Police Closure Report Finds No Wrongdoing By MSC Bank In Alleged Rs 25,000-Crore Scam

The closure report filed by the Mumbai police in the alleged Rs 25,000-crore scam at the Maharashtra State Cooperative Bank (MSCB) involving Deputy Chief Minister Ajit Pawar and others, has said there was no unfair loss to the bank due to the loan given to sugar mills and other entities.

The MSCB has also not committed any wrongdoing, the police said, citing an inquiry report.

The case pertains to loans of thousands of crores of rupees obtained by sugar cooperatives, spinning mills and other entities from district and cooperative banks.

The Economic Offences Wing (EOW) of the Mumbai police had filed the closure report before a special judge for the cases linked to MPs and MLAs, R N Rokade, in March.

As per the details made available on Tuesday following the NABARD's inspection of the MSCB between 2007 and 2011, and the bank's settlement report thereon, an inquiry was initiated in January 2013 under the provisions of the Maharashtra Cooperative Societies Act.

The objective was to come to a definite conclusion about the bank's operation, its financial condition as well as loss and damage caused to it during this period. But the inquiry report submitted to the cooperative commissioner in January 2014 'did not say that the bank suffered losses', the closure report said.

However, after the complainant of the case raised an objection, another inquiry was conducted by a retired chief district judge in February 2020.

The closure report stated that the former judge, appointed as an authorised officer by the co-operative commissioner, concluded that there was 'no unfair loss to the bank due to the loan given to the factories' and that 'the bank was recovering the amount owed to the bank from the factories by legal means'.

The officer has also mentioned in his inquiry report that the bank has not committed any wrongdoing, the police's report said.

Besides the inquiry reports, the police probe also relied on the statement of witnesses, including the bank officials, scrutiny of related documents.

The closure report was filed after nothing incriminating was found even after re-investigating the case, the police said.

Meanwhile, the original complainant in the case, Surinder Arora, has filed a protest petition against the closure report.

The Enforcement Directorate (ED), probing a related case, has sought to intervene in the matter.

The EOW had filed its first first closure report in September 2020, which was accepted by the court.

However, in October 2022, the probe agency had informed the special court that it was conducting further investigation into the matter based on the points raised by the protest petitioners (complainants) and Enforcement Directorate(ED).

The EOW had filed a first information report (FIR) in the case under Indian Penal Code (IPC) sections 406 (criminal breach of trust) and 420 (cheating), the Prevention of Corruption Act and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

The FIR named Ajit Pawar and more than 70 others, who were directors of the MSC Bank during the relevant period, as accused. It had been registered following a high court order in August 2019.

As per the FIR, the state exchequer suffered losses of Rs 25,000 crore between January 1, 2007 and December 31, 2017 due to irregularities in the bank.

Banking and RBI regulations were violated while disbursing loans to sugar mills at very low rates and selling off assets of defaulter businesses at throw-away prices, the FIR alleged.