‘I know Gadkari is a powerful man but we are not going to leave him for the fraud he has done to us’

Union Transport Minister Nitin Gadkari has been accused by members of his own parent organisation—the Rashtriya Swayamsevak Sangh—of having helped his sons procure a loan worth ₹42.83 crore by mortgaging land that belongs to a Nagpur-based cooperative society (of which he was the promoter) without informing its members.

The land belonging to Polysac Industrial Cooperative Society (PCSL) was allegedly transferred on the sly in order to acquire the loan for GMT Mining and Power Ltd, a company owned by Nikhil and Sarang Gadkari (Nitin Gadkari’s sons). The accusations first came to light when Ghanshyam Das Rathi, a PCSL shareholder and a member of the RSS, went to the office of the Maharashtra Industrial Development Corporation (MIDC) in Nagpur and discovered that the land belonging to the cooperative society had been taken over by Purti Solar Systems Ltd, a company associated with Kishore Totde, Nitin Gadkari’s brother-in-law.

Further inquiry into the matter revealed that PCSL’s land has been mortgaged to Saraswat Bank for the multi-crore loan provided to GMT Mining and Power Ltd.

To recap: Gadkari and his relatives first allegedly transferred the land belonging to PCSL, of which he himself was a member, to Purti Solar Systems Ltd, a company associated with his relative, without the permission or knowledge of PCSL’s shareholders. After this, Gadkari and co. allegedly mortgaged the land for a loan of ₹42.83 crore for GMT Mining and Power Ltd, where both his sons occupy the position of director(s).

The land belonging to PCSL was mortgaged for a loan of ₹42.83 crore for GMT Mining and Power Ltd

This is not the first time Gadkari’s name has cropped up in a questionable deal. In 2015, aCAG report had accused state-run Indian Renewable Energy Development Agency Ltd of wrongfully granting a loan of ₹48.65 crore to Purti Sakhar Karkhana Ltd—of which Gadkari was a promoter and director.

According to documents accessed by Newslaundry, PCSL was a cooperative society established for the manufacturing of PVC pipes. It was registered in 1988 under the Maharashtra Cooperative Societies Act, 1960, and was inaugurated by senior Bharatiya Janata Party leader LK Advani. The allotment of land was given to PCSL under the promotership of Gadkari at the premium of ₹99,000 and at an annual ground rent of ₹1 per annum for the alloted plot of land. The land given was Plot No. J-17 at Hingna MIDC in Nagpur measuring 4,950 square metres. PCSL was also granted ₹24.77 lakh by the Maharashtra government. It’s this land that was allegedly transferred by Gadkari and his relatives to acquire the loan for GMT Mining and Power Pvt Ltd.

The document states allotment of land measuring 4950 Sq Meters to Nitin Gadkari of Polysac Industrial Cooperative Society Ltd

Although PCSL continued its operations till 2003, it didn’t hold any kind of general body meeting with its members after that and kept them uninformed about the plot’s transfer.

Rathi, a staunch RSS man and the first member of PCSL who came to know about the alleged fraud, said: “Gadkari and his relatives have committed fraud with 1,330 shareholders. Without informing them (the shareholders), they transferred the plot belonging to the society to Purti Solar Systems Pvt Ltd, which has Kishore Totde, brother-in-law of Nitin Gadkari, as its director. After transferring the land to Purti Solar Systems, they mentioned that GMT Mining and Power Pvt Ltd was the sister company of Purti Solar and mortgaged the plot to acquire a loan of ₹43 crore.”

Rathi said that the registrar of the cooperative society had been kept in the dark about the plot’s transfer. “They (Gadkari and his relatives) have not only kept society members in the dark but also the registrar of cooperative societies. They have not taken the permission of the registrar for the transfer or sale of PCSL’s land. Even the cooperative department had no information regarding the mortgaging of the plot.”

