By Kavita Mistry 
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:
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A hotels-for-land scam?
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.
Bid to tweak policy for BNR hotels?
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.
Modification of the eligibility criteria
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.
The bidding process
The CBI chargesheet said that while M/s Sujata Hotel Pvt. Ltd. bid for both the BNR hotels at Puri and Ranchi, bids were submitted by only one other bidder each for each hotel.
For BNR Ranchi, the other bidder allegedly submitted on the “telephonic instructions of an RJD leader, who had threatened him to quote the rates between Rs 4 to 5 crore”. Due to “fear and insecurity”, this bidder acquiesced.
Moreover, the court order said, as per the advertisement, the bids were to be opened on 1 December 2006 at 12.15 pm with all bidders present in the IRCTC office. However, both the other bidders were “allegedly made to sign some papers” before the opening of bids.
According to the CBI, the IRCTC officials purportedly told these other bidders that it had been decided, “upon the instructions of the topmost official of the IRCTC”, that the tender would not be opened that day. They were directed to leave the IRCTC office and told they would be informed about the date of the opening of the tender.
However, the bids were shown to have been opened on the same date, on verbal instructions, with no written orders on file, said the chargesheet.
It was also alleged that the technical bids were “mischievously designed so as to conceal the star status of property” of M/s Sujata Hotel Pvt. Ltd. for the last two financial years, which was one of the eligibility criteria. The “arbitrary” awarding of marks led to the technical rejection of the second bidder for BNR Puri.
In the CBI’s allegations, the court noted, “the strong identity of interest and community of purpose between the various persons and entities under allegation is itself a ground for the court to find the act of one conspirator to be the act of other conspirators”.
“With influence upon policy and processes being the currency of power available to Lalu Prasad Yadav and land being the chosen coin for the Kochhar brothers to repay, there prima facie existed a common interest between Lalu Prasad Yadav, alongwith Rabri Devi and Tejashwi Yadav and the two accused Kochhar brothers to ensure that the tender for BNR Puri and Ranchi was awarded to M/s Sujata Hotel and land owned by Kochhar brothers was transferred through a masked mechanism, involving P C Gupta and Sarla Gupta, to the wife and son of the then Railway minister,” the order said.
(Edited by Sugita Katyal)
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