The Insolvency and Bankruptcy Board of India (IBBI) has recently cancelled the registration of a Registered Valuer (RV) for suppression of ongoing criminal proceedings against him while applying for Valuer Registration.
An Inspecting Authority (IA) was appointed to conduct inspection of the fact that while applying for the registration as valuer in IBBI, Venkata Krishna Srinivasa Raju Penmetsa had suppressed the facts about the FIR registered against him.
The IA had sent a Draft Inspection Report to Penmetsa on 20.09.2022 for submission of comments within 15 days. However, no reply was received. A reminder was sent on 11.11.2022 for submission of response. Still no response is received by the IA from him.
Subsequently, the IA submitted its report on 21.12.2022.
Based on the findings of the inspection, a prima facie opinion was formed that sufficient cause exists to consider actions under sub-rule (5) of rule 17 of the Valuation Rules and accordingly SCN dated 24.01.2023 was issued to Mr. Penmetsa for 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 Rules. The written reply was sought from Mr. Penmetsa which was not received from him.
The SCN noted that in spite of the fact that Penmetsa was named as an accused by CBI in another case and this fact was never brought before the Authority and falsely claimed that there is no other FIR or charge sheet pending against him. This conduct of Mr. Penmetsa is unbecoming for continuation of his certificate of registration.
Detailing the background, it is elaborated in the SCN that Mr. Penmetsa in his email communication dated 28.08.2022 has submitted that he had applied for the registration of RV on 16.03.2020, whereas he came to know about the Central Bureau of Investigation(CBI) case through telephonic information from CBI, ACB, Hyderabad in the first week of June, 2020. He also stated that he had not received any written communication regarding this case either form CBI or from the complainant.
Penmetsa submitted that he did not have any information with respect to the FIR. When he submitted his RV application, he also submitted a notarized affidavit before the authority. He submitted that another FIR was pending by the CBI, ACB, Visakhapatnam dated 22.12.2015 wherein he was arrayed as accused and subsequently the charge sheet was filed on dated 19.12.2016 is true as per record.
He submitted that during the year 2015, he received a call from the investigating agency and he explained his stand before them and they stated that his name will be removed from the complaint as there is no prima facie case against him. But for the best reasons known to the investigating agency, his name was included in the chargesheet and he came to know about it very recently when he received the SCN from this Authority.
He submitted that the chargesheet filed by the IO clearly goes to show that his involvement was only to the extent of giving valuation of the properties. He further submitted that his enquiry with respect to the above chargesheet revealed that the case after filing the charge sheet was transferred to Vijayawada from Visakhapatnam and since then the same is pending and he did not have any information with respect to the pendency of the same.
He also submitted that he intends to challenge the said charge sheet by filing the quash petition before the High Court of Andhra Pradesh as the same is without any prima facie case against him.
The Disciplinary Committee observed that, “There are two FIRs registered against Mr. Penmetsa and chargesheet has been filed in one of the case.“
It was also noted that, “ED has filed Prosecution Complaint against M/s PBR Poultry Tech & other, in SC 72/2022 wherein, Shri Venkata Krishna Srinivasa Raju Penmetsa (the then panel valuer of Indian Overseas Bank, Visakhapatnam) is arrayed as accused no. 6. 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 and a charge sheet was filed against him on 17.06.2016 in the same. It was also informed by ED that Hon’ble MSJ cum Special PMLA Court, Visakhapatnam has taken cognizance of the Prosecution Complaint on 12.05.2022 and also issued summons to the accused. The charges against the accused including Mr. Penmetsa are under section 120-B read with 420, 468, 471, 477-A of Indian Penal Code, 1860 and section 1392) r/w 13(d) of Prevention of Corruption Act.”
It was clearly stated in the findings of the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) that, “While Mr. Penmetsa has submitted on affidavit dated 08.09.2022 that no FIR or chargesheet is pending against him. The said affidavit does not state the correct facts and in contrary, there is material suppression of facts. Had Mr. Pnemetsa disclosed the correct facts in the affidavit, while submitting application to IBBI for registration as RV, registration would not have been granted by IBBI.”
It was thus found that suppression of facts particularly in relation to the information submitted which has direct bearing on the registration process is a grave act and akin to manipulating the decision making based on false information.
Additionally, if appropriate action is not taken in the instant case, it will give wrong message to other stakeholders to get the registration on the basis furnishing wrong information; keeping the matter resting till somehow the Authority comes to know, if at all, about the correct facts, the DC noted. In the view of the above, the Disciplinary Committee of Whole TIme Member Sudhaker Shukla cancelled the registration of the valuer.
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