Case Law Details
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.
The High Court identified the principal issue as whether the bank was justified in disempanelling the petitioners and placing their names in the IBA TPE Caution List on the basis of discrepancies in the title deeds, property documents and the location and extent of the properties covered by their valuation reports.
Examining the notices issued by the bank, the Court found that the allegations against both petitioners were founded solely on the assertion that the title deeds were forged or not genuine and that the actual property differed from the documents furnished by the borrowers. The Court held that assessment of the legality, validity, genuineness and authenticity of title deeds and property documents falls within the domain of the bank’s legal counsel and not that of an approved valuer. It observed that a valuer’s professional responsibility is confined to inspecting the property and determining its valuation based on the guideline value, market value and other relevant valuation parameters. Verification of title documents and legal scrutiny of ownership records are matters requiring legal expertise and cannot be attributed to civil engineers acting as valuers.
The Court further held that the alleged discrepancies in the title deeds and property records had no nexus with the professional duties expected of the petitioners while preparing valuation reports. Consequently, the allegations relied upon by the bank could not amount to professional misconduct warranting disempanelment or inclusion in the IBA TPE Caution List. It therefore concluded that the impugned actions of the respondents could not be sustained.
Accordingly, the High Court allowed both writ petitions. In one petition, it quashed the communication dated 01.08.2022, directed the Indian Banks Association to remove the petitioner’s name from the TPE Caution List, publish and upload a fresh list deleting his name, and directed the bank to remove his name from all caution or disempanelment lists within four weeks. Similar directions were issued in the second petition. The Court clarified, however, that the order would not prevent the bank from deciding, in accordance with law, not to renew or continue the petitioners’ services as valuers in future.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In W.P.No.22386/2022, petitioner seeks the following reliefs:
“(i) Call for the entire records leading to the hosting / placing the petitioner’s name in the TPE Caution Lit as on 26.07.2022 uploaded by the 3rd respondent in its website www.iba.org.in; as reflected in Annexure – F.
(ii) To issue a writ of mandamus or any other appropriate writ, order or direction, directing the 3rd respondent to forthwith remove the name of the petitioner from the TPE Caution List as on 26.07.2022 uploaded by the 3rd respondent in their website www.iba.org.in; as reflected in Annexure ‘F’;
(iii) Issue such other writs, direction and orders as this Court deems fit to grant in the facts and circumstances of the case; and in the interest of justice and equity.”
In W.P.No.17989/2022, petitioner seeks the following reliefs:
“(i) Call for records of the proceedings in relation to the Show Cause Notice No.SME/ADV/RMSME/2021-22/283 dated 21.05.2021 (Annexure – L) and Show Cause Notice No.R1/THANE/FRD/2021-22(0000900) dated 06.08.2021 Annexure – N issued by the second respondent to the petitioner;
(ii) Issue a writ in the nature of a mandamus or any other writ directing the first respondent to delete the name of the petitioner from the Caution List circulated by the first respondent Association to all of its member banks; and
(iii) Pass any such order/s as this Hon’ble Court may deem fit in the interests of justice and equity.”
2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. The petitioner in both the petitions are Civil Engineers by profession and were empanelled as an approved Property Valuer by the respondent – bank. While, Sri. H.T.Vasudev, petitioner in W.P.No.22386/2022 was empanelled in the year 1998, Sri. D.V.Yogisha Rao, petitioner in W.P.No.17989/2022 was empanelled by the respondent – bank in the year 2004. Both the petitioners were continued as empanelled valuers by the 2nd respondent – bank till the year 2018-19.
4. The aforesaid Sri. D.V.Yogisha Rao, petitioner in W.P.No.17989/2022 issued a valuation report dated 03.01.2019 as requested / directed by the respondent – bank. In pursuance of the same, the respondent – bank issued a notice dated 21.05.2021 calling upon the petitioner to show cause and provide explanation as to why his name should not be reported to Indian Banks Association (IBA) – 1st respondent and IBBI for blacklisting and placing the name of the petitioner in the Caution List. It was alleged by the respondent – bank that the property documents submitted by the borrower were forged and the location and extent of the property was not correct as per the property documents.
5. The petitioner Sri. D.V. Yogisha Rao submitted his reply dated 17.06.2021 and intimated the bank that his job / duty as a valuer had been performed by him with due diligence and any discrepancy in the title deeds and other property documents cannot be attributed to him nor can he be found fault with the same or be charged with professional misconduct as alleged by the bank.
6. The respondent – bank issued one more Show Cause Notice dated 06.08.2021 to which petitioner submitted one more detailed reply dated 16.08.2021. Subsequently, petitioner learnt that his name was there in the Caution List issued by the bank and accordingly, he submitted a representation dated 08.08.2022 seeking removal of his name from the Caution List. So also, the petitioner came to know that the 1st respondent – IBA had circulated a Caution List to all its member banks in which the name of the petitioner was found and accordingly, petitioner sent several e-mails to the bank including e-mails dated 01.09.2022 and 02.09.2022 calling upon the bank to furnish the Caution List circular sent by the 1st respondent – IBA and since the respondents did not take any steps in this regard, petitioner is before this Court by way of the present petition.
