M/S.A.K.Samantaray And Co. PVT.LTD. vs. Indian Banks Association

1. This matter is taken up through hybrid arrangement.

In this Writ Petition, the Petitioner/Company has made a prayer to quash the letter dated 04.04.2018 issued by the Assistant General Manager (CR)/ Opposite Party No.3 addressed to the Senior Vice-President, Indian Bank’s Association, World Trade Centre Complex, 6th Floor Cuffe Parade, Mumbai, 400005/ Opposite Party No.1 reporting the names of Third Party Entities (TPE) by Bank and the letter dated 08.05.2018 issued by the Opposite Party No.1 addressed to Chief Executives of all member Banks sharing the information of TPE.

Heard learned counsel for the Parties.

The fact of the case as narrated in the present Writ Petition is that the Petitioner’s Managing Director Sri A.K.Samantaray after obtaining a degree in Engineering has been registered under CBDT as an approved valuer since 2002. He has been empanelled by 52 Banks, financial Institutions including Oil Companies, PSUs etc. apart from few NBFCs. The Petitioner is also in the panel of big industries in the State like OCL, IMFA, PPL etc. He has been discharging his duty diligently without any complaint from any quarter.

The Petitioner was allotted with a valuation work by the Opposite Party No.4/ Branch Manager, Central Bank of India, Palaspali Branch, Bhubaneswar concerning a property of the Opposite Party No.5/ Sashikanta Mishra who had offered his land on equitable mortgage for securing the loan to be availed as a loanee and, accordingly, approached the Bank.

The Petitioner was asked by the Opposite Party No.4 to submit a valuation report concerning the properties of Sri Sasikanta Mishra. Representative of Shri Mishra contacted the Petitioner's office for necessary valuation of the property and furnished Xerox copies of the sale deed and RORs showing that the land stands recorded in the name of Sri Sasikanta Mishra.

The Petitioner along with the staff went to the spot which was identified by the representative of the Opposite Party No.5 and after spot verification necessary information were taken from the concerned Government Offices and the adjoining localities to inquire about the market value.

After obtaining the relevant documents from different authorities, the Petitioner submitted his report to the Bank along with documents on 27.01.2015 which were made available with the Opposite Party No.

The Petitioner while submitting the valuation report had also furnished his bill towards his professional fees and subsequently, the same was paid by the Opposite Party/ Bank to the Petitioner.

However, when the allotment of work to the Petitioner was reduced considerably by different Banks, he made inquiries and he was told that the valuation report submitted by him concerning the property of the Opposite Party No.5 was based on some forged documents.

Thereafter, the Opposite Party No.3 vide letter dated 04.04.2018 requested the Opposite Party No.1 to put the name of the Petitioner in the cautionary list. In turn, the Opposite Party No.1 vide letter dated 08.05.2018 informed all the Chief Executives of all Member Banks regarding the allegation against the Petitioner and similarly placed persons. However, it has been clearly noted in the said letter dated 08.05.2018 that inclusion of name would not be a bar for continuing relationship with the Petitioner.

Challenging such inclusion of his name in the cautionary list of the Indian Bank’s Association (IBA), the Petitioner has filed the present Writ Petition.

Learned counsel for the Petitioner submits that inclusion of the name of the Petitioner in cautionary list is not in consonance with the rules and guidelines framed by the IBA. The IBA has formulated a detailed guidelines regarding empanelment of valuers so also the manner in which they are to be regulated with regards to rendering of services to different organizations. The IBA has also out lined and set up a forum which considers de- empanelment of the TPEs (Third Party Entities). The detailed procedure has been laid at Clause- 1.4 which stipulates that on receipt of any complaint or information regarding professional misconduct or negligence on the part of a TPE, the concerned department is to seek explanation from the concerned TPE so also to provide him a chance to present his case against the allegation. It is further provided that after evaluating the response on TPE and on the basis of further information/clarification, if any, the case of the TPE is to be decided and, thereafter, it has to be recommended for putting his name in the cautionary list. Further, it has prescribed at Clause- 2.1 that IBA/ Opposite Party No.1 on receipt of recommendation, if any, will examine in detail, the role of the TPE and after taking into consideration all the relevant materials it is to be considered on the disability on inclusion of name of the TPE in the cautionary list. In spite of the clear guidelines available as above the Central Bank of India before requesting Indian Bank’s Association for inclusion of the name of the Petitioner in cautionary list, has not followed any of the procedures as prescribed in the IBA guideline as stated above.

She further submits that in the present case neither the Petitioner was informed about the alleged forged nor was any explanation called from him. Rather, all of a sudden, the Central bank stopped allotting him assignments and the same has been followed by other Banks which has caused great damage to the Petitioner’s interest.

It is further submitted that the guideline prescribed that before taking any action which is detrimental to the interest of a person, a reasonable opportunity of being heard should have been afforded to the TPE by passing such administrative order shall have far reaching consequences not only in detriment to the professional interest but also to the Petitioner’s right of livelihood and also the right to live with dignity. It is also submitted that the Petitioner has 41 persons in his pay roll who are registered with ESI and Provident Fund Organization. The Petitioner is also registered with GST and pays nearly 2.5 lakhs approximately per month to the taxing authorities. Therefore, such action of the Bank would affect the livelihood of 41 employees.

