H.T. Vasudev Vs State Bank of India (Karnataka High Court)
The Karnataka High Court decided two writ petitions filed by civil engineers who had been empanelled as approved property valuers by the State Bank of India. One petitioner had been empanelled in 1998 and the other in 2004, and both continued as approved valuers until 2018–19. After they submitted valuation reports for properties at the bank’s request, the bank issued show cause notices alleging professional misconduct on the ground that the borrowers had submitted forged property documents and that there were discrepancies in the location and extent of the properties. The bank proposed reporting their names to the Indian Banks Association (IBA) and the Insolvency and Bankruptcy Board of India (IBBI) for blacklisting and inclusion in the IBA Third Party Entity (TPE) Caution List. Despite detailed replies denying misconduct, their names were included in the TPE Caution List, leading them to seek judicial review.
The petitioners contended that they had discharged their professional responsibilities with due diligence by inspecting the properties and furnishing valuation reports. They argued that scrutiny of title deeds, verification of the genuineness of property documents and examination of ownership records did not form part of the duties of an approved valuer and therefore any discrepancy in the borrowers’ documents could not constitute professional misconduct on their part. They also challenged the continuation of their names in the IBA TPE Caution List despite representations seeking removal. The respondents maintained that the bank had rightly disempanelled the petitioners and included their names in the caution list because of discrepancies relating to the property documents and the identity, location and extent of the properties.
