A REPORT

ON

Adarsh Housing Society Scam

SUBMITTED BY:
Members Enrolment no.
Yash Yellewar 18FMUCHH010223
Ramchandra Rao 18FMUCHH010059
Naman Kumar 18FMUCHH010738
Ansh Mittal 18FMUCHH010028
Vishwa teja 18FMUCHH010565
Sharmila reddy Gunda 18FMUCHH010299
Charitha pothineni 18FMUCHH010503

Distribution list:
Faculty Guide:

Dr. Rachita Kashyap

Adarsh Housing Society

The Adarsh Housing Society is a 31-story building constructed on prime real estate in Colaba,
Mumbai, for the welfare of 1999 Kargil war heroes and war widows. Over a period of several
years, politicians, bureaucrats and military officers allegedly conspired to bend several rules
concerning land ownership, zoning, floor space index and membership getting themselves flats
allotted in this cooperative society at below-market rates.
The scam was unearthed in November 2010 which forced the then Chief Minister of
Maharashtra, Ashok Chavan, to resign.
In 2011, a report of the Comptroller and Auditor General of India (CAG) said, "The episode of
Adarsh Co-operative Housing Society reveals how a group of select officials, placed in key
posts, could subvert rules and regulations in order to grab prime government land – a public
property – for personal benefit."
In January 2011, the Maharashtra government set up a two-member judicial commission to
inquire into the matter. The commission was headed by retired High Court judge Justice J A
Patil, with N N Kumbhar acting as member secretary. After deposing 182 witnesses over 2 years,
the commission submitted its final report in April 2013 to the Maharashtra government. The
report highlighted 25 illegal allotments, including 22 purchases made by proxy. The report
also indicted four former chief ministers of Maharashtra: Ashok Chavan, Vilasrao
Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil, 2 former urban development
ministers: Rajesh Tope and Sunil Tatkare and 12 top bureaucrats for various illegal acts. The
allottees included Devyani Khobragade an Indian Foreign Service officer who was also involved
in United States visa fraud.

Alleged violations
The Adarsh Society high-rise was constructed in the Colaba locality of Mumbai. This is
considered a sensitive coastal area by the Indian Defence forces and is the location of various
Indian defence establishments. The society is also alleged to have violated Indian environment
ministry rules. At first, appeared as only a misuse of granted land but It was found that the Navy
had objected to the Maharashtra government according permission for Occupation Certificates
citing “serious security concerns” as the 100-metre tall building stood next to a planned helipad
and military installations.
In the building, which was originally meant to be a six-storey, several apartments, estimated to
cost anywhere up to Rs 8 crore in 2010, were allegedly bought at a tenth of the price by defence
personnel and relatives of bureaucrats and politicians — but mostly registered in the names of
proxy owners.
The scam is notable for the fact that it was enacted over a period of ten years and required the
active involvement of successive officials in many crucial posts. Rules and regulations across
many departments and ministries, both at the Centre and the state of Maharashtra, were flouted
or bent to allow for the construction of the building. Some of the more blatant transgressions
included: obtaining a No Objection Certificate (NOC) from the Army towards construction of
the building in a sensitive zone, getting the Mumbai Metropolitan Region Development
Authority (MMRDA) development plan modified, and obtaining another NOC for residential
development in a Coastal Regulation Zone, often through manipulation of records and
misrepresentation of facts. Efforts by honest officers to bring this to the notice of top officials
were ignored.
The issue was first raised in a newspaper report in 2003 but did not evoke any official
reaction. In 2010, it was again raised by various newspapers and TV channels. Questions were
raised about the manner in which apartments in the building were allocated to bureaucrats,
politicians and army personnel who had nothing to do with the Kargil War and the way in which
clearances were obtained for the construction of the building of the Adarsh Society. It had led to
the resignation of the then Chief Minister, Ashok Chavan. Some of the current allottees of the
flats in the Adarsh co-operative society building have offered to return their flats, denying
allegations that they were allotted flats because they influenced or helped, in some manner, the
construction of the society by violating the rules.

