Maharashtra horse festival contract row: MTDC audit red-flagged rent paid to minister’s kin

But documents obtained by The Indian Express show that MTDC’s own auditors have even raised serious objections regarding the expenditure the firm claims to have incurred on the festival in 2017-18.

In the report, submitted to the MTDC on July 21, 2018, MTDC’s auditors, R Devendra Kumar and Associates, have even raised an objection regarding “land rents” paid by the firm to then tourism minister and senior BJP MLA Jaykumar Rawal’s uncle, Jaypalsinh Rawal, and aunt, Aishwarya. Rawal, who was then also the Chairman of MTDC, is also the local MLA.

While the Sarangkheda festival, organised for a month in December annually, is one of the oldest horse fairs in India, the MTDC has been associated with it since December 2016. Incidentally, Rawal had taken over as the Tourism Minister in July that year.

The auditors observed that on January 1, 2018, “an amount of Rs 12 lakh was paid as rent to Jaypalsinh Rawal and Aishwarya (each paid Rs 6 lakh) as rent. However, no rent agreement was executed.” The auditors report, which has also been acknowledged on file by one of the directors of the Gujarat-based firm, observed that the “payment was made towards the land rent at Sarangkheda site. There is no agreement or documentation regarding land ownership. The invoice even has the address of the person.” It has, however, added that the “payment was made through the banking channel and the applicable tax was deducted as source”. In another objection, the auditors, who verified

the accounts and invoices raised by the company, claimed that the local Chetak Samiti, also headed by Jaypalsinh Rawal, was paid Rs 43.03 lakh by the firm on January 29, 2018, while observing that the “Samiti is not registered under the GST law”.

While Rawal remained unavailable for comment, his uncle Jaypalsinh confirmed both the payments. “The land (festival site) is owned by us. We had entered into a rent agreement with the firm before accepting the rent,” he said. Bhavik Sheth, Manager, Finance and Operations, Lallooji and Sons, also claimed that following the objections raised by the auditors, the firm had submitted a copy of the rent agreement to the MTDC. Incidentally, Jaypalsinh admitted that in the past he has never collected rents for the festival’s organisation. He claimed that the payments made to the Samiti were towards “prize money and allied expenses” incurred on various horse competitions. “The Samiti is a non-profit. We wanted the firm to directly give away the prize money but they had insisted on routing it through the Samiti,” he argued.

Further, just as the firm had claimed a total expenditure of Rs 13.71 crore in that season and had raised a demand of Rs 4.17 crore from the government as viability gap fund (VGF), the auditors had found that “amount eligible for expenditure to be Rs 7.76 crore.”

Claiming that a majority of the invoices raised did not contain details regarding the place of delivery, the auditor’s report stated that “in most of the invoices the delivery destination of the goods was found to be either the contractor’s office in Ahmedabad or their godown at Jethlapur, and not at the festival venue”. Similarly, the report claims that “a majority of the GST invoices had also mentioned the place of service in Gujarat” while adding that the “delivery challans, in most cases, weren’t produced for verification. Some of the submitted invoiced did not bear authorised signatures, it added, while contending that “lack of adequate details regarding the actual movement of materials from the godown to the festival site had made it difficult to conclude whether the materials were put to use”. Sheth, however, denied the allegations, claiming they had already submitted a response to all the audit objections.