Supreme Court Questions Banks’ OTS Deal with Hyatt Hotel Owner, Seeks Transparency in Public Money Settlement
CJI Surya Kant Asks Why Auction Was Avoided Despite Rising NCR Property Prices
Court Issues Notice to Centre, PNB, BoM, and Asian Hotels Over OTS Valuation
By Legal Reporter
New Delhi: February 06, 2026:
In a case that has drawn national attention, the Supreme Court of India has put under scrutiny the One-Time Settlement (OTS) entered by Punjab National Bank (PNB) and Bank of Maharashtra (BoM) with Asian Hotels (North) Pvt Ltd, the company that owns Delhi’s iconic Hyatt Regency Hotel. The Court questioned why the banks did not opt for auctioning the property, especially when property prices in the National Capital Region (NCR) were rising and emphasized that public money must be safeguarded.
Background of the Case
- The matter reached the Supreme Court through a petition filed by NGO Infrastructure Watchdog, which alleged irregularities in the OTS deal.
- The Delhi High Court had earlier dismissed the NGO’s plea seeking a CBI and CVC investigation into the settlement.
- The NGO argued that the banks had acted against public interest by settling dues at undervalued rates instead of recovering higher amounts through auction.
- The Supreme Court bench, comprising CJI Surya Kant, Justice Joymalya Bagchi, and Justice Vipul Pancholi, agreed to examine the matter.
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Supreme Court’s Observations
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- Public money belongs to the people: The Court stressed that banks must act in the interest of the public, not private entities.
- Commercial wisdom questioned: While acknowledging banks’ discretion in financial decisions, the Court said such wisdom must align with public interest.
- Auction avoidance criticized: The bench asked why no attempt was made to auction the five-star property after 2023, despite rising real estate values in NCR.
- Transparency demanded: Notices were issued to the Union Government, PNB, BoM, and Asian Hotels to explain the valuation process.
Key Takeaways
- OTS deal under scrutiny: The Supreme Court is examining whether the settlement was clean and transparent.
- Auction could have fetched more: Rising NCR property prices suggest banks may have recovered higher amounts through auction.
- Public accountability reinforced: The Court reminded banks that they are custodians of public money.
- Possible investigation: The plea for CBI and CVC inquiry remains under consideration.
Why This Matters
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- For banks: The ruling highlights the need for transparency in settlements involving large corporate borrowers.
- For taxpayers: Ensures that public money is not compromised in undervalued deals.
- For corporate governance: Sends a strong message against backdoor settlements that benefit private entities at public expense.
Wider Implications
- Banking sector reforms: The case may push regulators to tighten rules around OTS and asset valuation.
- Corporate accountability: Large borrowers may face stricter scrutiny in future settlements.
- Judicial oversight: Reinforces the Supreme Court’s role in safeguarding public interest in financial matters.
Expert Reactions
- Legal experts welcomed the Court’s intervention, noting that it strengthens accountability in banking.
- Economists argued that undervalued settlements distort the market and weaken banks’ balance sheets.
- Public opinion strongly supports auctioning high-value assets to maximize recovery.
Conclusion
The Supreme Court’s scrutiny of the Hyatt Regency OTS deal underscores the judiciary’s commitment to protecting public money and ensuring transparency in banking decisions. By questioning why banks avoided auction despite rising property prices, the Court has sent a strong message that commercial wisdom must serve public interest. The outcome of this case could reshape how banks handle large corporate settlements in India.
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