Chaudhuri arrest case: Alchemist ARC accuses loan defaulters of complicity

Says former SBI chief's arrest was based on protest petition filed by erstwhile directors of Hotel Gaudavan; non-bailable warrants were issued without any summons

Defaulting borrowers are trying to “frustrate the recovery process” initiated by the lenders and Alchemist Asset Reconstruction Company, the ARC has alleged. Instead of repaying their dues, the defaulters are harassing and maligning the image of Alchemist ARC’s directors, its chief operating officer, Manish Nihalani told Business Standard.

On Sunday, former State Bank of India Chairman Pratip Chaudhuri was arrested by Jaisalmer Sadar police from his residence for allegedly selling a non-performing asset (NPA), Hotel Gaudavan, to Alchemist ARC at a lower value. Chaudhuri is now a director on Alchemist ARC’s board.

Chaudhuri was arrested by the Jaisalmer Police based on a protest petition filed by former directors of Hotel Gaudavan before the Chief Judicial Magistrate (CJM) Jaisalmer. The petition was accepted, and non-bailable warrants were issued against Chaudhuri and Alok Dhir, promoter of the ARC, without issuing any summons or notice, Nihalani said.

“The ARC is examining all legal remedies,” Nihalani said when asked if Alok Dhir would appear before the authorities.

The ARC has clarified that a fair and transparent process was followed by SBI for assigning the non-performing asset (NPA) on March 20, 2014. Chaudhuri had relinquished his position as SBI Chairman on September 30, 2013.

Hotel Gaudavan Pvt Ltd had taken a loan of Rs 25 crore from SBI and could not repay. The directors and Rathore family were personal guarantors of the loan.

Alchemist ARC had taken possession of Hotel Fort Rajwada Jaisalmer and Garh Rajwada, Jaisalmer under Section 13(4) of the SARFAESI Act. Soon, a securitisation application was filed by the borrowers in Debt Recovery Tribunal (DRT), Nihalani said.

The DRT had set-aside the possession notice on the issue of improper declaration of NPA and Alchemist ARC filed an appeal in Debt Recovery Appellate Tribunal (DRAT). DRAT upheld the order passed by DRT, and Alchemist challenged the same before the Delhi High Court. The court had directed the ARC to take fresh action under SARFAESI Act by issuing a fresh notice. Post issuance of a fresh notice, the borrowers had filed a protest petition.

After the implementation of Insolvency and Bankruptcy Code, the case was admitted by the National Company Law Tribunal, and an insolvency resolution professional was appointed. This was challenged by the borrowers in Rajasthan High Court, and the court declined to give any stay of the admission order passed by NCLT. The borrowers moved the Supreme Court, and the petition was dismissed by the top court, Nihalani said.

Lawyers who represented Hotel Gaudavan at the Supreme Court declined to comment.

“The former promoters have created a lot of issues in the resolution under IBC,” Nihalani alleged. The erstwhile promoters had initiated suo-moto arbitration proceedings against the ARC, and had appointed their own Arbitrator. The NCLT had stayed the arbitration proceedings.

Insolvency and Bankruptcy Board of India (IBBI) had also taken suo-moto cognizance, and filed a criminal complaint before Special Judge, Jaipur against the former directors and management of Hotel Gaudavan for creating hindrances in the resolution process.

“The allegations being raised by the borrowers are baseless, and actions taken by the former directors is a desperate attempt to harass the officials of the bank and ARC” Nihalani said.