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TMI Blog2019 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... actice but wanted to simultaneously practice law. The objective and intention behind laying down the impugned Rule is clearly to introduce higher standards of professionalism in valuation industry, specifically in relation to valuations undertaken for the purpose of Companies Act and IBC, 2016. The impugned Rule obviates the possibility of conflict of interest on account of diverging interests of constituent / associate entities which resultantly shall undermine the very process of valuation, being one of the most essential elements of the proceedings before NCLT. Thus, making eligible only companies other than subsidiary companies, associate companies and joint ventures for the purpose of registration as valuer, a separate class has been carved out based on classification which is founded on intelligible differentia and as such the Rule cannot be faulted - petition dismissed. - W.P.(C) 9883/2018, CM No. 38508/2018, W.P.(C) 9889/2018, CM No. 38522/2018, W.P.(C) 9890/2018, CM No. 38524/2018,W.P.(C) 9927/2018, CM No. 38673/2018, - - - Dated:- 31-1-2019 - MR. V. KAMESWAR RAO J. Petitioner Through: Mr. Vikas Singh, Sr. Adv. With Mr. Karan Malhotra, Mr. Vikram Bajaj, Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. Further the petitioner had invested time, money and experience in creating a pool of resources to carry out quality valuation services in India. 5. According to him, with the advent of Companies Act, 2013, the concept of Registered Valuer was introduced for the first time. As per Section 247 of the Companies Act, where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets or net worth of a company or its liabilities under the provision of the Companies Act, it must be valued by a Registered Valuer. 6. On October 18, 2017, Section 247 of the Companies Act was notified along with the Companies (Registered Valuers and Valuation) Rules, 2017. According to him, Rule 3(2)of the RV Rules and in particular Rule 3(2)(a) explicitly provides that a company shall not be eligible to be a Registered Valuer, if it is a subsidiary, joint venture or associate of another company or body corporate, and this has impaired the right of the petitioners to carry on trade and business, which is guaranteed by the Constitution of India, as it ousts the petitioner from being a Registered Valuer merely on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts on net worth of a company or its liabilities under the provisions of the Companies Act, 2013 or the RV Rules. She states that the explanation to Rule 1(3) clearly stipulates that the conduct of valuation under any other law other than the Companies Act, 2013 shall not be affected by the coming into the effect of the Rules in question. 11. It is also her endeavor to rely on Section 247 of the Act which introduced for the very first time the concept of valuation by a registered valuer having qualifications, and requisite experience so that an impartial, true and fair valuation may be made. Such a provision did not exist under the old Companies Act, 1956. She submits that credible valuation of assets is critical to the efficient working of the financial market. Till the commencement of the Act and the Rules, there had not been any generally accepted and uniform standards in asset valuation system in India. Valuers had been adopting divergent methodologies resulting in vast differences in their conclusions. Due to divergent valuation outcomes and criteria, asset valuation in India was not considered credibly. Lack of authentic valuation reports of assets pointed fingers at the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation as a profession and not as a business formed with the sole purpose of profit maximization. The endeavor of the Rules is to introduce a class of professionals where the focus is on the professionals skills of the individuals rather than a business venture. Professionalism is introduced into the profession of valuation, which involves sophisticated skills and a high degree of integrity, impartiality and ethics for the purposes of the Companies Act and IBC, through Valuation Rules which can regulate this area and make valuers more accountable and professionally trained. 15. It is provided under Rule 3(2)(d) that three or all the partners or directors, whichever is lower, of the partnership entity or company must be Registered Valuers and under sub-clause (e), it is provided that at least one of the partners or the directors must be a registered valuer for the asset class defined in clause 2(1)(c) which is a distinct specialization. Further, Rule 7(h) of the Rules provides that even with respect to a valuation report prepared by a partnership or a company, the same has to be signed by a partner or director who is a Registered Valuer for the asset class that is being va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of the Supreme Court in the case of Swiss Ribbons Pvt. Ltd. Anr. vs. Union of India Ors. in Writ Petition (Civil) No.99/2018 , wherein the Supreme Court has upheld the provisions of the IBC and also which is a legislation which deals with economic matters and, in the larger sense, deals with the economy of the country as a whole. For such purposes the legislation / rules of this nature are required. 20. Having heard the learned counsel for the parties, the issue which falls for consideration is in a very narrow compass, whether a company, other than a subsidiary company, joint venture or associate of other company forms a separate class for the purpose of eligibility for registration as a valuer under the subject Rules, and as such whether the said classification is reasonable. In other words, whether exclusion of a subsidiary company, joint venture or associate of other company, for purpose of eligibility for registration as valuer is reasonable. The answer to the same has to be in the affirmative, more so in view of the justification given by the respondents and as contended by Ms. Madhavi Divan. 21. She is justified in relying upon the judgment of the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is true that the appellant as a citizen of India having obtained the qualification required for being enrolled as an advocate can legitimately aspire to be enrolled as an advocate but his aforesaid right is fettered by the impugned rule framed by the State Bar Council. We have to consider whether the said restriction imposed by the rule is in any way unreasonable. We have to keep in view the fact that the impugned rule restricts entry of a person who is otherwise qualified for being enrolled as an advocate if he is already carrying on any other profession. Question is whether such a person carrying on other profession can be validly told off the gates by the State Bar Council by resorting to the impugned rule. In our view looking to the nature of the legal profession to which we have made detailed reference earlier the State Bar Council would be justified in framing such a rule prohibiting the entry of a professional who insists on carrying on other profession simultaneously with the legal profession. As we have seen earlier legal profession requires full-time attention and would not countenance an advocate riding two horses or more at a time. He has to be a full-time advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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