According to police officials, the allegation against Chaudhuri was that SBI sold properties worth Rs 200 crore for Rs 25 crore to Alchemist Asset Reconstruction Company Ltd after the bank seized them for defaulting on a Rs 24-crore loan. Chaudhuri’s bail application was rejected by the Magistrate Court in Jaisalmer on Monday, which sent him to 14-day judicial custody.
In a statement, SBI, however, said, “All due process were followed while making the said sale to the ARC.” The police action also drew sharp reaction from bankers. Former SBI Chairman Rajnish Kumar said, “The banking industry is upset with the arrest of Mr Chaudhuri. This is not the right thing. There’s no corruption in this case. Everyone in the banking industry knows its correct.”
As per Jaisalmer police, under the direction of Jaisalmer SP Ajay Singh, a team arrested Chaudhuri from his Delhi residence on Sunday. As per Singh, he was an accused under Indian Penal Code sections 420 (cheating and dishonestly inducing delivery of property), 409 (criminal breach of trust by public servant, or by banker, merchant, or agent) and 120 B (criminal conspiracy) in the case lodged at Sadar police station.
Additional SP Narendra Choudhary said, “There was a five star property in Jaisalmer worth around Rs 200 crore. Following a default (by the property owners) it was decided – by the highest levels of SBI – to sell it. And the bank sold it for about Rs 25 crore. Thus, a particular group gained a profit of Rs 175 crore. They followed the procedure, but the intention was malafide.”
Garh Rajwada was a hotel project promoted by the Godawan Group in Jaisalmer. The project remained incomplete over the years and the key promoter passed away in April 2010. Chaudhuri, who retired as SBI Chairman after a two-year term in September 2013, had joined the board of Alchemist ARC in October 2014.
According to SBI, the account slipped into NPA in June 2010. “Various steps taken by the bank for completion of the project as well as recovery of bank’s dues didn’t yield desired results,” the bank said. 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, it said.
“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,” it said. 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 an FIR with the State Police against the sale of asset to ARC. It appears from the copies of the proceedings now accessed by us that the Court do 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 said. 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, it said.
“Aggrieved against the negative closure report filed by Police authorities, the borrower had filed a ‘Protest petition’ before the CJM Court. Incidentally SBI was not made a party to this case,” SBI said. All the directors of the ARC including Chaudhuri, who joined its board in October 2014, have been named in the said case.
Another senior banker with Punjab National Bank, who did not wish to be named, said, “How can you single out and arrest the Chairman when there are so many committees to ascertain fraud. The judicial action is alarming.”
Pratip Chaudhuri, who was the Chairman of SBI for two years, held several important posts in the largest state-owned bank during his long tenure of service including the post of Deputy Managing Director of SBI’s International Division. He has about 40 years of experience in the banking sector. He was the Vice President in SBI (Canada) Toronto for close to five years. He was also the Chief Investment Officer at SBI Mutual Fund, Mumbai.
He held the position of Independent Director on the boards of various companies like CESC, Quess Corp Limited, Cosmo Films Limited, Iffco Kisan Sanchar Limited, Alchemist Asset Reconstruction, Company Limited and Spencer’s Retail Limited and others.