YC Bains's KCC NPA case: HP Govt. challenges bail in SC -

Shimla, Sep 2

Himachal Pradesh government has approached the Supreme Court seeking cancellation of the bail granted to Mandi-based businessman and social activist Yudh Chand Bains in a case arising from alleged irregularities in loans obtained from the Kangra Central Cooperative Bank (KCCB).

The move takes the legal battle over the alleged loan default and subsequent securitisation proceedings involving Bains to the country’s apex court. According to senior counsel representing the Kangra Cooperative Bank, the bank and the investigating agency have decided to challenge the recent Himachal Pradesh High Court order granting Bains bail in the case concerning the alleged misuse of loan funds and irregularities in the financing of his hospitality projects.

Bains has been at the centre of a prolonged dispute with the cooperative bank over loans secured against two hospitality properties—Himalaya Snow Village at Manali and Hotel Lake Palace in Mandi. The scale of the liabilities and the sharp dispute over the valuation of the secured assets have brought the matter under repeated judicial scrutiny.

The latest High Court judgment in CWP No. 9842 of 2026, decided on August 10, records that the outstanding liability against Himalaya Snow Village was ₹36.55 crore, while dues against Hotel Lake Palace stood at ₹18.78 crore. Together, the liabilities recorded in the two auction notices amounted to more than ₹55.34 crore(outstanding amount 56 Cr according to high court order).

The dispute became particularly contentious over the reserve prices fixed by the bank. According to the High Court judgment, the bank’s e-auction notice dated July 27 fixed the reserve price of the Manali property at only ₹75 lakh against outstanding dues of ₹36.55 crore. For Hotel Lake Palace, the auction notice dated July 29 fixed a reserve price of ₹8.23 crore against outstanding dues of ₹18.78 crore. Bains challenged these valuations as grossly inadequate.

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Bains had approached the High Court under Article 226 of the Constitution, challenging the bank’s possession and recovery proceedings and alleging that his properties had been grossly undervalued. However, the Division Bench of Chief Justice G.S. Sandhawalia and Justice Bipin Chander Negi declined to entertain the writ petition on merits, holding that the petitioner had an alternative and efficacious remedy before the Debt Recovery Tribunal (DRT).

The judgment also records that the recovery proceedings were not recent. Proceedings under Section 13(4) of the SARFAESI Act had been initiated in 2023, with possession of the secured properties taken on October 4, 2023 after proceedings under Section 14. An earlier representation by the petitioner had also been rejected in June 2022.

The bank’s case received further support from the record of the DRT proceedings. The High Court noted that assurances had earlier been given for repayment but the promised payments were not made, resulting in dismissal of the securitisation application concerning Himalaya Snow Village on April 22, 2026. The court also recorded that Bains had failed to comply with an earlier DRT order and that a ₹2.50-crore cheque towards the first instalment had bounced.

The valuation dispute had also figured prominently before the High Court in June. Bains’s counsel had claimed that finished cut stone worth approximately ₹30.98 crore was lying at the Manali site, besides stone for excavation and finished cutting valued at about ₹32 crore. The petitioner’s contention was that the material itself could substantially meet the outstanding liability if allowed to be sold under supervision.

At that stage, Bains’s counsel had offered to deposit ₹3 crore before the court to demonstrate his bona fides. The June 19 order, however, made it clear that no interim order had been passed at that stage.

The state, meanwhile, has alleged that the loan transactions involved serious irregularities, including alleged diversion or use of borrowed funds for purposes other than those for which the loans were sanctioned. The State Vigilance and Anti-Corruption Bureau subsequently registered a case against Bains, in which he later secured bail from the High Court. The wider investigation has also brought under scrutiny the circumstances in which the two substantial loans were sanctioned, including allegations that banking officials overlooked or undermined earlier outstanding liabilities while extending credit.

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The latest Supreme Court challenge assumes significance against the backdrop of Bains’s reported political proximity over the years to senior political figures, including former Chief Minister Jai Ram Thakur and the late former Chief Minister Virbhadra Singh. The proceedings have also acquired a wider political dimension, with allegations and counter-allegations concerning the functioning of the cooperative banking system and regulatory oversight.

The KCCB has been facing a sizeable burden of non-performing assets, and the Bains loan dispute has emerged as one of the high-profile cases in which the recovery of large outstanding amounts has come under judicial scrutiny. Questions are now likely to focus not only on the alleged default but also on how the loans were sanctioned, the valuation of the secured properties, the subsequent settlement efforts and the role of officials involved in the lending process.

With the state and the bank now moving towards the Supreme Court against the bail order, the controversy surrounding the alleged loan default, criminal investigation and recovery of the secured assets is set for another round of litigation before the country’s highest court.