The Central Bureau of Investigation has registered a case of alleged cheating and corruption against former bureaucrat Pradeep Baijal and Bharat Hotels owned by Jyotsna Suri for sale and purchase of Laxmi Vilas Palace hotel in Rajasthan worth Rs 280 crore for just Rs 7.5 crore during NDA rule in 2002.
According to the agency sources, the five-star Laxmi Vilas Palace ITDC hotel spread over 29 acres of prime property in Udaipur, as per the market price in 2002, was worth Rs280 crore. However, the official worth of the hotel was pegged at Rs151 crore. The property was sold to Bharat Hotels at an undervalued price of Rs7.5 crore.
The CBI has named Baijal, who was then secretary disinvestment, Ashish Guha, the then managing director of Lazard India, Kantilal Karamsey Vikamsey, owner of Kanti Karamsey and company and authorised representative of Bharat Hotel which owns Hotel Lalit.
"It was alleged that during 2001-02, Laxmi Vilas Palace Hotel, Udaipur, a heritage hotel and one of the units of Indian Tourism Development Corporation (ITDC), Department of Tourism...with 54 rooms with all accessories was first drastically undervalued and then sold/disinvested to a private hotel situated at Barakhamba Road, New Delhi, at a price of Rs7.52 crore," said a CBI spokesperson.
The spokesperson stated that as per the then DLC rates of land in which the hotel was situated was allegedly Rs151 crore (approx) and in this way, a loss of Rs143.48 crore (approx) was caused to the ITDC. However, investigators privy to the investigation state that the market value of the hotel in 2002 was around Rs280 crore. The hotel is currently functioning under the Bharat Hotels.
The agency has also mentioned unnamed government officers and private persons in the FIR registered under IPC sections related to criminal conspiracy and cheating besides under the Prevention of Corruption Act. The five-star property in Udaipur was sold for Rs7.52 crore in 2002 against a reserve price of Rs6.12 crore in 2002.
The Cabinet Committee on Disinvestment had in its meeting held on February 5, 2002 approved disinvestment of three hotel properties of ITDC — Qutab Hotel and Lodhi Hotel in New Delhi and Laxmi Vilas Palace Hotel in Udaipur.
"The evaluaters Kanti Karamsey and company who conducted the evaluation were not government approved. They pegged the price at Rs45 per square foot while the market price was around Rs1,500 per square foort," said a senior CBI official.
As per the records, Lazard India was the financial advicor to the then Disinvestment Ministry. Arun Shourie was the then disinvestment minister. After registering PE in the case CBI has also examined Shourie.
Interestingly, 9/11 attack on twin towers in USA in 2001 was listed as one of the reasons for selling off the property cheap. "They had stated that tourist inflow has decreased after the 9/11 attack and thus hotel is running into losses," said a senior CBI official.