Thursday, November 04, 2021

Pathetic Arrest of SBI Ex-Chairman Pratip Chaudhary

The arrest of SBI Ex-Chairman Pratip Chaudhary would call for a separate judiciary for financial cases. It also increases the fear in the Government officials when they are trying to do something good for the Government Organizations, because of the Police, CBI, CAG, Judiciary and many other organizations.

In 2008, Godawan Group took a loan of Rs.24 crore. 

In June 2010, it became NPA. It means, they did not pay the agreed interest and principle even after 90 days from the due date. When it was declared as NPA, the Chairman was Pratip Chaudhary. 

In 2013, he retired and joined Alchemist ARC (Asset Reconstruction Company - Which buys bad loans or the properties that were associated in the bad loans and sells for a better price). 

In 2014, SBI sold the properties associated with Godawan Group for Rs.25 crore. 

In 2016, Alchemist Group took over the properties. 

In 2017, Alchemist valued those properties, and it was valued at Rs.160 crore.

Currently, the properties are valued at Rs.200 crore.

Godawan Group went to court saying, Alchemist Group bought these properties for a cheap price. Court ordered the arrest of few directors and Pratip Chaudhary was arrested.

This is a financial case and it needs to be presided over by the experts in business economics and not by the regular judges who deal with theft/robbery. 

There is absolutely no need for any arrest unless the concerned directors are not cooperating with the investigation. 

Even if Alchemist Group bought it for a cheaper price (as per the valuation in 2014), it is still not a business for Godawan Group. SBI and Alchemist Group have full rights on deciding a price at mutual understanding. Godawan Group loses all the rights once they stop paying the interest and principle. Within the grace period they are given, they should have found some better buyer and sold for a higher price and keep the remaining amount after paying the dues. But, they did not do that. 

It is possible that they could not pay the dues in 2010, because the promoter passed away in April 2010, and the others did not do much to fix the situation. But, it is the problem with the Godawan Group and not the problem of SBI or Alchemist Group.

When SBI sold the properties to Alchemist Group, even if the market value was much higher than Rs.25 crore, the Alchemist Group might be reluctant to buy at a higher price, because of the legal issues or any other risks involved in buying that property. When they come up with that valuation, it is internal to both the companies, and it is not a business of anyone outside. 

If at all there is some improper process, then the issue has to be taken by SBI on its directors at the time of sale, and not against the person who declared it as NPA or the directors of the buyer company. But, if SBI takes action against its own officers for selling the for lesser price, then that would be the end of the bank as it can never find any buyer who buys at closer to market price.

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