Tag: Loan scam

The story behind Former Chairman Pratip Chaudhary’s arrest, BFSI News, ET BFSI

Banking & Finance

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Hospital PMO Dr JR Panwar said the condition of Chaudhuri, who is a patient of hypertension, is stable.

Pratip Chaudhary, former State Bank of India chairman, was arrested last Sunday for a loan scam involving a hotel project in Jaisalmer, Rajasthan, dating back 14 years.

Chaudhary’s bail plea was rejected, and after spending a day in jail, he was admitted to Jawahar Hospital in Jaipur last Wednesday due to restlessness.

The loan scam

In 2007, the state-owned bank had sanctioned a loan of Rs 24 crore to Godawan Group for a constructing a hotel in Jaisalmer. The properties were worth Rs 200 crore. The Group was unable to repay the loan as the project could not be completed and Dilip Singh Rathore, group owner, passed away in April 2010.

The loan was declared a non-performing asset in June 2010.

Chaudhary has been alleged to have “connived” with Alchemist Asset Reconstruction Company, and violated Reserve Bank of India norms to declare the loan an NPA, and sold company property for Rs 25 crore. Chaudhary retired as SBI chairman after a two-year term in September 2013.

Harendra Singh Rathore, son of Dilip Singh and current promoter of Godawan Group, pointed out that Chaudhury joined the board of Alchemist ARC in October 2014.

A complaint was registered with Rajasthan Police in 2015, which was closed after it was stated a “civil matter” between individuals.

However, following a protest petition filed by Harendra Rathore in 2016, which challenged the police action and investigation, Chaudhuri was arrested on last Sunday.

The order was issued on February 12, 2020, but execution was held up by the COVID-19 pandemic.

Chaudhary did not follow proper procedure in the auction of the properties and did it in a hurry, the court order said, adding that the entire process appears to be a “conspiracy”, hatched along with officials of Alchemist, to acquire the properties.

The properties were given away at a much lower price than the reserve price and Chaudhary misused his position, because the project was declared an NPA much before time, the order added.

Latest developments

Alok Dhir of Alchemist ARC, who is the other accused in the case, got transit anticipatory bail on Friday from the Delhi High Court. He will not be arrested till Tuesday.

Chaudhury has been charged under sections 420 (cheating and dishonesty including delivery of property), 409 (criminal breach of trust by public servant, or by banker, merchant, or agent) and 120B (criminal conspiracy) of the Indian Penal Code.

The bank, defending Chaudhary, said in a statement that the sale followed the laid-down process in line with the policy of the bank. SBI said it took various steps for completion of the project as well as recovery of dues but it did not yield the desired results. Hence, the dues were assigned to an ARC in March 2014.

The borrower was put through the Insolvency and Bankruptcy Code process by the ARC, and the asset was acquired by a non-banking financial company in December 2017, the bank had said in the statement.



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Former SBI chairman hospitalised after spending a day in jail, BFSI News, ET BFSI

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Jaipur, Former SBI chairman Pratip Chaudhary, jailed in the loan scam, has been admitted to Jawahar Hospital after he complained of restlessness, officials said on Thursday morning.

“He was brought to Jawahar Hospital on Wednesday evening after he complained of restlessness and hypertension in jail,” they added.

Chaudhary was jailed on Monday evening after the CJM Court of Jaisalmer ordered him to be sent to judicial custody for 14 days in the loan scam case.

Jawahar Hospital’s Principal Medical Officer JR Panwar said that Chaudhary is suffering from hypertension and undergoing treatment.

The former SBI chairman has been accused of misusing his position to sell Jaisalmer’s Hotel Fort Rajwada against the rules.

The CJM Court of Jaisalmer issued an arrest warrant against him.

On Sunday, the Jaisalmer Police nabbed him from Delhi and brought him to Jaisalmer.

The following day, the court ordered to send him to judicial custody for 14 days.

–IANS

arc/shb



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Bankers protest against Chaudhuri’s arrest, want FinMin to intervene

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Bankers are up in arms against what they perceive as an unjust punitive action against former SBI Chairman Pratip Chaudhuri who was arrested on Sunday for an alleged loan scam.

While prominent bankers have condemned the arrest as being detrimental to lending and credit flows, the Indian Banks Association (IBA) has asked the Centre to put in place a procedure to safeguard bankers against state-level authorities, including police, in cases of loan defaults.

