bankruptcy

IBBI bans Insolvency Professional for 3 months for appointing unregistered valuer

IBBI bans Insolvency Professional for three months for appointing unregistered valuer

ABACUS Case Law Citation
ABCAUS 3372 (2020) (08) IBBI

In a recent case, Disciplinary Committee of IBBI has banned an Insolvency Professional for a period of three months for appointing unregistered valuer

Under regulation 27 of the corporate insolvency resolution process (CIRP) Regulations, it is the duty of the Insolvency Professional (IP) to appoint registered valuers within 7 days of their appointment and not later than forty-seventh day from insolvency commencement date to determine the fair value and liquidation value of the Corporate Debtor (CD).

Further, IBBI Circular IBBI/RV/019/2018 dated 17th October 2018 (w.e.f. 1st February 2019) specifies that only valuers registered with the IBBI under the Valuation Rules may be appointed by the IP.

The DC found that the Resolution Professional (RP) had appointed a valuer in relation to the CIRP who was not registered with the Board under the Companies (Registered Valuers and Valuation) Rules, 2017 (Valuation Rules). In other words the valuer appointed was unregistered.

The case of the RP was that hat he had got reference of valuer from a co-professional and appointed him when the said unregistered valuer provided him relevant mark sheet and certificate of passing of the valuers examination and quoted the fee and represented that he was registered with the Board
 
It was submitted that the said person also ensured to provide the certificate of registration at the earliest. The fact that the said valuer was not registered with the Board came to the knowledge of the IP after when the said valuer provided the copy of his registration certificate. That the amount of valuer’s fee was refunded by the said valuer to the CD and, therefore, no loss occurred to the CD.
 
The DC noted that the IP appointed a person who was not a registered valuer as on the date of his engagement. Therefore, the conduct of IP was in contravention of the following provisions of the Code and Regulations:-
 
1 (a) Clause (d) of sections 25 (2) and clauses (a) and (e) of 208 (2) of the Code;
 
(b) Clauses (a),(h)and (i) of regulation 7(2) of the IP Regulations read with clauses 10 and 14 of the Code of Conduct contained in the First Schedule of the IP Regulations;
 
(c)Regulation 27 of the CIRP Regulations
 
2. IBBI Circular IBBI/RV/019/2018 dated 17th October 2018
 
In view of the above, the Disciplinary Committee, gave the following directions:
 
(i) The IP was banned to seek or accept any process or assignment or render any services under the Code for a period of three months .
 
(ii) The IP was allowed to conduct and complete the assignments / processes he has in hand
 

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