Explained: CBI court order against Arun Shourie

Arun Shourie. (Photo Express: Praveen Khanna, file)

A special CBI court in the Jodhpur district of Rajasthan has ordered the registration of a criminal case against former Union Minister Arun Shourie, retired IAS officer Pradip Baijal and three others, after finding that crimes including criminal conspiracy and cheating were proven prima facie against him in connection with the sale of a luxury hotel in Rajasthan in 2002.

Shourie, who was Minister of Divestment at the time of the sale, was not named in the FIR registered by the CBI on the matter in August 2014. In its final report, CBI said there was insufficient evidence to initiate legal proceedings in the divestment process. from the Hotel M / s Laxmi Vilas Palace (LVPH), Udaipur.

Furthermore, no evidence has emerged to establish an association between the management of M / s Bharat Hotels Ltd (one of the defendants), the asset appraiser, the advisor or senior public officials, the CBI said.

What is Arun Shourie’s role, according to CBI?

Shourie is not mentioned in the FIR filed by the CBI on August 13, 2014. The FIR appointed Baijal, who was Secretary of the Divestment Department at the time of the sale; Ashish Guha of New Delhi-based financial advisory firm Lzard India Ltd, who was a government financial adviser at the time; asset appraiser Kantilal Karamsey Vikamsey of Kanti Karamsey & Co .; and Bharat Hotels, based in New Delhi, through its authorized representative and other unknown government officials / officials and private persons.

It was alleged in the FIR that LVPH was sold to M / s Bharat Hotels Ltd. for a measly Rs 7.52 crore, resulting in an illicit loss of Rs 143.48 crore for the government and unfair profits for the defendants individually / jointly. The FIR was registered under Section 120B (criminal conspiracy) read with Section 420 (cheating) of the IPC, and Section 13 (2) read with Section 13 (1) (d) of the Corruption Prevention Act, 1988.

When was the sale of the Laxmi Vilas Palace Hotel?

The CBI found that on February 8, 2001, the Government of India issued an expression for restructuring / divestment of ITDC hotel properties, including M / s LVPH. Fifteen parties submitted requests for qualification (RFQ) for the divestment of M / s LVPH. Only one party, M / s Bharat Hotels Ltd., submitted a financial offer for the purchase of 99.97% of the paid-in capital in Udaipur Hotels Pvt. Ltd. for the sum of Rs 7.52 crore. LVPH, Udaipur was sold to Bharat Hotels Ltd, New Delhi on January 24, 2002 for that price.

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What did the CBI say in its final report?

During the investigation, CBI discovered that the valuation report for the property in question was prepared by Kantilal Karamsey Vikamsey, owner of M / s Kanti Karamsey and Co. after inspecting the property on October 10, 2001. The valuation was submitted to M / s Lazard India, the financial advisor, who analyzed it and presented it to the Secretary of the Divestment Department, while the invitation to tender process was still ongoing. The appraiser said that although the government’s rate for land ranged from Rs 500 to Rs 1000, it was being considered at Rs 45 per square foot for freehold land.

The reasons cited by the appraiser for the undervaluation were that the land was within the Red Zone, that is, without a development zone; it was 500 m from the lake; and a high transmission line ran through the north and west ends of the property. The appraiser’s conclusion that no construction could be done on the land that fell into the Red Zone was based on oral information.

Considering all these factors, the appraiser concluded that the depreciated fair market value of said property was Rs 7.85 crore at the valuation date, October 8, 2001. The total freehold area of ​​the land was found to be 9, 30,204 square feet. .

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What actionable evidence did the CBI find against Shourie or others?

He found none. The CBI in its final report said that no irregularities had come to light regarding the appointment of M / s Lazard India Pvt Ltd as financial adviser by the ministerial working group. Nor was any irregularity found in the selection of M / s Kanti Karamsey & Company, Mumbai, as an asset appraiser.

The CBI’s final report said that no evidence had emerged to prove an association between the management of M / s Bharat Hotels Ltd., the Asset Appraiser, the Assessor or senior public officials.

The CBI investigation noted that the M / s LVPH asset was undervalued by the appraiser M / s Kanti Karamsey & Co., but there was no evidence to establish that it was done with ulterior motive to facilitate setting a reserve price. lower. .

The reserve price was decided by the consultant and the selected experts after a transparent process. His recommendation was examined by an inter-ministerial evaluation committee, an inter-ministerial group, a core group of secretaries on divestment and finally approved by the Cabinet Divestment Committee, the CBI said in the closing report.

The report stated that it was discovered that M / s Kanti Karamsey & Co. had not made a proper valuation of the assets of M / s LVPH, so the matter was referred to the Department of Investment and Management of Public Assets of the Minister of Finance .

The CBI concluded in the closing report presented to the court that no evidence worth prosecuting had been found throughout the hotel divestment process.

What has the court said?

IWC Judge Pooran Kumar Sharma’s special court rejected the IWC closure report and said that crimes under IPC Section 120B read with Section 420 as well as Sections of the Corruption Prevention Act they had been proven prima facie against Shourie and the others.

The court noted that the investigating officer had accepted in the investigation that the Laxmi Vilas hotel was undervalued and should have filed a charge sheet. The court has ordered that a criminal case be filed against Shourie and the others. He has also summoned the accused through arrest warrants.

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