Govt. Permits Criminal Prosecution in Rs 13.92 Crore Loss at Brahmavar Sugar Factory
Udupi: The Karnataka government has granted permission for criminal prosecution against the management board of the South Kanara Cooperative Sugar Factory in Brahmavar following an investigation that confirmed a loss of Rs 13.92 crore in the sale of the factory’s old machinery. Shivanand Patil, Minister for Textiles, Sugarcane Development, Sugar, and Agricultural Marketing, announced the decision, citing clear irregularities in the sale of the factory’s machinery and buildings.
The investigation report held the board of directors, members of the tender-cum-auction technical committee, and former managing directors Praveen B. Nayak and G.N. Lakshminarayana, responsible for the significant financial loss incurred by the factory. Consequently, criminal proceedings will be initiated against the implicated board members and the Technical Advisory Committee members involved in the tender and auction process.
Minister Patil stated that permission has also been granted for criminal prosecution against former managing directors Praveen B. Nayak and G.N. Lakshminarayana, regarding a previously filed criminal case. Furthermore, a departmental inquiry has been recommended to the Cooperation Department against these two officials. The government has also issued directives to recover the Rs 13.92 crore loss from those found responsible.
The case stems from the management board’s decision, with government approval, to sell the factory building and machinery to New Royal Traders, Chennai. Allegations of irregularities in the tender process prompted Legislative Council member Manjunath Bhandari and Udupi District Raitha Sangha (Farmers Association) General Secretary to submit formal complaints to the government, triggering the investigation.
Retired district judge K. Radhakrishna Holla was appointed to investigate the alleged malpractice. His subsequent report substantiated the claims of irregularities in the tender process.
Background of the Factory
Established in 1985, the Brahmavar sugar factory operated until 2002-03, when sugarcane crushing operations were suspended due to a shortage of cane and a lack of working capital. After 17 years of disuse, the machinery and buildings had deteriorated significantly due to rust and general decay. Consequently, the management board sought and received permission to dispose of the assets through a tender-cum-auction process.
However, the investigation revealed that the tender process was not conducted following established regulations. Initially, the board stipulated that the machinery and scrap items would be sold to the highest bidder on a per-kilogram basis, requiring a security deposit of Rs 50 lakh and a bank guarantee of ₹5 crore.
A key deviation from the established rules occurred when New Royal Traders requested that the scrap be sold on a lot basis, citing the difficulty of transporting old machinery by weight. The board’s agreement to this request was deemed a clear violation of the tender rules, as highlighted in the inquiry report.
Discrepancies were also found in the quantity of scrap transported. While New Royal Traders claimed to have taken 1,139.37 metric tonnes of scrap in 46 truckloads, records indicated that 2,245.65 metric tonnes were transported in 83 loads. The investigation further revealed that Rs 12.63 crore remains outstanding after deducting payments made by the purchasers to the factory. Additionally, old building materials worth Rs 1.28 crore were also transported from the factory premises.