Mumbai bizman arrested for ₹137.05 crore dry ration scam linked to mid-day meal

The remand application submitted by the ED in court on Tuesday said the funds were routed circularly through shell entities while generating bogus invoices.

The Enforcement Directorate (ED) has arrested Ushik Gala, businessman and managing director of Suumaya Industries Ltd, as part of its money laundering investigation into the alleged misappropriation of ₹137.05 crore from another firm on the pretext of financing a fictitious business scheme purportedly linked to the mid-day meal programme.

ED was investigating alleged misappropriation of ₹137.05 crore from another firm on the pretext of financing a fictitious business scheme purportedly linked to the mid-day meal programme.(HT_PRINT)

“The so-called scheme was a sham devised to create a façade of legitimate trading activity and to unlawfully obtain, divert and integrate funds so obtained from the complainant,” the ED’s Mumbai unit told the special court where Gala was produced on Tuesday and remanded in the ED’s custody till November 24. Gala’s firm had failed to pay back the company from which it had procured the money, the ED said.

The ED’s case is based on a first information report (FIR) registered by the Worli police on February 12, 2022, following a complaint filed by the firm from which money had been procured. Gala and his associates had conspired to cheat and misappropriate funds by inducing the firm to finance a fictitious business scheme, named ‘Need to Feed’, purportedly linked to the government’s mid-day meal scheme, according to the FIR.

Gala was booked under relevant sections of the Indian Penal Code for cheating, common intention and other offences. The case was later taken over by the city police’s Economic Offences Wing.

ED sources said that based on the alleged misrepresentation by Suumaya, the complainant firm had transferred around ₹325.98 crore to it between March 2021 and August 2021, as per the scheme of arrangement.

“Suumaya subsequently failed to repay the money and cheated the complainant firm of ₹117.73 crore, along with accumulated interest worth ₹19.31 crore, taking the total to ₹137.05 crore,” the ED source said.

In the charge sheet filed by the EOW, it was alleged that Gala, in collusion with Saahil Arora of Dentsu and partners of Veda Multicorp LLP, used fake documents and a staged event to induce the complainant firm into financing the non-existent scheme for supply of dry ration, titled ‘need to feed’.

The remand application submitted by the ED in court on Tuesday said the funds were routed circularly through shell entities while generating bogus invoices.

“This elaborate fraud resulted in Dentsu defaulting on payments, cheating the complainant of ₹137.05 crore, leading to the arrest of Mr Ushik Gala and four accomplices by the EOW, Mumbai,” the ED’s remand application said.

The complainant firm’s representative, in his statement, told the ED that some case suspects had claimed to have a Haryana government contract under the ‘Need to Feed’ scheme and expected similar contracts from other states, agency sources said.

The fictitious scheme was also promoted by some suspects on social media and a supporting letter purportedly from the district education officer, Gurgaon, was cited to gain their trust, the sources mentioned.

The ED had in December 2024 seized movable assets worth around ₹3.9 crore during searches carried out in Mumbai, Delhi and Gurgaon as part of its investigation into the case.