Rathi’s claims are supported by an RTI reply to him dated March 8, 2017, from the office of the district deputy registrar of cooperative societies in Nagpur. The reply states that neither does the office of the cooperative department have any information about the transfer of the plot owned by PCSL to Purti Solar Systems nor has their permission been taken to do the same. The document says that the cooperative department possesses no information regarding the mortgaging of the plot to Saraswat Bank for a loan of ₹42.83 crore which was given to GMT Mining and Power Pvt Ltd. The reply further says the factory belonging to PCSL was shut down from March 2003 onwards and the annual report of PCSL has not been available since then.

The RTI reply states the Cooperative Society was not aware of the transfer or sale of the land

Ajay Mahajan, another shareholder of PCSL, said: “It is a planned conspiracy by Gadkari and his relatives to increase the purchasing power of their companies. Gadkari, both his sons and Totde had conspired in advance to occupy the land. Their intentions can be clearly judged by the fact that they had passed a resolution in 2011 mentioning mortgaging of a plot at Hingna. However, the first application to transfer the land owned by PCSL to Purti Solar was made to the regional office of MIDC only in 2012—which means they mortgaged the plot even before it got transferred.”

Mahajan told Newslaundry that in September 2016, shareholders had asked for the details of the deal for the first time through an RTI. Mahajan said someone in the cooperative department had informed Rajesh Bagdi, secretary of PCSL, about their query. Bagdi then allegedly prepared a backdated audit report to justify the sale of land to Purti Solar Systems Pvt Ltd. The inward and outward entries in the register of the deputy registrar office were manipulated to regularise the backdated audit report.

Both Rathi and Mahajan filed a criminal case against Gadkari and his two sons in August this year at the district court of Nagpur and have appealed that an FIR be registered against the three with respect to this matter.

According to the documents accessed by Newslaundry, there is a clear mention of the mortgaging of the said plot at Hingna to Saraswat Bank against the borrowing of the loan given to GMT Mining and Power Pvt Ltd in a resolution passed by Purti Solar Systems Pvt Ltd back in 2011. However, the application to transfer the land owned by PCSL at Hingna MIDC was made for the first time on May 7, 2012, to the office of the regional officer of MIDC Nagpur. The application was made by Rajesh Bagdi, secretary of PCSL, and Kishore Totde, one of the directors of Purti Solar System Pvt Ltd. The corporation granted its permission to transfer the land on June 22, 2012.

A document dated October 18, 2011, and with the letterhead of Purti Solar Systems Pvt Ltd—is the certified copy of the resolution passed in the meeting of the board of directors of Purti Solar Systems Pvt Ltd on October 12, 2011. Signed by one of its directors Sagar Kotwaliwale, the letter states: “Resolved that, consent of the board of directors be and hereby accorded to provide Collateral security by way of mortgage of company’s immovable property situated at Industrial Estate, Hingna Road, Nagpur, in favour of Saraswat Cooperative Bank Ltd, the Banker of M/S GMT Mining and Power Pvt Ltd, Nagpur against borrowing of  funds by M/s GMT Mining and Power Pvt Ltd, Nagpur vide sanction letter no SCB/20-VI/11-12/AVP/23 dated 28.08.2011 and SCB /20-VI/11-12/AVP/34 dated 10.10.2011.”

Resolution passed by Purti Solar Systems Pvt Ltd to mortgage the plot of land at Hingna to acquire the loan of Rs 42.83 Crores for GMT Mining and Power Pvt Ltd. 

Even though the land was transferred, it was never used for the purpose of its transfer. The MIDC, in its letter written to PCSL, clearly stated that the “Corporation has examined your (PCSL’s) request and decided to transfer the subject plot to Purti Solar Systems Pvt Ltd, for setting up their unit for manufacturing activity of Solar Panels and pump solar LED lights”.

