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