The Jaisalmer police have arrested State Bank of India (SBI)'s former chairman Pratip Chaudhuri from Delhi, based on arrest orders issued by the chief judicial magistrate (CJM) to sell a hotel property at a low price after declaring it a non-performing asset (NPA). Mr Chaudhuri was arrested on Sunday. On Monday, the CJM at Jaisalmer rejected the bail application of Mr Chaudhuri and sent him to judicial custody till 15th November.
The counsel for the former chairman of SBI moved the bail application before the CJM. After hearing, the counsel, CJM Hanuman Sahai Jat rejected the bail application of Mr Chaudhuri and ordered him to be sent to judicial custody till 15 November 2021. After this order, the former chairman of SBI was taken to jail.
According to information received from the police, he was arrested from his residence in Delhi in a case related to a hotel group in Jaisalmer. It is alleged that the property worth about Rs200 crore was sold for Rs25 crore by declaring it as NPA.
This property was seized instead of the loan.
SBI issued a clarification stating that Mr Chaudhuri retired from the Bank's service in September 2013 and then in October 2014 had joined the board of the asset reconstruction company (ARC). "It appears from the copies of the proceedings now accessed by us that the court does not appear to have been briefed correctly on the sequence of events. In as much as SBI was not a party to this case, there was no occasion for the views of SBI to be heard as part of this proceedings. SBI would like to reiterate that all due processes were followed while making the said sale to ARC. The bank has already offered its cooperation to the law enforcement and judicial authorities and will provide further information if any that may be called for from their side."
According to the police, the hotel group had taken a loan of Rs24 crore from SBI in 2008 for the construction purpose. At that time, another hotel of the group was running smoothly. After that, when the group could not repay the loan amount, the Bank seized both the hotels of the group after considering it as NPA. At that time, Mr Chaudhuri was chairman of the bank.
The Bank then sold both the hotels to a company for Rs25 crore at a much lower price than the market rate. On this, the hotel group went to court.
Meanwhile, the buyer company took it over in 2016 and, when this property was valued in 2017, its market value was found to be Rs160 crore. At the same time, after retirement, Mr Chaudhuri joined the same company as a director to which this hotel was sold. At present, the value of these hotels is being estimated at Rs200 crore.
In this case, the CJM court of Jaisalmer ordered the arrest of Pratip Chaudhuri.
According to the lender, 'Garh Rajwada' was a hotel project in Jaisalmer, financed in 2007. The project remained incomplete for over three years, and the key promoter passed away in April 2010.
It says, "The account slipped into NPA in June 2010. Various steps taken by the bank to complete the project and recover the bank's dues did not yield desired results. Hence as part of the bank's recovery efforts, the dues were assigned to an ARC for recovery in March 2014. This sale to ARC by the bank was done through a laid down process as per the bank's policy. We further understand that the borrower was subjected to Insolvency and Bankruptcy Code (IBC) process by the said ARC and the asset was acquired by a non-banking finance company (NBFC) in December 2017, again through the due process under the orders of the National Company Law Tribunal (NCLT) at Delhi."
"As recovery efforts failed, approvals for sale to ARC were taken in January 2014, the assignment to ARC was completed in March 2014. It transpires now that the borrower had initially filed a first information report (FIR) with the state police against the sale of the asset to ARC. Aggrieved against the negative closure report filed by police authorities, the borrower had filed a 'protest petition' before the CJM. Incidentally, SBI was not made a party to this case. All the directors of that ARC, including Mr Chaudhuri, who joined their Board in October 2014, have been named in the said case," SBI says.