The Central Bureau of Investigation (CBI) has instituted a preliminary inquiry into allegations that a Tamil Nadu hotel was undervalued and auctioned to a relative of former Finance Minister P. Chidambaram, in conspiracy with some Indian Overseas Bank (IOB) officials.
K. Kathirvel, a doctor who was running the hotel in partnership with his associates, lodged a complaint with the CBI in September 2016, alleging that the Comfort Inn hotel in Tirupur was put to auction despite the fact that the owners were ready to clear the bank loans.
He alleged that the hotel was worth ₹10 crore, but was undervalued and sold for ₹4.24 crore to Padmini Sivasubramanian, sister of Mr. Chidambaram’s wife Nalini. She passed away a few months ago.
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The petitioner also approached the Delhi High Court, which sought a response from the CBI. The agency submitted before the court that it had initiated a preliminary inquiry.
Two term loans
It turned out that the hotel had taken two term loans of ₹2.55 crore and ₹42 lakh from the IOB in August 2005.
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As its construction was taking time, there was an overdue in the loan account and it was classified as a non-performing asset.
The bank issued notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI Act) for recovery, took symbolic possession of the property, and fixed its auction on December 6, 2007.
On the auction day, the complainant — on the hotel’s behalf — paid ₹65 lakh in its loan account as instructed by the then general manager in the bank’s recovery department. However, it is alleged, the bank auctioned the property. Of the two bidders, Padmini quoted the highest amount of ₹4.24 crore and got the hotel. The same day, she paid 25% of the bid amount.
The CBI, during the verification of facts, concluded that the bank officials had acted in a hurried manner to “facilitate” Padmini in acquiring the hotel by not following prudent banking practice.
Dr. Kathirvel, in his complaint, alleged that the bank officials had also threatened him, demanding that he withdraw the complaint.
As he refused, the bank allegedly initiated action under SARFAESI Act against D.R. Poultry Farms Pvt. Ltd. and other group accounts of Best Wing Energy India Pvt. Ltd., the companies he was associated with.