SAFEMA Appellate Tribunal Dismisses Appeal in BMC Khichdi Scam: Upholds PMLA Property Attachment Over Unexplained Rs. 1.25 Crore Transfer
The Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA), New Delhi, recently delivered a decisive ruling in the high-profile Brihanmumbai Municipal Corporation (BMC) Khichdi distribution scam. In the landmark judgment of Suraj Satish Chavan Vs Deputy Director (Appellate Tribunal Under SAFEMA Delhi), the Tribunal categorically dismissed the appeal filed by the assessee, thereby upholding the provisional attachment of properties under the Prevention of Money Laundering Act, 2002.
The core of the dispute revolved around the alleged illicit receipt of Rs. 1.25 Crores by the appellant, which the Enforcement Directorate (ED) classified as proceeds of crime. The Tribunal systematically dismantled the appellant's defense—which attempted to recharacterize the tainted funds as either legitimate salary or a commercial loan—due to a complete absence of corroborating documentary evidence.
Factual Matrix of the BMC Khichdi Scam
The genesis of this legal battle traces back to the unprecedented challenges of the Covid-19 pandemic, during which the BMC (also referred to as MCGM) initiated a welfare program to distribute food packets to stranded migrant workers and economically vulnerable populations.
Registration of the FIR and Initial Probe
The investigative machinery was set into motion when the Economic Offences Wing (EOW), Mumbai, registered FIR No. 504/2023 on 01.09.2023. The First Information Report invoked severe penal provisions, specifically Section 34, Section 406, Section 409, Section 420, and Section 120-B of the IPC, 1860.
The primary accused named in the FIR included several entities and their key personnel:
- Vaishnavi Kitchen (operating as Sahyadri Refreshment), managed by Sunil Kadam and Rajiv Salunkhe.
- M/s Force One Multi Services, represented by its partners including Sujit Patker.
- M/s Sneha Caterers, managed by Sanjay Mali.
- Other associated sub-contractors and politically connected individuals.
The Modus Operandi of the Fraud
The preliminary inquiry conducted by the Mumbai Police uncovered a deeply entrenched conspiracy to defraud the state exchequer. The BMC had awarded work orders to the aforementioned entities for the supply of nutritional "Khichdi" packets. The contractual obligation explicitly mandated the supply of 300 gms of Khichdi per packet at a fixed, pre-determined rate of Rs. 33 per packet.
However, the execution of these contracts was marred by blatant deceit. Instead of adhering to the stipulated 300 gms weight requirement, the contractors maliciously supplied packets containing a mere 100 gms of food. Despite delivering less than a third of the contracted quantity, the entities continued to bill the BMC at the full rate of Rs. 33 per packet.
The investigative authorities concluded that this systematic under-delivery and over-billing resulted in a massive wrongful loss to the BMC, quantified at over Rs. 6.37 Crores across two primary work orders.