A case of alleged financial fraud involving a cooperative sugar mill has come to light in Surat district of Gujarat. The Olpad Police Station has registered an FIR against three persons, including the former Managing Director of a cooperative sugar mill and a former Managing Director of the Surat People’s Co-operative Bank Ltd., for allegedly obtaining loans from the National Cooperative Development Corporation (NCDC) by submitting false documents related to sugar stock.
The complaint was filed by Brijeshbhai alias Viralbhai Gunvantbhai Patel, Chairman of the custodian committee currently managing the affairs of Shri Kantha Vibhag Sahakari Khand Udyog Mandali Ltd.. According to the FIR, the alleged irregularities took place in 2023 when the cooperative sugar mill was being run by its previous board and management.
As per the complaint, the accused include former Managing Director of the sugar cooperative Pradipkumar Gautambhai Pandya, godown keeper Pradipkumar Bhagubhai Patel, and Jatinbhai Ishwarbhai Nayak, former Managing Director of the Surat People’s Co-operative Bank. Nayak is currently serving as Managing Director of Sarvodaya Sahakari Bank. They have been accused of conspiring to prepare false stock verification documents to secure loans from NCDC.
According to the FIR, the sugar mill applied to National Cooperative Development Corporation in March 2023 for a working capital loan by pledging sugar stock. Based on the application and board approval, NCDC initially sanctioned a loan of about Rs 6.29 crore in June 2023 against a stock of 23,882 quintals of sugar.
Later, another loan of about Rs 9.35 crore was sanctioned in November 2023 after documents submitted to NCDC claimed that the mill had 59,402 quintals of sugar in stock. However, the complaint alleges that a physical verification conducted on November 17, 2023 found that only about 4,022 quintals of sugar were actually available at the mill.
According to the complainant, despite the much lower actual stock, the accused allegedly prepared and submitted a false physical verification report showing the higher stock figure and used it to obtain the loan. The FIR further states that under a tripartite arrangement involving the sugar mill, NCDC, and the Surat People’s Co-operative Bank, the bank was responsible for monitoring the pledged stock and ensuring that proceeds from sugar sales were deposited towards repayment of the loan.
Reacting to the development, the Chairman of the Surat People’s Co-operative Bank Amit Gajjar, told Indian Cooperative that the bank came to know about the FIR only recently. He said the matter surfaced on Friday and, as it was followed by the weekend, the bank has convened a board meeting on Monday evening to review the issue.
“In a nutshell, there is no financial loss to the bank and no bank funds are involved. The issue appears to relate to certain lapses in the tripartite agreement and audit responsibilities. The board had earlier passed a resolution delegating the powers to the then Managing Director, Jatinbhai Nayak, to carry out the necessary processes, including the audit-related work,” Gajjar said, adding that the board will examine the matter in detail.
The complaint further alleges that the proceeds from sugar sales were not deposited as required and that the loans obtained from NCDC were misused. In total, loans amounting to about Rs 15.65 crore were allegedly obtained in this manner and have not been repaid so far.
Police have registered a case under Sections 409, 420, 465, 467, 468, 471 and 120B of the Indian Penal Code. Officials of Olpad Police Station have begun an investigation, and further names may be added if additional involvement emerges during the probe.