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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