Current State of Investigation

Bombay High Court monitoring of CBI investigation
There was a spate of petitions filed in Bombay High Court seeking to monitor CBI investigation.
The petitions are Criminal PIL No. 34 of 2010 by former Journalist Ketan Tirodkar, Criminal
Writ Petition No. 3359 of 2010 by Simpreet Singh and Criminal PIL No. 36 of 2010 by
Mahendra Singh. Ref. Bombay High Court order dated 17 Feb. 2011. By this order High Court
asked CBI to amend the F.I.R. by adding Benami Properties Transaction Act section 4. Also, the
High Court transferred the missing filed probe from Mumbai Police to CBI. Praveen
Wategaonkar filed Criminal PIL later seeking invoking of Prevention of Money Laundering Act
(PMLA) into the case. So it has been invoked and Enforcement Directorate came into picture.
Reacting to these petitions and based on the slow pace of the investigation in the last two
years, Bombay High Court severely castigated Enforcement Directorate for its failure to initiate
any probe in the matter on 28 February 2012. Expressing its unhappiness the court observed, "It
is unfortunate that ED has remained a mute spectator. There is a serious lapse on the agency's
part for not probing into money laundering offence. ED has not moved an inch. It reflects a
sorry state of affairs. We are summoning the director as there has been no assistance from his
department to the court." The Court also rapped the CBI for the tardiness in its investigations
(begun in January 2011). The High Court, again on 12 March 2012, severely castigated the CBI
for not arresting any of the accused in spite of having evidence and ordered it to take action
without fear or favour. ED having registered a case under Prevention of Money Laundering Act,
has decided to launch attachment proceedings of the flats after going through the latest charge
sheet filed by CBI. In a landmark judgement, the Bombay high court on 29 April 2016, ordered
the demolition of the building.

Arrests
Following the Court's criticism, the CBI carried out eight arrests including two retired Major
Generals TejK Kaul and AR Kumar, retired brigadier MM Wanchoo, former General Officer
Commanding(GOC) of Maharashtra, Gujarat and Goa, Adarsh promoter Kanhaiyalal Gidwani
and Pradeep Vyas, the then city collector and currently, finance secretary (expenditure) in
the Govt. of Maharashtra. Accordingly, on 22 March 2012, the Chief Minister of
Maharashtra, Prithviraj Chavan announced in the legislative assembly that the two IAS officers
whose names have figured in the scam, Pradeep Vyas and Jairaj Phatak have been suspended
from government service.
According to newspaper reports, many of the arrested hold more than one flat in the society in
fictitious names. Former Congress MLC Kanhaiyalal Gidwani was reported to have as many as
ten flats, which he had bought on behalf of top politicians. Gidwani and his son had been earlier
arrested on 6 March 2012, by the CBI for trying to influence CBI officials investigating their
alleged involvement in the Adarsh scam. In a further twist to the case, the CBI officers arrested
their own lawyers, J K Jagiasi and Mandar Goswami. Jagiasi allegedly asked an Air India (AI)
official, one of the accused in the case, to pay a bribe of Rs 5 million in exchange for diluting
charges levelled against him. The petty cash books maintained by Jagiasi helped unearth the
conspiracy. In addition, Rs 2.5 million was allegedly paid to Goswami. He was the Special
Counsel in the Ministry of Law and Justice and at present is working as Retainer Counsel for
CBI. According to CBI sources, the tainted AI official approached the CBI for dilution of the
case filed against him.
2 IAS officers Jairaj Phatak and Ramanand Tiwari were also arrested by the CBI on 3 April
2012, for their alleged involvement in receiving illegal gratification in the Adarsh Housing
Society Scam.

Bail
On 29 May 2012, a special CBI court granted bail to seven of the nine arrested accused in the
Adarsh scam since the CBI failed to file a chargesheet within the stipulated 60 days from the
time it took them in custody. Those granted bail include Maj. Gen. (Retired-retd) A. R. Kumar,
Maj. Gen. (retd) T. K. Kaul, Brig. (retd) M. M. Wanchu, IAS officer and former Mumbai district
collector Pradeep Vyas, former Defence Estate officer R. C. Thakur, IAS officer P. V.
Deshmukh and former Congress member of the Legislative Council Kanhaiyalal Gidwani (the
chief promoter of Adarsh). The bail was set at ₹500,000 rupees (US$7,700). They have been
directed to attend the CBI office every Tuesday and Thursday between 10 am and 12 pm. The
court also told the accused to deposit their passports and not tamper with evidence.

Inquiry by a Judicial Commission

On 9 January 2011, Government of Maharashtra appointed a two-member judicial commission,
under the Commissions of Inquiry Act, 1952, to investigate alleged irregularities and corruption.
It was decided that the commission would be led by a retired Bombay High Court judge JA
Patil while former State Chief Secretary P Subramanian would be the member.
The Commission's terms of reference were to investigate all aspects, including land ownership
and allotment, permissions given to Adarsh. The Commission was given three months' time to
complete the investigation.
On 27 June 2012, while deposing before the two-member panel probing the scam, Vilasrao
Deshmukh, Union Minister and former chief minister of Maharashtra contended that land was
allotted to the housing society after getting clearance from the Revenue Department, passing the
buck to his successor, Ashok Chavan who headed the department then.