Former SBI Chief arrested in Jaisalmer hotel loan case

Sunil Mehta, Chief Executive Officer of IBA told BusinessLine that the mechanism to protect bankers should be on the lines of that already in place for central investigative agencies such as the CBI. Mehta said IBA has written to the Secretary, Department of Financial Services (DFS) in the Finance Ministry and the Chief Secretary, Rajasthan Government, seeking their intervention. In its communication to the DFS, the IBA has said the bona fide decisions on loans should not be subject to arrest without a mechanism in place.

‘Examine the evidence’

“How can you arrest a person until you have sufficient evidence against him? It is humiliating to subject a person of Chaudhuri’s stature to go through this. People with sufficient knowledge should examine the documented evidence and find out if there is something mala fide,” Mehta said.

Bankers, including former SBI chiefs Rajnish Kumar and Arundhati Bhattacharya, have also voiced support for Chaudhary and highlighted the bankers’ precarious situation. Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank and Chairman of the IL&FS board, said on Tuesday, “Based on what I have read, we need to have a criminal justice system which protects bona fide actions taken by lenders to recover their money.”

Meanwhile, industry observers pointed out that Chaudhuri retired as SBI Chairman on September 30, 2013. SBI had assigned the asset in March 2014 to Alchemist ARC. Pratip Chaudhuri joined the ARC Board only in October 2014. Some bankers pointed out that the allegation against Chaudhuri is not borne out as he was neither with the SBI nor with Alchemist when the asset was assigned to the ARC.

Alchemist ARC in a statement alleged that defaulters in the Hotel Gaudavan matter are taking the “judicial machinery for a ride”.

With inputs from Surabhi

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Ex-SBI chairman Chaudhury’s bail plea rejected in loan scam case, BFSI News, ET BFSI

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The Chief Judicial Magistrate of Jaisalmer Court on Monday rejected the bail application of former SBI chairman Pratip Chaudhury, arrested in the Jaisalmer hotel loan fraud case, and sent him to judicial custody till November 15.

The former SBI chairman will now have to spend his Diwali behind bars, said sources.

He will be in judicial custody for 15 days till November 15, they added.

Pratip Chaudhury was arrested from Delhi on Sunday and brought to Jaisalmer on Monday.

After that he was produced in the court of Chief Judicial Magistrate, his lawyer moved the bail application, but CJM Hanuman Sahai Jat after hearing rejected the bail application of Pratip Chaudhury and ordered to send him to judicial custody till November 15, following which he was was taken to jail.

The case relates to a hotel group in Jaisalmer which took a loan of Rs 24 crore from SBI in 2008. When the hotel group did not pay full instalments of the loan, the bank allegedly went against the RBI rules and declared it NPA after confiscating the property. It is alleged that later the property was also sold in a wrong manner. At present, the value of this property is being said to be around Rs 200 crore.

The SBI in a statement said that all the facts of the case were not presented before the court properly and SBI was not made a party to the case.

“‘Garh Rajwada’ was a hotel project in Jaisalmer, financed by the Bank in 2007. The project remained incomplete for over 3 years and the key promoter passed away in April 2010. The account slipped into NPA in June 2010. Various steps taken by the Bank for completion of the project as well as recovery of dues didn’t yield desired results. Hence as part of 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 policy of the Bank. “We further understand that the borrower was subjected to IBC process by the said ARC and the asset has been acquired by an NBFC in December 2017, again through due process under the orders of NCLT, Delhi,” the statement said.

“As recovery efforts failed, approvals for sale to ARC were taken in Jan 2014, the assignment to ARC was completed in March 2014. It transpires now that the borrower had initially filed an FIR with the State Police against the sale of asset to ARC. Aggrieved against the negative closure report filed by Police authorities, the borrower had filed a ‘Protest petition’ before the Hon’ble CJM Court. Incidentally SBI was not made a party to this case. All the directors of that ARC including Chaudhuri, who joined their Board in October 2014, have been named in the said case. Incidentally, Chaudhuri retired from Bank’s service in September 2013.

“It appears from the copies of the proceedings now accessed by us that the Hon’ble 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 being heard as part of this proceedings. SBI would like to reiterate that all due process 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,” the SBI statement added further.



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