Chadha owed his meteoric rise to his friendship with the powerful
Virendra Nath Bhatt
The sudden death of Ponty Chadha, Uttar Pradesh’s liquor baron, has left many in the state stunned. Chadha, a classic example of crony capitalism, had friends cutting across political lines and owe his meteoric rise to his proximity to the political parties and their top bosses that have ruled UP over the past decade. Chadha, who along with his brother Hardeep Chadha, was killed on Saturday 17 November over a property dispute in Delhi’s Chhatarpur area, is known for his liberal funding to all his political friends.
As soon as the news of Chadha’s death spread in UP, all liquor shops including the Model Shop of the Chadha Group were closed across the state. The Model Shops are mini bars. The multiplexes of the Wave Group, also owned by Chadha in Lucknow, Moradabad and Ghaziabad, suspended film shows for tonight and downed shutters. The district administration also deployed police force outside the Wave Multiplex in Moradabad and Lucknow. There are around 175 wine selling outlets in Lucknow, and barring few, all belong to the Chadha syndicate.
Though Chadha made news during former UP chief minister Mayawati’s tenure (May 2007-March 2009) when he grabbed the sick PSU sugar mills for a song and acquired monopoly over the liquor (both country liquor and Indian Made foreign Liquor) businesses, he had penetrated the top echelons of UP politics long ago.
The then BJP government headed by Rajnath Singh (2000-2002) introduced new excise policy for the allotment of the liquor vends across the state. For the first time a provision of Model Shop was made in the state’s excise policy which allowed the tipplers to consume alcohol within the premises of the IMFL (India made foreign liquor ) shops. The then excise minister Surya Pratap Shahi, who later rose to become the state president of the BJP, then championed the cause of Chadha. Shahi resigned after the rout of the BJP in March 2012 assembly elections.
In August 2003 Mulayam Singh Yadav, the chief of the Samajwadi Party, took over as UP’s chief minister. The Samajwadi’s of UP heralded the entry of Chadha in UP with a bang. Mulayam Singh Yadav introduced the `high tech township policy’ for promoting the construction of housing units in cities with all state of the art modern civic amenities. Yadav also introduced the multiplex policy giving five year exemption from entertainment tax for potential investors. The Chadha group was one of the major beneficiaries of both the policies. Mulayam Singh as CM had inaugurated the Wave Multiplex in Lucknow. The SP government completed its tenure and lasted till May 2007 and by this time Chadha had developed sizeable interests in real estate and multiplex business in UP.
The return of Mayawati to power in May 2007 virtually opened the gold mine for the Chadha group. From real estate and multiplexes, Chadha moved to acquire monopoly over liquor and mining businesses in UP.
In March 2009, the Mayawati government amended excise laws and issued a fresh order. “The Uttar Pradesh Demarcation and Regulation of Special Zones for Exclusive Privilege of Excise Shops Rules 2009”. This amendment created a special excise zone in UP, which included 45 districts falling under Meerut, Saharanpur, Moradabad, Bareilly and Agra division and few other districts. The order ostensibly was issued for preventing the smuggling of liquor from neighbouring states to UP, which according to the government, was detrimental for public health. The real purpose was, however, different. This gave absolute monopoly to Chadha in the liquor trade. Even today, after 8 months of the SP government in power it’s the Chadha group which decides which brand of IMFL will be sold in the special zone and other parts of the state, which the group controls by syndicate. Any spirit company wishing to sell its product in UP, has to submit to the dictates of Chadha group, enabling the group to corner major chunk of the margin in the business.
The Chadha group, with the state government at their beck and call during the Mayawati regime, pushed the distilleries producing and selling country liquor out of business. As many as 22 distilleries had to lay off their marketing staff as they could no longer market their product on their own and were forced to sell their products through the marketing arm of the Chadha group. Most of the distilleries refused to submit worrying about the consequences of adulteration in liquor and resultant causalities. In spite of it all, the Chadha group rules the roost unchallenged till this day.
Besides acquiring a couple of PSU sugar mills for a paltry sum of Rs 275 crore, the Chadha group also enjoyed absolute monopoly over the mining business in Bundelkhand region and Sonbhadra district of UP.
Born in a poor family in Moradabad, Chadha used to sell snacks in front of wine shop along with his father in the same town.
Virendra Nath Bhatt is a Special Correspondent with Tehelka.