She further contends that the Central Bank of India has acted in hasty manner recommending the name of the Petitioner for inclusion in cautionary list in order to cover up its latches as it is aware that the Petitioner is not professionally equipped to verify the authenticity of the documents supplied to him for evaluation work. The Petitioner's job is limited to verity the property which is done on the basis of available construction and market rate and also bench mark valuation of the concerned Mouza.

In such view of the matter, the prayer of the Petitioner may be allowed quashing the impugned letters.

Per contra, learned counsel for the Opposite Party No.4 brings to the notice of this Court to the counter affidavit especially paragraphs-5 to 9 of the same wherein it is submitted that the Petitioner has not acted as per the procedures of the Bank, but suo moto collected the photocopies of the documents from the prospective guarantor/mortgagor of the loanee without the knowledge of the Bank authorities and submitted the opinion and valuation report to the Bank. The Bank on good faith accepted the same, but subsequently, it is ascertained that the documents are forged, as a result of which, the Bank exposed to loss of public money to the tune of Rupees Twenty Five Lakhs and with interest it touches more than a Crore.

Paragraphs-5 to 9 of the counter affidavit filed by the Opposite Party No.4 are quoted below: ‚5. That the petitioner in the aforesaid Writ Petition further contended that, the Opposite party No.4 has requested him to submit a Valuation Report concerning the properties of the opposite party No.5 and accordingly the Opposite party No.5 handed over the Photocopies of the documents to him and after verification of said documents in the concerned Government offices as well as spot verification, he has submitted his report to the Bank along with the documents, which were made available to him by the Opposite party No.5, who was agreed to remain/stand as Guarantor/Mortgagor of loan transaction of the prospective Loanee, M/s. Satyadeep Traders.

That the further case of the petitioner is that, after submission of the said Valuation Report, suddenly the allotment of work to the petitioner by different Banks reduced considerably, for which he made enquires and he was told, the Valuation Report submitted by him concerning the property of the opposite party No.5 before the Opposite party No.4 is totally based upon forged documents as a result of which on the recommendation of the opposite party No.4, his name has been included in the Cautionary List of the Indian Bank’s Association. Hence/ he has filed the present writ petition with the prayer as aforesaid.

That in reply to the fact stated and submissions made by the petitioner in different paragraphs of the writ petition, this deponent humbly submits that, the petitioner was asked to submit the Valuation Report of the properties of Opp. party No.5, but the petitioner without the knowledge of the Opp. party No.4, suomoto collected the photocopies of the properties documents directly from the Opp. party No.5 and on the basis of said forged photocopies of the documents, submitted the Valuation Report before the Bank.

That this deponent humbly submits that, the petitioner, himself in Paragraph-5 to 7 of the writ petition clearly admits that, the Opp. party No.5, who is the mortgagor of the prospective Loanee, handed over the photocopies of the documents to him directly and he along with his staff went to the spot which was identified by the Representative of Opp. party No.5 only and after the verification, he prepared the Valuation Report and submitted the same to the Bank,

That it is pertinent to mention here that, basing on the said Valuation Report, the Opp. party No.4 sanctioned the loan to the tune of Rs.25,00,000/- (Rupees Twenty Five Lakhs) cash credit loan limit and after availing the loan, the loanee as well as the Opp. party No.5 who is the Guarantor -Cum- Mortgagor knowingly defaulted in paying the loan amount and his loan account became NPA. The Opp. party No.4 finding no other way out, issued call cards to the Loanee as well as the Opp. party No.5, but they remained silent and after enquiry it is ascertained that, the opinion given by the petitioner is based on forged documents. Thereafter, the Opp. party No.3, requested the Opp. party No.l to put the name of petitioner in the Cautionary List and accordingly the name of petitioner included in the cautionary list.”

In view of the facts and circumstances narrated above, he contends that the Writ Petition is devoid of any merit and liable to be dismissed with costs.

Having heard the learned counsel for the parties and upon perusal of materials available on record including the counter affidavit filed on behalf of the Opposite Party No.4, it is found that the Opposite Party No.5, who is the mortgagor of the prospective loanee, handed over the photocopies of the documents to the Petitioner directly and he along with his staff went to the spot which was identified by the representative of the Opposite Party No.5 only and after the verification, the Petitioner prepared the Valuation Report and submitted the same to the Bank. However, as per the guideline of the IBA, before taking any action which is detrimental to the interest of a person, a reasonable opportunity of being heard should be afforded to the TPE.

In such circumstances, this Court is of the considered view that for the ends of justice and to ensure that principles of natural justice is not violated, the Petitioner ought to be given an opportunity of being heard on the issue raised by the Petitioner.

Accordingly, the Petitioner is directed to approach the concerned Opposite Party/ Bank by filing an application ventilating his grievance within a period of three weeks hence. In such event, the Opposite Party/ Bank shall consider the application to be filed by the Petitioner and pass a reasoned order in accordance with law, after giving an opportunity of hearing to the Petitioner.

It is made clear that this Court has not expressed any opinion regarding the merits of claims of either of the Parties.

Accordingly, this Writ Petition is disposed of.

Interim orders passed earlier stand vacated.