Railways raised red flag last year on hotels in CBI’s FIR against RJD chief Lalu Prasad

In February 2016, following a note from the Railways’ finance wing, Odisha-based East Coast Railway raised the first red flag, writing in a letter to the Railway Board that BNR Puri had become a “commercial project”, and that Railways should claim 40 per cent of its share of revenues.

Written by Avishek G Dastidar | New Delhi | Published:July 18, 2017 6:07 am
railways, railways red flad,  lalu prasad yadav, Indian Railways, IRCTC, sujata hotels, irctc hotel scam. sujata hotel scam RJD Chief and former Bihar Chief Minister Lalu Prasad Yadav 

MORE THAN a year before the CBI’s FIR against former rail minister and RJD chief Lalu Prasad for alleged irregularities in awarding tenders to Sujata Hotels, the Railways had red-flagged the Patna-based company for charging higher tariffs in hotels leased to it by a rail PSU, according to records examined by The Indian Express.

In both cases, the hotels under the scanner were the same — BNR Puri and BNR Ranchi.

Records show that the two hotels were leased out in 2006-07 to Sujata Hotels by Indian Railway Catering and Tourism Corporation (IRCTC) as “budget hotels” on the premise that they were located close to railway stations and would cater mainly to train passengers.

However, in 2016, Railways found that Sujata Hotels was charging up to Rs 5,000 per night in these two hotels, depending on room and season, which was much higher than industry standards for budget hotels. According to the agreement with IRCTC, the rates should have been Rs 1,000 per night.

And this, when the IRCTC had informed Railways that the hotels in Puri and Ranchi were “passenger amenities” and not a commercial venture, documents show. Records also show that the licence fee received by IRCTC from these BNR hotels was split with the zonal railways 75:25 in favour of the PSU.

In February 2016, following a note from the Railways’ finance wing, Odisha-based East Coast Railway raised the first red flag, writing in a letter to the Railway Board that BNR Puri had become a “commercial project”, and that Railways should claim 40 per cent of its share of revenues.

“It is seen that Clause 10 (in the agreement) is about the tariff part which mentions that BNR Hotel shall be catering primarily to rail passengers… and room tariff of all category of rooms should not exceed Rs 1,000 per night,” said the letter written by B P Swain, Chief Commercial Manager, East Coast Railway.

“Clientele of BNR, Puri is not restricted to rail passengers and is mostly patronized by people who come by other means of transport,” the letter said.

Railway officials also pointed out that the hotel’s tariff, not available on its website but displayed by other commercial aggregators, were much higher than Rs 1,000 per night.

In response to queries from the Railway Board, IRCTC claimed that rail passengers were the main target market for BNR Puri and Ranchi. “The major target market is railway passengers on underutilized Railway land,” IRCTC wrote.

It also defended the escalation in tariff, stating that Sujata Hotels increased room rates with IRCTC approval every year. “Revision of the tariff is made on yearly basis. Percentage increase in WPI (wholesale price index) and not on other market factors,” IRCTC wrote.

It also clarified that Sujata Hotels was obligated to earmark some rooms for use of Railway employees and officers on payment basis. “The room tariff of BNR Hotels is fixed keeping in view the economic profile of the passengers likely to avail the facility,” the IRCTC wrote.

According to zonal railway sources, the matter remains unresolved.

On July 7, the CBI said it had registered an FIR against Lalu Prasad, his wife Rabri Devi, their son and Bihar Deputy Chief Minister Tejashwi Yadav, and five others, including the then IRCTC managing director, in a case of alleged corruption linked to the award of tenders for the maintenance of these BNR hotels to Sujata Hotels.

The CBI alleged in its FIR that Prasad and his family received a plot of prime land in Patna in return for awarding tenders to the company run by two Patna-based businessmen Vijay Kochhar and Vinay Kochhar.

Prasad and Tejashwi have denied the charges. Representatives of Sujata Hotels or the Kocchars were not available for comment despite repeated attempts by The Indian Express.

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    Nampurath Krishna
    Jul 18, 2017 at 8:10 pm
    Last more than 60 years of Congress rule has made the corrupt so arrogant and brazenly unashamed to indulge in corruption crimes instance being Lalu and his family's deeds. Not much long that Lalu with his family was in residing in the servant quarters of Govt. Veterinary College, Patna and now he has amassed crores of rupees of properties. Congress never dare to put hands on stinking underhand deals of Lalu and now when honest Nitish Kumar is raising red flag against the corruption of the Lalu family Congress and its Italian Madam is playing the role of mediator, anymore evidence needed where lies Congress's interest?? Promoting and indulging in corruption only Congress Party and its leaders interested evidently!!
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      jitu
      Jul 18, 2017 at 6:59 pm
      narendra modi has become ti arrogant he wants to keep all piwer to himself he willl dig his own grave scindia smriti irsni shsh sll are involved in some matter or other but he is victimising only opposition
      Reply
      1. J
        jitu
        Jul 18, 2017 at 6:56 pm
        first ssck simriti irsni arrest khadse
        Reply
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          Damodar Biswal
          Jul 18, 2017 at 3:56 pm
          Lalu is a seasoned corrupt politician.He indulged in corrupt practices like an expert but unfortunately luck deserted him.If all his benami properties r not confiscated n if he is not penalised people of the country will lose faith in justice delivery system.
          Reply
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            Niladrinath Mohanty
            Jul 18, 2017 at 7:23 am
            The charges may be true but I have doubt about the ability of CBI to carry out a fault free investigation.
            Reply
            1. V
              Vinod
              Jul 18, 2017 at 6:43 am
              When Corruption is done by BJP leaders like in Vyapam Scam, Lalit Gate, DDCA and dozen other Scams then it is considered Legal but when Opposition leader do something good for country then it is called Scam and it is illegal. It is Supreme Court and not BJP or CBI working as its proxy and puppet cannot reach to any final conclusion or called something legal as illegal or Scam for political motives and Political Vendetta.
              Reply
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                Damodar Biswal
                Jul 18, 2017 at 3:58 pm
                It is unfortunate that people like u still consider Lalu non corrupt.Give up ur political bias n speak things which r supported by facts.
                Reply
              2. J
                Jimmy
                Jul 18, 2017 at 6:36 am
                Lalu was without doubt the best Railway Minister in 75 years and that was only during his term as Railway Minister Railway made huge profit. Now under BJP Railway Minister Railway is worst since 1947 with record number of rail accidents and record deficit. Good leader are always targeted by the incompetent and with BJP in power and it can fabricate any fake charges for political reason to continue with Political Vendetta using CBI to promote BJP and RSS.
                Reply
                1. s
                  s0r2637
                  Jul 18, 2017 at 7:01 am
                  If railways was the best under Lalu, then why on Earth Bihar has been forever. Also, if Lalu is a good leader then why did he go to jail for fodder scam?
                  Reply
                  1. R
                    RB
                    Jul 18, 2017 at 7:44 am
                    Case against him is failing that's why he is out and in the end case could fail completely because far bigger cases against BJP leaders being closed because BJP in power same will happen in Lalu case when opposition comes to power soon.
                    1. D
                      Damodar Biswal
                      Jul 18, 2017 at 4:00 pm
                      Lalu is a convicted criminal.He is out on bail courtesy UPA Govt.
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