Vishwanatha Sridhar Prabhu Vs. Union of India Case Summary
Case Citation: (2023) ibclaw.in 11 HC
–Akhila Bolla, B.com, LL.B, GIP and working as Legal and Compliance Officer at NeSL
Background of the Case
The Petitioner is a Chartered Accountant. He is government registered valuer 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. One of the clients of this firm Yardi Prabhu Consultants was the Punjab and Maharashtra Cooperative Bank Ltd (“PMC”).
Facts of the Case:
On September 2019, a First Information Report came to be registered by the Economic Offences Wing (“EOW”) through its Banking Unit-II, a Division of Mumbai Police. This was directed against certain officials of the PMC. The case was one of on creation of fictitious and the siphoning of huge sums of money for the benefit of a corporate entity known as Housing and Development Infrastructure Ltd (“HDIL”). That company was already being put through the insolvency and bankruptcy process apart from other criminal charges against its various directors.
Yardi Prabhu Consultants, the firm of which the Petitioner was a promoter director, has PMC on its client list. The Petitioner did not serve on the HDIL board. The Petitioner did not serve on the PMC board. A team of valuers worked for that bank. One of the several valuers on the PMC panel was Yardi Prabhu Consultants. This connection is what prompted the EOW to approach the petitioner for questioning and investigation. The petition accurately notes that the petitioner was taken into custody on March 12, 2020. Charge sheets were submitted by the EOW. In one of these charge sheets, the petitioner is accused as No. 14. From 12th March 2020, until he obtained bail on 20th June 2022, the Petitioner was in judicial custody.
While the Petitioner was in judicial custody, the IBBI by an email issued a show cause notice dated 4th May 2021 to the Petitioner asking why the registration of the Petitioner with the IBBI should not be cancelled. The basis of the show cause notice was the charge-sheet filed by the EOW for an alleged role in the activities of the PMC. The charge-sheet set out alleged offences inter alia under Sections 201, 406, 420, 465, 467, 468, 471 and 477A of the Indian Penal Code read with Section 120B of that Code and Sections 46(1) and 47A of the Banking Regulation Act. The show cause notice of 4th May 2021 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 is the Eligibility for registered valuers who must be is a fit and proper person.
- (a) Section 201—Causing disappearances of evidence of offence, or giving false information, to screen offender— punishable with imprisonment may extend from 7 years to one-fourth part of the longest term of the imprisonment provided for the offence.
- (b) Section 406—Punishment for criminal breach of trust— punishable with imprisonment up to 3 years, or with fine, or with both.
- (c) Section 420—Cheating and dishonestly inducing delivery of property—punishable with imprisonment up to 7 years and fine.
- (d) Sections 465 and 471—Punishment for forgery and using as genuine a forged document or electronic record— punishable with imprisonment up to 2 years or fine.
- (e) Section 467—Forgery of valuable security, will, etc.— punishable with imprisonment for life or with imprisonment up to 10 years and fine.
- (f) Section 468—Forgery for purpose of cheating punishable with imprisonment up to 7 years and fine.
- (g) Section 477A read with section 120B—Falsification of accounts and punishment of criminal conspiracy—punishable with imprisonment up to 7 years or fine or both.
On May 28, 2021, the petitioner responded via email to the show-cause notice through his lawyers. that the allegations in a charge sheet were not proven by the charge sheet’s simple filing. The situation was still up for trial. Whatever the evidence may be against the PMC and HDIL, the petitioner contended that the entire case against him was premised on speculation and assumption. On February 28, 2022, the IBBI, acting through its Whole Time Member (or “WTM”), issued the impugned order suspending Mr. Vishwanath Shridhara Prabhu’s registration as a registered valuer until the conclusion of the trial into the allegations against him.
On 6th August 2022, the Petitioner made a representation to the Union of India pointing out that the disputed order passed by the IBBI, which had no convincing reasons and was contrary to law. There is no response from the Union of India. Hence this Petition is filed by the petitioner.
The Hon’ble High Court decided in the above matter that it is satisfied that the disputed order must be stayed. High Court in this case has granted Interim relief for Pending the hearing and final disposal of the present Writ Petition, stay the operation and effect of the Order passed on February 28, 2022 passed by the IBBI for suspending the registration of Mr. Vishwanath Shridhara Prabhu as a registered valuer till he is acquitted of the charges.
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