7. Similarly, H.T.Vasudev, petitioner in W.P.No.22386/2022 having conducted a valuation in the year 2018 at the behest of the respondent – bank submitted his valuation report on 25.10.2018. After almost three years, the respondent – bank issued a letter dated 21.05.2021 calling upon the petitioner to show cause as to why his name should not be blacklisted for professional misconduct in relation to the report due to discrepancies in the title deeds, property documents and location, extent and identity of the property. The petitioner submitted a reply dated 21.06.2021 despite which the bank issued one more notice dated 06.08.2021 to which also the petitioner submitted his reply dated 21.08.2021, despite which, the bank issued the impugned Communication dated 01.08.2022 intimating the petitioner that he has been depanelled / disempanelled as per IBA TPE Caution List as on 26.07.2022. It is the grievance of the petitioner that despite submission of representations dated 19.09.2022 and 26.09.2022 by the petitioner to the bank as well as the IBA, the name of the petitioner continues to remain in the TPE Caution list uploaded by the 3rd respondent – IBA and as such, the petitioner is before this Court by way of the present petition.
8. Per contra, learned counsel for the respondents would reiterate the various contentions urged in the Statement of objections and submits that the bank was fully justified in disempanelling / depanelling both the petitioners for their professional misconduct and placing their names in the TPE Caution List / Circular issued by the IBA and as such, there is no merit in the petitions, which are liable to be dismissed.
9. The only question that arises for consideration in the present petitions is as to whether the respondent – bank was justified in disempanelling / depanelling the petitioners from their panel of valuers and placing / inserting their names in the TPE Caution List / Circular issued by the IBA on the ground that there were discrepancies in the title deeds and property documents in respect of which the petitioners had submitted a valuation report and the location and extent of the property. In this context, it is relevant to state that a perusal of the notices issued by the respondent – bank to both the petitioners will clearly indicate that the sole ground on which they are sought to be disempanelled / depanelled is by stating that the documents / title deeds of the property were forged and not genuine documents and there were discrepancies between the extent and location of the actual property available in respect of which a report was submitted by the petitioners and the property as per the documents furnished to the respondent – bank.
10. In my considered opinion, the alleged discrepancies in the extent and location of the property available at the spot in relation to the property documents is to be scrutinized and assessed by the legal counsel of the bank and not by the petitioners, who are merely civil engineers and approved valuers, whose duties and responsibilities are to inspect the property and submit their report regarding the valuation on the basis of the guideline value and actual market value by taking into consideration all relevant parameters, which does not include scrutiny of the title documents and property records, which would lie in the realm of scrutiny by the legal counsel and not by the petitioners. Similarly, the legality, validity, genuineness and authenticity of the documents furnished by the borrower to the bank would necessarily have to be assessed and examined by the legal counsel of the bank and not by the petitioners, who are not qualified or eligible or entitled to render any opinion in this regard, which is beyond their skill and expertise, which solely vests with the legal counsel; in other words, it is the sole duty and responsibility of the legal counsel of the bank to give necessary advice by scrutinizing the title deeds and documents after obtaining the valuation report furnished by the petitioners, who cannot be attributed with professional misconduct on account of discrepancies in either the property documents or location / extent of the property in respect of which they submitted their valuation report. To put it simply, the various allegations and claim made by the respondent – bank describing / categorizing the valuation report submitted by the petitioners as an act of professional misconduct clearly has no nexus / connection whatsoever with the nature of duties and responsibilities to be fulfilled and performed by them while submitting a report. Under these circumstances, I am of the considered opinion that the petitions deserved to be disposed of by issuing necessary directions to the respondents to remove the names of the petitioners from the TPE Caution List and by issuing further directions in this regard.
11. In the result, I pass the following:
ORDER
(i) W.P.No.22386/2022 is hereby allowed.
(ii) The impugned Communication at Annexure – F dated 01.08.2022 is hereby quashed.
(iii) The 3rd respondent – Indian Banks Association is directed to remove / delete the name of the petitioner from the TPE Caution List and issue a fresh / new list by deleting the name of the petitioner and also upload the fresh / new list without the name of the petitioner in its website iba.org.in as expeditiously as possible and at any rate within a period of four weeks from the date of receipt of a copy of this order.
(iv) The respondent Nos.1 and 2 – bank is also directed to take necessary steps to delete the name of the petitioner from the TPE Caution List or any other list showing / indicating the name of the petitioner as disempanelled / depanelled valuer of the bank within a period of four weeks from the date of receipt of a copy of this order.
(v) It is however made clear that this order will not come in the way of Respondent Nos.1 and 2 – bank taking necessary steps not to renew the services of the petitioner or to continue the services of the petitioner as a valuer by passing appropriate orders in this regard and liberty is reserved in favour of Respondent Nos.1 and 2 to do so, in accordance with law.
(vi) W.P.No.17989/2022 is hereby allowed.
(vii) The 1st respondent – Indian Banks Association is directed to remove / delete the name of the petitioner from the TPE Caution List and issue a fresh / new list by deleting the name of the petitioner and also upload the fresh / new list without the name of the petitioner in its website iba.org.in as expeditiously as possible and at any rate within a period of four weeks from the date of receipt of a copy of this order.
(viii) The respondent No.2 – bank is also directed to take necessary steps to delete the name of the petitioner from the TPE Caution List or any other list showing / indicating the name of the petitioner as disempanelled / depanelled valuer of the bank within a period of four weeks from the date of receipt of a copy of this order.
(ix) It is however made clear that this order will not come in the way of Respondent No.2 – bank taking necessary steps not to renew the services of the petitioner or to continue the services of the petitioner as a valuer by passing appropriate orders in this regard and liberty is reserved in favour of Respondent No.2 to do so, in accordance with law.
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