Faulting the procedure adopted by the government for divestment of the controversial Mumbai Centaur Hotel property, a Parliamentary Standing Committee has demanded a thorough probe by the Central Vigilance Commission into the deal.
In its 65th report, the committee on transport, tourism and culture said "the government should order an enquiry into the entire transaction relating to Hotel Mumbai Airport by CVC."
The hotel property was first acquired by Batra Hospitalities for a sum of Rs 83 crore (Rs 830 million) only to be resold for around Rs 115 crore (Rs 1.15 billion) to Sahara group in October last leading to criticism by various political parties including Shiv Sena.
Noting that there were several discrepancies with regard to the selection criteria, reduction of turnover levy and re-bidding process, the committee said there was no validity in the argument put forth by the civil aviation ministry in this regard.
It further suggested that necessary safeguards should be incorporated in future sale agreements to prevent quick change of hands at a premium.
The committee was peeved at the way in which the criteria were framed for initial bids, which it said were 'restrictive' permitting only hoteliers to participate.
"As a result the market for properties of Hotel Corporation could not be fully explored and several other parties who were interested in offering better prices could not enter the process", it said.
The committee set aside the reasoning forwarded by the civil aviation ministry on the issue of reducing the turnover levy from six to two per cent terming it a quantitative change in the offer.
It said the idea behind reducing turnover tax was to go in for re-bidding and secure a better response, which was defeated by restricting the same to four bidders who undertook due diligence.
It said that the reason why a single bid was considered even after reducing the turnover levy needs to be investigated.
On the issue of resale of the hotel property to Sahara Group, it observed that the time span in which the resale was enacted clearly showed that there were other interested parties as well.
As regards the issue of transfer of petrol pump belonging to India Oil located in the hotel premises, it expressed surprise at to how the civil aviation ministry could get the valuation done and also proceed to transfer the ownership of the same without the consent of the petroleum ministry.
Neither the divestment ministry nor the Hotel Corporation had the right to transfer the pump to Batra group, as neither of them were owners and this clearly shows that no proper thought was given to the sale process, it said.
The committee said that A L Batra, who won the mandate for the hotel in his capacity as chairman and managing director of Batra group, had not informed the government of his intention to form a joint venture till he won the bid.
It noted that Batra had informed the government that a special purpose vehicle namely Batra Hospitality Private Ltd would take over the hotel after winning the bid, therefore raising questions over the intention of the buyer.
"BHPL has been brought into the picture as SPV for acquiring the hotel which appears to be a pre-motivated objective to dispose of the same, flouting the provisions since transfer of 100 per cent holding in BHPL will automatically lead to transfer and not sale of property", it said.
