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SR Mohanty as the managing director of the MP State Industrial Development Corporation  allegedly committed a huge fraud
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Above: SR Mohanty as the managing director of the MP State Industrial Development Corporation  allegedly committed a huge fraud

The blue-eyed boy of the Congress  S R Mohanty is in a tight spot over the inter-corporate deposits scam with the Supreme Court issuing a notice to the Madhya Pradesh government asking if he is tainted

By Rakesh Dixit in Bhopal

When Madhya Pradesh Chief Minister Kamal Nath chose a 1982-batch IAS officer, Sudhi Ranjan Mohanty, as chief secretary last month, neither could have expected that a two-decade-old scam would return to haunt them. Mohanty, the seniormost IAS officer in the state, was always the blue-eyed boy of most chief ministers, especially Digvijaya Singh when the Congress was in power from 1993 to 2003.

Mohanty, an alumnus of IIM Ahmedabad who cleared the civil service exam at the age of 22, is considered an efficient and dynamic bureaucrat. However, corruption allegations have plagued him for a long time and, on February 16, the matter finally reached the Supreme Court which issued a notice to the state government seeking a reply within six weeks as to whether the chief secretary was tainted. The notice was issued in response to a PIL questioning the appointment of Mohanty on the ground that his alleged involvement in the
inter-corporate deposits (ICD) scam was still under judicial scrutiny.

Appearing for advocate-petitioner Manohar Dalal, senior advocate Maninder Singh told a bench of CJI Ranjan Gogoi and Justice Sanjiv Khanna that Mohanty’s appointment demonstrated brutal abuse of power by the government. Dalal claimed that as managing director of the MP State Industrial Development Corporation (MPSIDC) under the Digvijaya government, Mohanty had sanctioned Rs 100 crore surreptitiously to dubious companies by side-stepping rules and without prior permission from the state government.

While the chief secretary didn’t want to react as the matter was sub judice, officers close to him said the PIL was baseless and mischievous. They claimed that the MP High Court had exonerated Mohanty in the ICD case in March 2017. They also dismissed the allegation in the PIL that the chief secretary influenced the Economic Offences Wing (EOW) to close the pending inquiry against him.

According to government sources, Kamal Nath chose the chief secretary with due diligence and after considering the merits of the case involving him.  Thus, they said, the question of removing him did not arise. However, the state government has not yet prepared a reply to the Supreme Court notice.

In 2017, Mohanty was bypassed by then Chief Minister Shivraj Singh Chouhan for the chief secretary’s post despite being the seniormost IAS officer in the state. However, he did get two promotions in the BJP regime before elevation as chief secretary. Chouhan was initially suspicious of him, but gradually, Mohanty got into his good books by sheer hard work and innovative ideas. His work in the non-renewable energy department as principal secretary earned the state several valuable projects.

In the Digvijaya government, Mohanty’s stints as Indore collector and commissioner, public relations, made him the darling of the media. But despite his good work, Mohanty failed to remove the perception in the BJP that he was essentially Digvijaya’s man. This was because Mohanty’s appointment became an election issue in the 2003 assembly polls to attack the Congress government. The BJP had then promised to punish the guilty in the ICD scam. The scam started in the second tenure of the Digvijaya government.

It all began in 1998 when MPSIDC launched the ICD scheme to disburse loans to industrialists, with Mohammad Pasha Rajan as its managing director. Two years later, Mohanty succeeded Rajan, who took voluntary retirement from the IAS amid serious allegations of corruption. Under the scheme, loans worth Rs 714 crore were advanced to companies and individuals, mostly with dubious credentials. The Corporation went to the extent of raising crores through bonds which were bought by Mumbai-based cooperative banks, IDBI, Bank of Punjab and Syndicate Bank, among others. The Rs 714 crore thus raised was disbursed to select industrialists, whose list reads like a who’s who of MP. Under the articles of association of a company, the government’s permission is necessary for disbursal of any loan over Rs 3 crore. This condition was violated in almost all the cases. Mohanty allegedly speeded up loan disbursals to certain industrialists. The scam landed him in deep trouble when the BJP led by Uma Bharati routed the Congress government in 2003.

In 2004, Bharati replaced Mohanty with Raghav Chandra as the MPSIDC’s managing director. Chandra blew the lid off the scam. On his report, Bharati ordered a probe by the State Bureau of Investigation for Economic Offences (SBIEO). In 2005, the SBIEO filed an FIR against 84 persons, including Mohanty. Two prominent accused were Rajendra Kumar Singh and Narendra Nahata, former chairmen of the MPSIDC and successive commerce and industry ministers in Digvijaya’s government. To flee the hostile atmosphere in MP, Mohanty sought deputation at the centre. As the UPA government was at the centre, Mohanty was confident that his proximity to Digvijaya would bail him out. But the probe in the ICD scam was a major hurdle in his plan.

Mohanty then moved the MP High Court, praying for an order directing the General Administration Department (GAD) to give him vigilance clearance. GAD filed an affidavit in 2006 which not only gave him a clean chit, but also emphasised that his action caused no loss to the state. The affidavit was filed without the knowledge of then CM Chouhan, who was heading the GAD. When Chouhan came to know of it, he removed then Chief Secretary Vijay Singh, principal secretary and deputy secretary to GAD, Abha Asthana, and Suresh Daphne, respectively. The MP High Court ruled in Mohanty’s favour, but the state government filed an SLP in the Supreme Court, saying the bureaucrats were not authorised to file the affidavit, and thus there was no question of a clean chit. In 2011, the SC upheld the state government’s stand and asked the EOW to start a probe afresh into the scam.

Praveen Dubey, one of the counsel for Mohanty, said the EOW completed its probe and sanction was sought on May 16, 2011, but there was no document on record to show what was done by the investigating authority after the SC ordered a “fresh investigation” in 2011. Vivek Tankha (another counsel for Mohanty) and Dubey argued that the MP government had forwarded its sanction to prosecute his client without complying with the SC order. They also produced a chart to clarify that no fresh probe was conducted by the EOW.

The state government issued Mohanty a charge sheet and, after finding his explanation unsatisfactory, instituted a disciplinary inquiry against him. It also sent his file for sanction of prosecution to the centre on June 28, 2011. In 2016, the Chouhan government sanctioned the prosecution sought by the EOW. The sanction followed a remark by the Department of Personnel and Training (DoPT) that the MP government had failed to convince the centre that it had followed the orders of the SC.

But, in March 2017, the High Court quashed the EOW’s probe, saying that the SC’s orders were not followed. The HC also quashed the letter sent by the probe agency to the DoPT seeking sanction to prosecute the officer while issuing an order to conduct a fresh inquiry against him. In October 2016, the HC stayed all proceedings against him.

Although the MP government seems confident about a favourable order by the SC, the chief secretary doesn’t want to take any chances. He has engaged three top lawyers—Mukul Rohatgi, Kapil Sibal and Tankha. In the February 16 hearing, the lawyers didn’t get a cha­nce to speak. When they sought permission to oppose the SC’s interim order, the CJI said: “We will hear Mr Sibal, Rohatgi and Tankha when we examine the matter in detail.” This is expected when the MP government files its reply.

Till then, uneasy lies the head that wears the crown.

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