ED and Mumbai Police at Odds Over Closure Report in MSCB Scam Case

In a significant development concerning the alleged ₹25,000 crore Maharashtra State Cooperative Bank (MSCB) scam, a dispute has arisen between the Mumbai police and the Enforcement Directorate (ED) over the closure of the case. The Economic Offences Wing (EOW) of the Mumbai police has moved to close the case, arguing that the apex cooperative bank did not suffer any unfair loss due to the purported fraud. However, the ED opposes this move, emphasizing the interconnected nature of their ongoing money laundering investigation related to the scam.

Police and ED Dispute

On Thursday, the EOW opposed the central agency’s plea against closing the case, citing their findings that no significant loss was incurred by the bank. The original case registered by the EOW named Deputy Chief Minister Ajit Pawar as an accused, along with over 70 others who served as directors of MSC Bank during the relevant period.

While the Mumbai police sought to close the case, the ED intervened, expressing concerns that accepting the closure report would adversely affect their ongoing investigation into money laundering linked to the scam. The ED has already filed prosecution complaints and supplementary chargesheets in the case.

Legal Proceedings and Timeline

The EOW’s written submission to the court rebuffed the ED’s intervention, noting that a similar plea had been previously rejected by a special court for cases involving MPs and MLAs. The timeline of events includes the police initially filing a closure report in September 2020, which was accepted by the court. However, further investigation was initiated in October 2022 based on protest petitions and the ED’s involvement.

In March this year, the EOW moved to close the case again, asserting that no unfair losses were incurred by the bank due to the alleged fraud. The FIR, which followed a High Court order in August 2019, alleged that loans of several thousand crore rupees obtained by sugar cooperatives, spinning mills, and other entities from district and cooperative banks were diverted and not repaid.

Allegations and Investigations

The FIR was lodged under various sections, including criminal breach of trust and cheating. It outlined a loss of ₹25,000 crore to the Maharashtra government between 2007 and 2017, pointing to violations of banking regulations and RBI guidelines in loan disbursements to sugar mills and the undervalued sale of defaulting businesses’ assets.

A former judge, appointed as an authorized officer by the cooperative commissioner, concluded that “there was no unfair loss to the bank due to the loans given to the factories (sugar mills),” and “the bank was recovering the amount from the factories by legal means,” according to the closure report.

Conclusion

The dispute between the Mumbai police and the ED highlights the complexities and challenges in large-scale financial fraud investigations, especially when multiple agencies are involved. The court’s decision on the matter will have significant implications for the ongoing investigations and the parties involved.

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