Report and role of Maharashtra state cabinet led by Prithviraj Chavan

In April 2013, the commission submitted its final report to the Government of Maharashtra but it
 

refused to table it in the assembly. The Government of Maharashtra deliberately adopted delay

tactics and it was only after queries from the Bombay High Court that the Government tabled the
report purposely on the very last day of Assembly's Winter Session in December 2013 so that the
Adarsh report cannot be discussed in the Winter session of 2013. The report that was tabled was
conveniently rejected the Maharashtra Cabinet led by Prithviraj Chavan.
The report indicted 4 former chief ministers: Ashok Chavan, Vilasrao Deshmukh, Sushilkumar
Shinde and Shivajirao Nilangekar Patil, 2 former urban development ministers: Rajesh
Tope and Sunil Tatkare and 12 top bureaucrats. The report said Ashok Chavan and other
bureaucrats gave permissions and clearances in exchange for flats. It found 25 of the society's
102 members ineligible. The report also said Adarsh enjoyed the "political patronage" of Late
Vilasrao Deshmukh, Sushil Kumar Shinde, Chavan, Sunil Tatkare and Rajesh Tope. The report
revealed that 22 benami transactions took place and that the Adarsh society never sought any
environmental clearances. The report mentioned that Devyani Khobragade (who was in the news
for a visa fraud allegation by United States Government around the same time the report was
released), was an illegal beneficiary of a flat allotted to her.
After Rahul Gandhi and Sonia Gandhi publicly disapproved of Maharashtra cabinet's decision to
reject judicial report, Prithviraj Chavan convened a cabinet meet to review the decision. The
report was partially accepted by the state cabinet. It was decided that the 12 officials named in
the report will face departmental inquiry for violating the service conduct rules but appeared
going soft on politicians named by the commission for political patronage. The cabinet has also
decided to initiate proceedings against 22 benami transactions, adding the commission had
recommended action against allottees of such flats as they were found to be in violation of the
Benami Transactions Prohibition Act.

CBI Special court rejects CBI plea

K. Sankaranarayanan, Governor of Maharashtra (2010-2014) in 2013 rejected the proposal of
Central Bureau of Investigations to grant sanction to prosecute former Chief Minister Ashok
Chavan for having favoured Adarsh Society by way of allotment of additional Floor Space Index
illegally. It is stated in the C.B.I. proposal that Mr. Chavan grabbed two apartments in the tainted
society for these illegal decisions.
Acitivist Ketan Tirodkar moved Bombay High Court seeking direction to C.B.I. to proceed
against Ashok Chavan without sanction on the basis of Supreme Court Judgement stating that
sanction to prosecute is not required in cases that are monitored by Court.[Application 27 of
2013 in Cr.PIL 34 of 2010]. The application states that Governor Mr. Sankarnarayan was Union
Minister with father of Ashok Chavan and Ashok met governor on later's birth-day 15 October;
2013; at Raj Bhavan; official residence of the Governor. This meet lasted for an hour; as stated in
the application after which Governor rejected the CBI plea of sanction. The application in High
Court seeks direction to CBI to proceed with prosecution of Ashok Chavan & Governor. CBI,
acting like a caged parrot, conveniently ignored the Supreme Court judgement on the aspect of
Sanction to Prosecute being Not Required in cases monitored by Court; and moved the Special
CBI court to drop Mr. Ashok Chavan from the process of prosecution. However the special court
rejected the CBI's plea to drop his name from the list of accused in the Adarsh scam case. Special
CBI court observed even though governor K Sankaranarayanan had rejected CBI's plea for
sanction to prosecute Chavan, he could still be tried under the Prevention of Corruption act as he
has been accused of criminal misconduct. Special CBI Public Prosecutor Bharat Badami himself
admitted in the court that the CBI would be "very happy" to prosecute the former chief minister
but "our hands are tied". Another Public Interest Litigation has been moved by activist Ketan
Tirodkar seeking to prosecute State Cabinet for having rejected Judicial Commission findings
pertaining to Adarsh housing scam.

Events since 2014

In 2014, when the BJP led NDA formed the government of Maharashtra, the case against Ashok
Chavan was reopened. However, Chavan appealed and the Bombay High court rejected the
reopening of the case. In 2016, the same court ordered the building to be demolished holding that
it was illegally constructed. However, the society appealed to the Supreme court of India which
in 2018 ordered a stay on the demolition. On the orders of the Supreme Court, the Indian army
has secured the building pending further appeals. In 2020, Real Estate Scam Fighters is formed
with a basic mission to debunk various Frauds in the real estate sector and create awareness for
the investors.

Bibliography
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