The Jalgaon housing scam was a financial fraud in the Maharashtra city of Jalgaon and involved the illegal diversion of approximately Rs 110 crore in loaned public municipal funds. The funds were designated for a 1996-launched project to construct over 11,000 subsidized housing units. The incident is one of the largest scams in Maharashtra’s history.
How did the Jalgaon Scam happen?
From 1995 to 1996, the Pradhanmantri Awas Yojana—Gramin was implemented with the goal of constructing over 11,000 units of subsidized housing in the Jalgaon City outskirt neighborhoods of Tambapura, Samatanagar, Khanderaonagar, and Shree Hari Vitthalnagar. The project’s goal was to provide affordable housing for rural poor families who fell below India’s poverty line.
The Jawaharlal Metropolitan Corporation (JMC) announced plans in 1997 to construct 11,424 low-cost houses for slum dwellers in Mumbai. JMC overlooked the rules and regulations that governed the bidding and approving process and instead granted the housing contract to Khandesh Builders.
Khandesh Builders secured a loan from India’s Housing and Urban Development Corporation LTD for 110 crore rupees (HUDC). The loan was made without interest by the municipal corporation of Jalgaon. Despite the passage of many years, they were unable to construct any houses.
Khandesh Builders finished only fifteen hundred of the five thousand houses they were contracted to build. The scheme was riddled with flaws from the start. When the project was not completed by the projected completion date, JMC granted the builders numerous extensions to the original deadline. Pravin Gedam, then an IAS officer in Jalgaon, filed an FIR in 2006 for irregularities in the housing scheme.
Who was behind the scam?
Gulabrao Devkar was charged under Indian Penal Code sections 109, 120(b), 177, 406, 409, and 420, as well as the Prevention of Corruption Act, sections 13(d) and 13(ii). He was later granted bail on a 50,000 rupee bond.
The arrestees were granted interim bail. Although he filed multiple bail applications after that, each was denied by the court, and he remained imprisoned until sentencing. In late 2019, Jain was convicted of the charges by special judge Srushti Neelkant of the Jalgaon district court in Dhule, sentenced to seven years in prison, and fined 100 crore rupees.
Vijay Devkar, a Shivsena MLA at the time, was sentenced to seven years in prison and fined Rs. 40 crores. Rajendra Mayur and Jagannath Vani, the owners of Khandesh Builders, were sentenced to seven years in prison and fined as well.
Gulabrao Devkar was released in 2019 after completing his three-year sentence. In the 2014 Maharashtra assembly election, Devkar and fellow conspirator Vinayak Jain ran unsuccessfully. Jain is still a member of the Shiva Sena party as of 2019.
Only 1,500 of the projected 11,000 units of subsidized housing were ever completed in the Jalgaon housing project. JMC suffered total losses of 150 crore rupees, which it had to repay to HUDCO due to loan default terms.