Former SBI chairman Pratip Chaudhuri detained for selling cheaper hotel claiming NPA


Jaisalmer police arrested former State Bank of India (SBI) Chairman Pratip Chaudhuri of Delhi, based on arrest orders issued by the Chief Justice (CJM) for selling a low-cost hotel after have declared it non-performing asset (NPA). Mr. Chaudhuri was arrested on Sunday. On Monday, the Jaisalmer CJM rejected Mr. Chaudhuri’s request for bail and sent him to judicial detention until November 15.

The lawyer for the former SBI chairman filed the bail application with the CJM. After hearing, the council, CJM Hanuman Sahai Jat, rejected the request for release on bail of Mr. Chaudhuri and ordered his placement in judicial detention until November 15, 2021. After this order, the former president of the SBI was incarcerated.

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 around Rs200 crore was sold for Rs25 crore by declaring it as postcode.

This property was seized in place 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, joined the Board of Directors of the Asset Reconstruction Company (ARC). “From the copies of the proceedings to which we now have access, it appears that the tribunal did not appear to have been properly informed of the sequence of events. As SBI was not a party to this case, there was no need to for the opinions of SBI to be heard within the framework of this procedure. SBI would like to recall that all the due procedures were followed during the realization of 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 anything can be requested from their side.

Police said the hotel group took out a loan of Rs 24 million from SBI in 2008 for construction. At that time, another hotel in the group was functioning well. After that, when the group could not repay the loan amount, the Bank seized the two hotels of the group after considering it as NPA. At that time, Mr. Chaudhuri was president of the bank.

The bank then sold the two hotels to a company for Rs 25 crore at a price well below the market rate. On this, the hotel group took legal action.

During this time the buying company took it over in 2016 and when this property was appraised in 2017 its market value turned out to be Rs160 crore. At the same time, after his retirement, Mr. Chaudhuri joined the same company as a manager to which this hotel was sold. At present, the value of these hotels is estimated at Rs200 crore.

In this case, the CJM court in Jaisalmer ordered the arrest of Pratip Chaudhuri.

According to the lender, “Garh Rajwada” was a hotel project in Jaisalmer, funded in 2007. The project went unfinished for more than three years and the main developer died in April 2010.

He says: “The account slipped into NPA in June 2010. Various actions taken by the bank to complete the project and collect the bank contributions did not yield the desired results. Therefore, as part of the collection efforts from the bank, the contributions were assigned to an ARC for collection in March 2014. This sale to the ARC by the bank was made through a process established in accordance with bank policy. We further understand that the borrower was submitted to the Insolvency and Bankruptcy Code (IBC) process by said ARC and the asset was acquired by a non-bank financial company (NBFC) in December 2017, still under due process in under the orders of the National Company Law Tribunal (NCLT) in Delhi.

“The recovery efforts having failed, the sales approvals to ARC were taken in January 2014, the divestment to ARC was completed in March 2014. It now appears that the borrower had initially filed a first information report (FIR ) to state police against the sale of the asset to the CRA. Damaged against the negative closing report filed by the police authorities, the borrower had filed a “protest request” before the CJM. Moreover, SBI was not a party to this case. All the directors of this ARC, including Mr. Chaudhuri, who joined their board in October 2014, have been appointed in the said matter, ”said SBI.


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