Mr. Chandak was relieved within three days from service much before further processing by the IBBI. Thus, as per the DC, PVAI-VPO took corrective course of action. In the case of Mr. Dhaval Chheda, the contention that he joined the organization only for knowledge purpose and admission on behalf of PVAI-VPO that the certificate was issued erroneously due to oversight by PVAI-VPO for the first time was accepted.
In case of Mr. Kapadia Jai Vikram, PVAI-VPO refused to entertain his application based on the period of experience after post-graduation. Subsequently, Mr. Kapadia submitted his experience after graduation but PVAI-VPO stopped supporting his application and advised Mr. Kapadia to directly approach the IBBI for representing himself due to variation in his statements.
Further, the DC held that the admission on behalf of the RVO that procedural irregularity committed by it for the first time was a bonafide and inadvertent error and occurred due to haste, lack of experience and understanding to deal with the procedural issues relating to emerging profession of valuers, called for a lenient view.