The Insolvency and Bankruptcy Board of India (IBBI) recently issued an order dismissing an appeal by Mr. Venkata Krishna Srinivasa Raju Penmetsa regarding the cancellation of his registration as a valuer. The cancellation was based on allegations of suppression of facts related to legal proceedings. This article provides an overview of the background, findings, and the order issued by IBBI.
Background:
Mr. Venkata Krishna Srinivasa Raju Penmetsa was registered as a valuer in the asset class of Land and Building (L&B) with IBBI on March 31, 2020. However, his registration faced cancellation due to allegations that he failed to disclose his involvement in legal proceedings initiated by the Enforcement Directorate (ED) against M/s PBR Poultry Tech and others. These allegations were viewed as a violation of the Valuation Rules and the Model Code of Conduct for Registered Valuers.
IBBI Order of June 5, 2023:
The IBBI issued an order on June 5, 2023, after considering the allegations against Mr. Penmetsa. The order examined the contraventions mentioned in the Show Cause Notice (SCN) and the responses provided by Mr. Penmetsa. It concluded that there was suppression of facts that directly impacted the registration process, akin to providing false information for decision-making purposes. As a result, the registration of Mr. Penmetsa was canceled.
Appeal by Mr. Penmetsa:
In response to the cancellation of his registration, Mr. Penmetsa appealed the decision. He argued that the order was issued without a basis of any document indicating his knowledge of the pending cases against him. He also stated that he became aware of the FIR and chargesheet filed by the CBI, ACB Visakhapatnam only after receiving the SCN. Mr. Penmetsa maintained that he had no intention to withhold this information but lacked awareness of the legal proceedings.
Summary Findings and Order:
During a virtual personal hearing on August 23, 2023, Mr. Penmetsa was given the opportunity to submit additional documents regarding his alleged discharge by the ED. However, no such documents were received. The IBBI observed that Mr. Penmetsa had acknowledged receiving a call from the investigation agency in 2015 but had not disclosed this information in his valuer registration application. In light of these findings, the IBBI concluded that there was no reason to interfere with its earlier order of June 5, 2023.
Conclusion:
The IBBI’s order to dismiss Mr. Venkata Krishna Srinivasa Raju Penmetsa’s appeal reinforces the importance of transparency and disclosure in valuer registrations. Valuers are expected to provide accurate and complete information about their legal involvements, and any suppression of relevant facts can result in registration cancellations. This case serves as a reminder of the need for valuers to adhere to the regulatory requirements and maintain the highest standards of professional conduct.
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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
[Authority delegated by the Central Government vide notification no. S.O. 3401(E) dated 23.10.2017 under section 458 of the Companies Act, 2013 read with rule 2(1)(b) of the Companies (Registered Valuers and Valuation) Rules, 2017]
Order No. IBBI/Valuation/Disc.(A)/04/2023 Dated: 29th September, 2023
ORDER
This Order disposes the appeal preferred by Mr. Venkata Krishna Srinivasa Raju Penmetsa against the order dated 05.06.2023 passed by Insolvency and Bankruptcy Board of India (IBBI). The IBBI has been delegated powers by the Central Government to perform the functions of the Authority under the Valuation Rules. Mr. Venkata Krishna Srinivasa Raju Penmetsa is registered with IBBI as a valuer in the asset class of Land and Building (L&B), with the registration number IBBI/RV/04/2020/13012 on 31.03.2020.
1. Brief Background
1.1. The IBBI, in accordance with rule 15 read with rule 17 of the Companies (Registered Valuers and Valuation Rules), 2017 (Valuation Rules), had cancelled the registration of Mr. Venkata Krishna Srinivasa Raju Penmetsa vide its order dated 05.06.2023 (RV Order). The said order disposed of the Show Cause Notice (SCN) No. COMP-11012/82/2022-IBBI/293/8857, dated 24.01.2023, issued to Mr. Penmetsa.
1.2. In terms of rule 17(9) of the Valuation Rules, Mr. Penmetsa preferred an appeal on 05.07.2023 against the RV Order dated 05.06.2023. He availed the opportunity of personal hearing before the appellate authority on 23.08.2023.
2. IBBI Order dated 05.06.2023
2.1. The IBBI issued SCN dated 24.01.2023 to Mr. Penmetsa which contained allegations that he never brought before Authority the fact that he was named as an accused in prosecution complaint filed by Enforcement Directorate (ED) against M/s PBR Poultry Tech & other, and Hon’ble MSJ cum Special PMLA Court, Vishakhapatnam has taken cognizance of the prosecution complaint and also issued summons to him. The above complaint filed by ED is based on the FIR No. RC16(A)/2015 registered by the CBI, ACB, Visakhapatnam on 22.12.2015 against M/s PBR Poultry Tech. After due investigation, CBI had filed chargesheet dated 17.06.2016 before Hon’ble Principal Special Judge of CBI Cases Visakhapatnam against some accused including Mr. Penmetsa under section 120-B r/w 420, 468, 471, 477-A of Indian Penal Code, 1860 and section 1392) r/w 13(d) of Prevention of Corruption Act. This according to SCN was contravention of the rule 3(1)(k), rule 7 (a), (b) and (g) Valuation Rules and clauses 2 and 3 of the Model Code of Conduct for Registered Valuers stipulates under Annexure – I of the Valuation Rules and making him a person not “fit and proper” to continue as a registered valuer and has led to breach of his conditions of registration.
2.2. The IBBI vide its order dated 05.06.2023, examined the contraventions made in the SCN and the written and oral submissions presented on behalf of Mr. Penmetsa. The RV Order cancelled the registration of Mr. Penmetsa observing that there is suppression of facts which has direct bearing on the registration process and akin to manipulating the decision making based on false information.
3. Appeal by the RV
3.1. Mr. Penmetsa in his appeal submitted that the order was pronounced without basis of any document that he has knowledge about the pendency of alleged cases against him. He submitted that he is unable to obtain any record from concerned court where the matter is pending as the same has not reached trial stage and he could not be able to get copies as those filed transferred are not organized by the Hon’ble Court.
3.2. He submitted that he was not aware of the pendency of FIR No. RC16(A)/2015 by the CBI, ACB Visakhapatnam dated 22.12.2015 wherein he was arrayed as accused and subsequent chargesheet filed on 19.12.2016 which he came to know after receiving SCN. He submitted that non-mentioning of the above pendency of the case in the application was due to lack of knowledge but not wanton.
4. Summary Findings and Order
4.1. It is observed that Mr. Penmetsa during the personal hearing on 23.08.2023 attended through virtual mode requested to submit additional documents by 11.09.2023 regarding his alleged discharge given by ED. However, no communication has been received from him till date. It is noted that Mr. Penmetsa has submitted in his reply to SCN dated 31.05.2023 that he has received call from the investigation agency in 2015. The said fact was suppressed from the Board in his application for registered valuer. In view of the foregoing, the Authority does not find any reason to interfere with the order of IBBI dated 05.06.2023. Accordingly, the appeal is hereby disposed of.
Sd/-
(Ravi Mital)
Chairperson, IBBI
Dated: 29th September, 2023
Place: New Delhi
