The appointment of registered valuers in the corporate insolvency resolution process by the resolution professional within the time limit is made mandatory. IBBI Circular IBBI/RV/019/2018 (w.e.f. 01.02.2019) specifies that only valuers registered with the IBBI under the Companies (Registered Valuers and Valuation) Rules, 2017 may be appointed by the resolution professional. If the valuer who has not registered with the Board is appointed for the valuation purpose in the corporate insolvency resolution process, then the person who undertakes the valuation and the resolution professional will be subject to disciplinary action by the Insolvency and Bankruptcy Board of India
Appointment of registered valuer
Regulation 27 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provides that the resolution professional shall within seven days of his appointment, but not later than forty-seventh day from the insolvency commencement date, appoint two registered valuers to determine the fair value and the liquidation value of the corporate debtor in accordance with regulation 35.
The following persons shall not be appointed as registered valuers-
Regulation 35 requires that fair value and liquidation value shall be determined in Corporate Insolvency Resolution Process. Fair value and liquidation value shall be determined in the following manner-
The Insolvency and Bankruptcy Board of India issued the show cause notice to Mr Avishek Gupta, a resolution professional, in corporate insolvency resolution process in ‘Sri Ganesh Sponge Iron Private Limited’. The material on record is the appointment letter dated 12.04.2009 issued to R.K. Associates Valuers & Techno Engineering Consultants Private Limited (R K Associates), valuation reports relating to Industrial Plant & Machinery and Industrial Land & Building both dated 04.06.2019, valuation report relating to current assets dated 08.07.2019. 
It has been observed that the insolvency professional in the present matter has appointed RK Associates (which was not registered with the Insolvency and Bankruptcy Board of India under the Rules) as one of the valuers in the corporate insolvency resolution process on 12.04.2019. Therefore, the Insolvency and Bankruptcy Board of India is of prima facie view that the insolvency professional has violated section 208 (2) (a) & (e) of the Code, regulation 7 (2) (a), (h) & (i) of the IP Regulations read with clause(s) 10 and 14 of the Code of Conduct contained in Schedule 1 of the IP Regulations, regulation 27 of the corporate insolvency resolution process Regulations and Insolvency and Bankruptcy Board of India circular IBBI/RV/019/2018.
The resolution professional submitted the following before the Disciplinary Committee-
The Disciplinary Committee heard the resolution professional. The Disciplinary Committee observed that an insolvency professional is under an obligation to follow at all times the provisions of the Code and Regulations and the bye-laws of Insolvency Professional Agency of which the insolvency professional is a member and also follow the Code of Conduct specified in the First Schedule to the Insolvency Professional Regulations. The certificate of registration granted to an Insolvency Professional is also subject to this condition. Further, the Code of Conduct specified in the First Schedule of the Insolvency Professional regulations enumerates a list of code of conduct for insolvency professionals including maintaining professional competence for rendering professional service ( clause 10) and not to act with mala fide or with negligence (clause 14).
The Insolvency and Bankruptcy Board of India further clarified in explicit terms through the said circular that no insolvency professional shall appoint a person other than a registered valuer to conduct any valuation under the Code or any of the regulations made there under and reiterated by another circular that appointment of any person, other than a ‘registered valuer’, on or after 1st February, 2019, to conduct any valuation required under the Code or any regulations made there under is illegal and amounts to violation of the Circular aforesaid and the payment to a person other than registered valuer shall not form part of corporate insolvency resolution process.
The Disciplinary noted from the records available that in the matter of corporate insolvency resolution process of the corporate debtor, the resolution professional Mr Gupta, for the purpose of valuation, issued two engagement letters dated 12.04.2019, one to R.K. Associates Valuers & Techno Engineering Consultants Private Limited (RK Associates) and other to Adroit Technical Services Pvt. Ltd (Adroit Services). There were three registered valuers under the umbrella of R. K Associates which is an unregistered entity and three registered valuers under the umbrella of Adroit Services which is a registered valuer entity. Though reports are signed by the individual registered valuers of this entity but there are no separate engagement letters to those individual registered valuers for valuation of the assets of the corporate debtor.
The Disciplinary Committee considered it as illegal Mr Gupta appointed an entity which was not registered with the Insolvency and Bankruptcy Board of India as a registered valuer as on date of its appointment. The Disciplinary Committee observed that there is a lack of due diligence on part of Mr Gupta while appointing R K Associates as a valuer in the corporate insolvency resolution process. The valuation by an unregistered valuer may adversely affect the credibility of whole corporate insolvency resolution process and the resolution based on such valuation.
The Disciplinary Committee found that the valuation reports have not been revised after becoming aware of the mistake and the same have already been considered by the Committee of Creditors while approving the resolution plan in the corporate insolvency resolution process which is currently pending before Adjudicating Authority, Cuttack Bench for approval. A professional should never hesitate in rectifying errors wherever possible which further strengthens his or credibility as well as of the process.
The Disciplinary Committee ordered that Mr Gupta shall not seek or accept any process or assignment or render any services under the Code for a period of two months from the date of coming into force of this Order. He shall, however, continue to conduct and complete the assignments / processes he has in hand as on date of this order.
Action against the valuer
In another case the job of valuation in a corporate insolvency resolution process has been accepted by a registered valuer before being registered with the Insolvency and Bankruptcy Board of India.
The Insolvency and Bankruptcy Board of India granted registration to Mr. Abhishek Ahuja in the asset class of Land and Building on 12.07.2019. It has come to the notice of Insolvency and Bankruptcy Board of India that before being registered as valuer under the Rules, Mr Abhishek Ahuja took valuation assignment in the corporate insolvency resolution process of Arjun Ispat India Private Limited vide engagement letter dated 02.03.2019. Subsequently, the valuation report dated 05.04.2019 was submitted.
A show cause notice was issued by the Board to Abhishek Ahuja on 14.05.2020. Abhishek Ahuja filed the following reply before the Disciplinary Committee-
The Disciplinary Committee observed that by virtue of being a professional it is expected of a valuer to be updated with the law governing his profession, particularly, when the candidate has undergone mandatory training programme and qualified the valuers examination. Mr Ahuja accepted valuation assignment even though he did not have proper credentials with the regulatory authority. Merely because the amount has been refunded back, it does not mean that there is no violation of the provisions. An unauthorized person not registered with the regulatory authority and unbound by the Rules and Code of Conduct submitting valuation report could raise serious issues on the credibility of the CIRP, which may be prone to be challenged before the Court of Law.
The Disciplinary Authority ordered that Mr Abhishek Ahuja shall not accept any assignment for valuation until he again undergoes the 50 Hours educational programme with IOV Registered Valuers Foundation where Mr Abhishek Ahuja is enrolled as a member.
 Article by M.Govindrajan