2 Railway hotels, prime plot in Patna & 'quid pro quo': Inside IRCTC scam case & charges against Lalu

New Delhi: The long-drawn IRCTC scam case saw a major development last week as a Delhi court framed charges against former Bihar chief minister Lalu Prasad Yadav, saying there was a “dominant probability” that he was the “fountainhead of a criminal conspiracy”. Lalu, who was Union Railways minister in the first UPA government between 2004 and 2009, has been accused of “abusing his official position” to favour a hotelier in the awarding of maintenance contracts for two railway hotels in 2006, in return for prime land in Patna at a grossly discounted rate. Not just the Rashtriya Janata Dal (RJD) chief, the court also framed charges of conspiracy and cheating against his wife and former Bihar CM Rabri Devi, and their son, RJD leader Tejashwi Yadav, who has filed his nomination from Raghopur assembly seat for the Bihar polls which are a fortnight away. The IRCTC scam case is being investigated by the Central Bureau of Investigation (CBI), which had lodged an FIR in 2017, and a chargesheet in 2018. Lalu, Rabri and Tejashwi maintain they are innocent. The court observed that there were “grave irregularities” in the tender process for the two railway hotels, and that Lalu, “prima facie” aware of the process, passed on instructions to “manipulate” it as part of a “quid pro quo arrangement”.  ThePrint breaks down the court order and explains the allegations against Lalu in the IRCTC case: Established in 1999, the Indian Railway Catering and Tourism Corporation, or IRCTC, is a public sector enterprise under the Ministry of Railways, created for the purpose of managing the catering and hospitality services at trains and railway stations. The IRCTC’s objectives also include promotion of tourism through development of budget hotels. At the centre of the IRCTC scam case are two Bengal Nagpur Railway (BNR) hotels, one in Ranchi and another in Puri. According to the CBI, in 2006, the maintenance contracts for these two hotels were allotted to the IRCTC during Lalu’s tenure as Union railways minister. These hotels were subsequently sub-leased to a firm called Sujata Hotel, owned by Vijay and Vinay Kochhar, who also own Patna’s Chanakya Hotel, as “undue favour through officers posted at IRCTC, Delhi”. The RJD chief’s family, the CBI further alleged, in exchange got 3.5 acres of prime land in Patna registered in the name of RJD Rajya Sabha MP Prem Chand Gupta’s wife Sarla Gupta’s firm, Delight Marketing Company, at an undervalued rate. The shares of the firm were later transferred to Rabri and Tejashwi.  Special CBI Judge Vishal Gogne observed that it had “emerged as a dominant probability that Lalu Prasad Yadav was the fountain head of a criminal conspiracy, also involving the Kochhar brothers…the railway officials in question and his own family members to enable the award of the tender in favour of the Kochhar brothers in return for land at gross under valuation”. As a result, the judge added, Lalu was liable to be charged with conspiracy to commit offences punishable under section 420 of the erstwhile Indian Penal Code (IPC), which deals with cheating, and sections dealing with offences amounting to criminal misconduct by a public servant.  Apart from Lalu, Rabri and Tejashwi, Prem Chand Gupta and Sarla Gupta, the Kochhars and then IRCTC managing director (MD) P. K. Goel too were named in the CBI’s 2017 FIR. In 2001 and 2004, two Memorandums of Understanding (MoUs) were signed between the Railway Board and the IRCTC. It was decided that certain land and buildings owned by the Railways would be leased to the IRCTC on nominal charges, along with permission to sub-lease to third parties, certain services like food and beverages, pantry cars and budget hotels. The CBI chargesheet said that when he took over as railway minister, Lalu, due to his position, became aware of the Railway Board’s decision to transfer operation and management of BNR hotels at Ranchi and Puri to the IRCTC, with scope of participation of private parties. According to the court order, the CBI’s chargesheet divided the alleged conspiracies into two parts—one, that Lalu directly instructed a change in both the pace of policy implementation and the categories of services to be transferred to IRCTC, and the other involving the rigging of the tender process in favour of Sujata Hotel. In August 2004, a note by the Railway Board chairman addressed to various Railway officials stated that Lalu had desired that departmental catering remain with the Railways, while other services, such as pantry and refreshment rooms be transferred to IRCTC.  According to the CBI, statements by senior Railway officials had revealed that the BNR hotels in Puri and Ranchi were part of departmental catering “since these were existing Railway properties and were controlled and managed by departmental staff”. In November 2004, the Railway Board decided that for the transfer of Rail Yatri Niwas (RYN) and Railway hotels at Puri and Ranchi, the ownership would remain with Railways with the transfer of property being on an “as is where is basis”. However, the court noted, in August 2006, Lalu’s OSD forwarded instructions to withdraw all proposals for budget hotels, including those for which advertisements were published in papers.  The court considered the argument of CBI counsel D. P. Singh that Lalu had instructed the withdrawal of the policy for more budget hotels to allow for a tweaked policy on the BNR hotels in the future, using the budget hotels policy “template”. “In essence, the constant theme of the submissions from the CBI with respect to these two categories of hotels was that the policy for budget hotels was used as a front or cover for making changes to the policy qua the BNR Hotels,” Special CBI Judge Vishal Gogne noted in the order.  BNR hotels at Ranchi and Puri hotels were handed over to IRCTC on 19 January and 10 February 2006. The CBI chargesheet said sale deeds transferring 3.58 acres of prime land in Patna by the Kochhar brothers to Sarla Gupta’s firm were executed on 25 February.  The court stressed the CBI’s finding that by November 2005, the Railway Board had communicated to all general managers of Zonal Railways and IRCTC the terms of leasing budget hotels, as well as RYN and BNR hotels.  The court said the next level of irregularities allegedly occurred in awarding the contract for the two BNR hotels. According to the CBI, the chain of events began in July 2006 when P.K. Goel took over as the MD of IRCTC. Goel was previously the Railway Board chairman during Lalu’s tenure as Railway minister. The CBI alleged that within a fortnight of Goel taking over, IRCTC prepared a note proposing to “develop, maintain and operate” RYN and BNR hotels through a Public-Private Partnership model, the same model adopted for budget hotels. In November 2006, the chargesheet said, the IRCTC amended the eligibility criteria for participation in the tender related to the BNR hotels. It modified the turnover requirement of Rs 3 crore for the last two financial years instead of the earlier three. Another clause reduced the experience requirement for running a two-star hotel to the last two financial years from five financial years. The CBI questioned these changes being restricted to only RYN and BNR hotels, the order noted, adding that the agency also found suspicious, the exclusion of budget hotels. The court considered the agency’s allegations that, without these relaxations, Sujata Hotel would not have been eligible for a tender, and thus it submitted its bid only after the amendment to the eligibility criteria. The court said the CBI investigation into the tender process “purportedly revealed” that while officials claimed that 15 tender documents for the Ranchi hotel and 17 for Puri were sold, the details of only seven parties were on record. “According to the charge-sheet, it stood established during investigation that some parties, which were shown to have purchased the tender documents, had not purchased any tender document from the IRCTC in respect of BNR Hotels at Ranchi & Puri,” read the order.