Home Legal News [Laxmi Vilas Palace Hotel Auction Case] Rajasthan High Court Stays Proceedings Against Arun Shourie & Others

[Laxmi Vilas Palace Hotel Auction Case] Rajasthan High Court Stays Proceedings Against Arun Shourie & Others

by Shreya
Arun Shourie Laxmi Vilas Palace Hotel

The Rajasthan High Court has stayed proceedings against former Union Minister Arun Shourie and others in relation to the Laxmi Vilas Palace Hotel disinvestment case, which was going on before a Special CBI Court.

The Single Judge Bench of Justice Vijay Bishnoi, on October 21, directed the Special CBI Judge not to proceed with the trial against Shourie, Ashish Guha, Jyotsna Suri, Pradip Baijal and Kantilal Vikamsey till further orders.

Laxmi Vilas Palace Hotel Auction Case Background

The case concerns the auction of the Laxmi Vilas Palace Hotel, Udaipur by the Disinvestment Department of the Government of India in the year 2002 to Bharat Hotels Ltd.

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It was alleged that the said sale to Bharat Hotels Ltd. was illegal and in active connivance of then Secretary of the Department of Disinvestment Pradip Baijal; Managing Director of Lazard India Ashish Guha; the Financial Advisor to the Department of Disinvestment, and other unknown persons.

Shourie was the Minister of Disinvestment, Communication and Information Technology in the year 2001,when the disinvestment took place. The disinvestment process allegedly caused high losses to the government exchequer.


Arun Shourie and others had moved the High Court assailing the order passed by the CBI Judge on September 15 this year, directing for taking cognizance of offence against the petitioners. The petitioners are charged under Sections 420 and 120B of the IPC along with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act (PC Act).

The trial court had also directed for attachment of the Hotel, while appointing Udaipur’s District Collector as the receiver. It also summoned the petitioners through arrest warrants. These arrest warrants, however, were converted into bailable warrants by the Rajasthan High Court later on.

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Challenging the CBI Court’s order of September 15, Shourie argued that the Laxmi Vilas Palace Hotel’s disinvestment process was challenged before the High Court on two earlier occasions, but the petitions were not entertained. It was submitted that the High Court had made specific observations while dismissing these pleas that “no material has been placed that fixation of reserve price of shares was arbitrary.”

It was also highlighted that the CBI Judge made observations about Shourie, alleging him to be a person of dual character, without giving him the opportunity to be heard.

Senior Advocate PP Choudhary, appearing for one of the accused petitioners Umesh Kant Vyas, submitted that the CBI Court erred in passing the order of attachment and issuing summons based on the material collected by the CBI since nothing in the material can show Vyas’s involvement in any offence.

Nevertheless, the CBI Court proceeded to reject the closure report submitted by the CBI and took cognizance of the offence, he argued.

Ashish Guha’s Counsel, Senior Advocate Sanjeev Sen, argued that Guha was only a financial advisor to the disinvestment committee and had no other role to play.

Centre’s Averments

The Centre was represented by Additional Solicitor General SV Raju, who argued that the closure reports filed by the CBI twice earlier assert that no offence is made out against any of the petitioners and has given detailed reasoning for the same. Without considering those reasons, the trial court not only rejected the closure reports, but also passed other directions, said.


The High Court thus called for record of the trial from the Special CBI Court and listed the matter for hearing after three weeks. It also stayed the proceedings against the accused.

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