James Hotel (Chandigarh) auction: An illustrious case of misuse of public property for private gain?

If Chandigarh Administration is acting at the behest of certain private players, it is going to cause financial harm to the state exchequer i.e loss of revenue.

Online PR News – 16-December-2019 – Dec 15, 2019 Chandigarh, India – James Hotel Private Limited, the grand five star hotel located in the posh commercial hub in Sector-17, Chandigarh, is set to go under the hammer yet again but with some underlying inconsistencies that are worrisome. After a series of prolonged litigation before various forums, liquidation of the hotel was Ordered by the NCLT, Chandigarh vide its Order dated 17.10.2018. Subsequent to the said Order, the Hotel has already been put up for an auction multiple times in the past but none of those auctions were successful due to a lack of bids.

One very fascinating aspect in the entire transaction is the valuation of the hotel. Sources in the know of the matter said that taking into consideration the location of the establishment and the sum total of its assets, the valuation of the hotel would easily range anywhere between Rs. 400-600 Crores whereas the starting bid for the hotel is expected to be around 140-150 Crore. Strangely enough, even in the auctions held in the past, starting bid for the hotel was grossly undervalued which raises the question if this was a miscalculation in terms of assessment or if this was done deliberately.

Investigation undertaken by this publication has also revealed that the entire transaction seems to be marred by inconsistencies and the Chandigarh Administration is guilty of non-disclosure on numerous aspects. The property in question was initially transferred on "lease hold" basis vide lease deed dated 25.01.1986 and the Chandigarh Administration continues to be the owner of the property. Surprisingly, the Auction Notices issued by the Liquidator mention the words "sale of business of Corporate debtor as a going concern along with all its assets including land admeasuring 9602 sq yards...". It is not clear how the Chandigarh Administration is allowing the property to be sold as freehold when the property was in fact given on leasehold basis and the Government continues to be the owner of the land. Moreover, even if the transaction were to go through, the said lease deed mandated that for a transfer of rights in the said property, prior consent of the Chandigarh Estate Office was required and once the transfer had taken place, the Chandigarh Administration was entitled to receive 50% of the unearned increase in the value of the site. It is not clear if the aforementioned conditions have been met as the auction documents issued by the Liquidator do not make a mention in this regard, raising a doubt as to whether the liquidator too is guilty of non-disclosure and non-adherence to the terms of the lease deed

The inconsistencies and unanswered questions in this case beg the question if this yet another case of misuse of power by the custodians of public assets where valuable public property is being given for peanuts to private parties. It is not clear who the Chandigarh Administration is trying to extend the benefit to, through the entire process, probably to certain private players. It would be a case of gross misuse of power if certain unknown players were to be allowed to benefit through these kinds of actions and omissions.

Needless to say, if Chandigarh Administration is acting at the behest of certain private players and is altering government policy to suit private interests, it is going to cause substantial financial harm to the state exchequer in terms of loss of revenue that can be earned from the Hotel if the auction is performed legitimately and transparently. Messages/email sent to the Liquidator Mr. Navneet Gupta and the Officials of the Chandigarh Administration/Estate Office elicited no response.