Chandigarh: First MC official held in case; ₹50-cr cash payoffs alleged

Officer played a key role in diversion of funds during the merger of Chandigarh Smart City Ltd with municipal corporation and has been sent to four-day remand

In a significant breakthrough in the ₹116-crore Chandigarh Municipal Corporation forged fixed deposit receipts scam, the Chandigarh Police on Thursday arrested Nalini Malik, former chief finance officer of Chandigarh Smart City Ltd, making her the first government official to be held in the case since it surfaced on March 8.

During the hearing on Thursday, investigators told the court that Nalini Malik, along with other MC officials, allegedly received over ₹50 crore in cash from siphoned public funds, pointing to a well-oiled conspiracy. (HT Photo)

The arrest marks a key turn in the probe into the alleged fraud, suspected to have been carried out in connivance with government functionaries and officials of IDFC First Bank, Sector 32, where the Chandigarh Smart City Ltd (CSCL) accounts were maintained before it was wound up in March 2025.

Malik was produced before a local court, which remanded her to four days in police custody.

The case pertains to the alleged siphoning of ₹116.84 crore belonging to municipal corporation (MC) and CSCL through fake fixed deposit receipts (FDRs), which came to light last month when the civic body approached the bank seeking withdrawal or transfer of invested funds.

During the hearing on Thursday, investigators told the court that Malik, along with other MC officials, allegedly received over ₹50 crore in cash from siphoned public funds, pointing to a well-oiled conspiracy.

According to police, the fraud traces back to March 2025, when CSCL was merged with MC. Serving as CFO of CSCL at the time, Malik was part of the official team tasked with handing over financial records and accounts to the civic body, and is alleged to have played a key role in the diversion of funds during the process.

Investigators said as part of closing the company and consolidating its finances, a fresh MC account was opened in IDFC First Bank to pool all funds held by CSCL in different accounts. However, only ₹81.20 crore were traced, despite ₹95.78 crore being due for transfer from CSCL.

Police alleged that Malik, in collusion with accountant Anubhav Mishra, other officials and bank staff, orchestrated the creation of 11 forged FDRs to conceal the missing funds.

The probe further found that Malik’s mobile number was registered with a key CSCL-linked IDFC bank account, indicating her knowledge and control over financial transactions.

Police said she was fully aware of the diversion of funds from the CSCL account into multiple shell companies operated by co-accused.

During interrogation, co-accused and former bank manager Ribhav Rishi disclosed that he had opened MC bank accounts in the Sector 32 branch of IDFC First Bank in connivance with civic officials and generated forged FDRs worth around ₹116 crore.

He also disclosed that multiple shell firms, including CAPCO Fintech, RS Traders and Swastik Desh Project, were created to route the siphoned funds. Police said these accounts were allegedly used to transfer crores not just to Malik, but also Narender Pal Sharma, chief executive manager, CSCL; and Sukhwinder Abrol, project manager, CREST, and their family members.

Investigators have found that Malik received ₹2 lakh in her personal YES Bank account from shell firm Swastik Desh Project, while a substantial portion of the embezzled funds — over ₹50 crore — was allegedly distributed in cash among her and other officials.

The diverted money was further routed into real estate investments through Chandigarh-based realtor Vikram Wadhwa, who has already been arrested in the case.

So far, Wadhwa and three IDFC First Bank officials — Ribhav Rishi, Abhay Kumar and Seema Dhiman — have been arrested in the MC FDR fraud. The three bankers are also accused in a separate ₹83-crore CREST fund diversion case, also being probed by Chandigarh Police.

In the CREST case, police have arrested project director Sukhwinder Abrol and accountant Sahil Kukkar for allegedly pilfering funds through a similar network of shell entities.

Police said custodial interrogation of Malik was crucial to recover the embezzled funds, confront her with other accused already in custody, and verify the disclosures made by co-accused. The remand will also help investigators identify other senior officials who may have been involved in the fraud. Further investigation is underway.