In a significant ruling, a division bench of the Bombay High Court has stayed the action of the IBBI disqualifying a Registered Valuer on account of the scam relating to PMC Bank.
The Petitioner, Vishwanatha Sridhar Prabhu is a Chartered Accountant. He is highly qualified with a Doctorate, an LLB, and a BBM. He is government registered valuer under Section 34AB of the Wealth Tax Act 1957 for the purposes of the Wealth Tax Act, Income Tax Act and Gift Tax Act specifically for stocks, shares, debentures, securities, etc. The Petitioner and other valuers incorporated a company known as Yardi Prabhu Consultants and Valuers Pvt Ltd. The Petitioner is one its directors.
The insolvency regulator declared registered valuer, Vishwanath Sridhar Prabhu, unfit to be eligible, on account of his pending criminal proceedings, in respect of PMC Bank scam, which affected his reputation. Prabhu was registered with IBBI as an RV in the asset class of securities and financial assets.
According to the IBBI, pending criminal proceedings impact the integrity of the RV and the mutual trust between a valuer and a stakeholder.
The IBBI show cause notice also said that the Petitioner being in judicial custody and the filing of the charge-sheet might or had ‘significantly impugned (sic)’ (perhaps to be read as ‘impeached’) the ‘integrity, reputation and character’ of the Petitioner, thus rendering him ineligible under Rule 3(1)(k), which we have extracted above.
Justice G.S. Patel &Justice S.G. Dige“On the face of it, it is difficult to comprehend the reasoning, logic or rationale in this order, especially in paragraph 4.7. Anyone may set the criminal process in motion against anyone. There may be an FIR. There may even be a charge-sheet. But, except in certain specific statutes, the presumption in criminal jurisdiction in this country is still that a person is innocent until he is proved guilty.Today, even charges have not been framed.”
“It is entirely possible that the court in question, when it takes up the charge-sheet, may not in fact frame charges against the Petitioner at all. Even that is not known. The Petitioner may apply for or may obtain a discharge or a quashing order at some appropriate stage. Even that is unknown. We believe that in fact a quashing application is in the process of being filed. There is in addition the possibility of the Petitioner’s acquittal. The impugned order proceeds on the basis that a simple allegation or accusation is enough to impeach the ‘integrity, reputation and character’ of a person, and that on a mere accusation a person is rendered unfit and improper.”
“The impugned order seems to us to have completely overlooked the inherent absurdity that it creates. It proceeds on the basis that the mere pendency of a criminal proceeding robs a person such as the Petitioner of his “fit and proper person” status because it supposedly affects his ‘integrity, reputation and character’. We note that there is no case about the absence of a conviction, restraint orders, competence, or financial solvency. But if any of the eventualities that we have noted above occurs, i.e., no charges are framed, there is a discharge, quashing or an acquittal, we are asked to believe that the fit and proper person requirement, and the integrity, reputation and character of the Petitioner will suddenly get restored to some position anterior in time. In other words, it is being suggested that on account of mere accusations and allegations the Petitioner is already so guilty that his professional integrity, reputation, and character are tarnished.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
