'Why You Didn't Go For Auction When NCR Property Prices Rising?' : Supreme Court Questions Banks' OTS Of 5 Star Hotel's Dues

The Supreme Court today agreed to consider the plea seeking an investigation by the Central Bureau of Investigation and the Central Vigilance Commission into the One Time Settlement (OTS) between Asian Hotels(North), Bank of Maharashtra and Punjab National Bank.The bench of Chief Justice of India Surya Kant, Justices Joymalya Bagchi and Vipul Pancholi was hearing the challenge to the Delhi High Court order which dismissed a writ petition seeking directions for a CBI & CVC investigation into the One Time Settlement (OTS) deals entered into by Respondent No.6, Asian Hotels (North) Pvt Ltd with Bank of Maharashtra (BoM), and Punjab National Bank or PNB.It is the case of the petitioner, NGO Infrastructure Watchdog, that the OTS between the two banks and Asian Hotels to settle pending dues was against the existing laws. The plea explains, "Due to Covid, in 2021, at the request of the Respondent No.6, all the banks agreed for One Time Restructuring (OTR) of outstanding loans. As on 01.09.2020 it was Rs 705 Cr for all the lenders put together. Against this, the market value of hotel building in the OTR approval letter was written as Rs 2,600 Cr by one valuer and Rs 2,651 Cr by another. However, when it came to OTS in 2024, the market value was slashed to Rs 970 Cr by the same valuer, in spite of the fact the real estate prices had hugely increased in Delhi NCR." The main contention of the petitioner, represented by Advocate Prashant Bhushan, was that the Banks went for an OTS against the RBI's mandate that if the stressed loan is more than Rs 100 Cr, then such a loan must be auctioned.Sr Advocates N Venkataraman and Mukul Rohatgi, appearing for the banks, informed the court that Asian Hotels tried to auction its building and assets twice. Still, no one came forward to buy it. Venkataraman also submitted that the respondent banks have recovered 116% of the loan amount. He stated that petitioners only wanted a 'roving inquiry'.Justice Bagchi weighed in to point out "you (petitioners) also have to understand that this is a commercial transaction where the ledger value has already been recovered." Venkataram further submitted that the total loan sanctioned was 242.61 crores, the ledger balance at the time of the OTS is 226.54 crores, total amount recovered is 414.6 crores.Rohatgi also added that the Asian Hotels' account was declared NPA. To this, the CJI replied, "If the account is declared NPA and the assets of the borrower are valued more, then in that case, the bank will always go for auction." The bench was informed that the settlement was done in 2025. Considering this, the CJI remarked on why the property was not considered for auctioning in 2025, as the real estate value was rising post-COVID. He said : "When you are entering the settlement in January 2025, even a layman in Delhi can take notice of the fact that what will be the value of a 5-star hotel ....in 2023, the moratorium was over. From 2023 to 2025, when anybody on earth can take judicial notice of the fact that the value of real estate properties is rising."The CJI recalled that in a recent case pertaining to a hotel in Kerala, many persons were coming forward for the auction. If that is the case, then a hotel in Delhi would have many prospective buyers.The bench issued notices to the Union, PNB, BoM and Asian Hotels (North). The matter will now be heard on March 18. Before The Delhi High Court The Delhi High Court dismissed the petition on the grounds that (1) the plea was based on insufficient materials; (2) the petitioners approached the High Court prematurely without waiting for a response to complaints sent to authorities; (3) OTS falls under the commercial wisdom domain and is not subject to judicial review. (4) As per the decisions in Dr Subramanian Swamy vs UOI & Ors., Kunga Nima Lepcha vs State of Sikkim, the Court held that a mere allegation was not enough to trigger an investigation. Reliance was also placed on State of Jharkhand vs Shiv Shankar Sharma, where the courts are restricted from interfering with commercial banking matters in the absence of a clear violation of law.Case Details: INFRASTRUCTURE WATCHDOG vs. UNION OF INDIA| SLP(C) No. 001659 - / 2026

'Why You Didn't Go For Auction When NCR Property Prices Rising?' : Supreme Court Questions Banks' OTS Of 5 Star Hotel's Dues

Anmol Kaur Bawa

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