However, the land was not used for a manufacturing unit of solar panels and LED lights. Instead, it was mortgaged to acquire the loan of ₹42.83 crore by GMT Mining and Power Pvt Ltd, a biomass venture, so that it could set up a 10-megawatt power plant at Sawarkhanda village in Nagpur’s Kuhi Taluka.

GMT Mining and Power Pvt Ltd had been pulled up in a report by the Comptroller and Auditor General of India on public sector undertakings for the year ending March 31, 2015 (government of Maharashtra) for delaying the project. The report states that it was “…observed that contrary to the provision, MEDA (Maharashtra Energy Development Agency) did not recover commitment charges of ₹9.54 crore (at the rate of ₹5 lakh per MW) from 13 (including GMT Mining and Power) out of 103 Biomass which were commissioned after obtaining ICC fees from MEDA. Out of the two non-bagasse projects, in the case of GMT Mining and Power Pvt Ltd, the project was delayed by 19 months and accordingly the commitment charges should have been forfeited by MEDA.”

The document(s) mentioning the mortgaging of the land a year in advance—without taking the permission of MIDC for the transfer—indicates fraudulent intentions on behalf of the director and promoters of PCSL, Purti Solar Systems, and GMT Mining and Power in order to mortgage the land and acquire a loan of ₹42.83 crore. PCSL and Purti Solar Systems had even filed the application at the office of the regional officer of MIDC to transfer the land on the very same day which, Rathi said, indicates they had planned everything in advance.

In December 2017, Rathi submitted a complaint to the office of the Deputy Commissioner of Police (Economic Offences Wing) of the Nagpur police. He had also made an appeal in his complaint to conduct an enquiry into the affairs of PCSL. The office of the DCP, EOW, had forwarded an application to the district deputy registrar’s office to take appropriate action in the matter.

Anil Lambade, another shareholder of PCSL, said: “Gadkari and his associates have not called for an annual general meeting after 2003 and have transferred the land without taking the permission of its members for their financial gains.” He added: “I have made a complaint to the office of the deputy registrar of the cooperative society. I know Gadkari is a powerful man but we are not going to leave him for the fraud he has done to us.”

Newslaundry asked PCSL secretary Rajesh Bagdi about the allegations made by the shareholders and about not taking the permission of the cooperative department before transferring the land. Bagdi, who had written to the MIDC office to transfer the plot to Purti Solar Systems Pvt Ltd, said: “We have taken the permission of everyone in the AGM and only then transferred the land. What Purti Solar has done with it is none of my concern. We have also taken the permission of the cooperative department. However, since people keep on changing over there, that is why they may not be aware of it.”

This is thoroughly contradicted by an RTI reply dated June 15, 2018, which is signed by the deputy registrar of the cooperative society and addressed to shareholder Rathi. The reply says the society has not given any permission regarding the sale or transfer of land as they have not received any application in this regard.

Furthermore, a 2016 audit report mentions that the land belonging to PCSL was sold to Purti Solar Systems at a price lower than its market price. The ready reckoner rate of the plot was ₹2,26,38,000 whereas the tender was floated at the price of ₹73,74,000.

When Newslaundry contacted the office of Nitin Gadkari, this is the reply received: “We cannot give any statement on the issue, but yes, we can get a statement from the Polysac Cooperative Society. It is a politically motivated matter.”

Newslaundry contacted Sagar Kotwaliwale, one of the directors of Purti Solar Systems Pvt Ltd, and Nikhil Gadkari and Sarang Gadkari. All three refused to comment on the issue.

Newslaundry also tried to contact Maharashtra Chief Minister Devendra Fadnavis and RSS Chief Mohan Bhagwat—who are also members of the cooperative society—but they were unavailable for comment.

However, Ashish Fadnavis, brother of Devendra Fadnavis and a member of PCSL, said: “We were aware of the transfer of the land but we are not aware of the legal issues related to the matter, such as taking the permission of the cooperative society. These are all legal nitty gritties and as people are now going into the depth of it, newer things are being revealed. But I don’t think there is any such issue.”