The Enforcement Directorate (ED) has unearthed a massive education-related financial scandal, seizing ₹27.2 crore in unaccounted cash during raids on three private engineering colleges in Karnataka. The operation exposed a systemic “seat-blocking” racket that allegedly monetized admission quotas by bypassing merit-based allotments.
The searches were conducted on June 27 and 28 across multiple locations, including two colleges in Bengaluru and one in Davanagere. Acting on inputs suggesting large-scale cash transactions and money laundering, ED officials recovered bundles of currency from safes and concealed compartments on campus premises.
What Is the Seat-Blocking Scam?
According to ED sources, the scam involved pre-booking or “blocking” engineering seats during the counseling process, only to later “sell” them to students willing to pay a premium. These deals were often made in cash and did not reflect in official records. The colleges, by not surrendering unclaimed seats to centralized counseling authorities, enabled illegal transactions to flourish, violating both AICTE and state norms.
This manipulation compromised the integrity of engineering admissions and disadvantaged meritorious students. Preliminary findings indicate that several middlemen, agents, and even consultancy services were part of this nexus, charging lakhs of rupees per seat depending on the course.
Legal and Institutional Fallout
The ED is investigating the colleges under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, and is expected to summon key administrators for interrogation. Authorities suspect tax evasion, as the seized cash was neither declared nor accounted for in the audited financials.
This is one of the largest recent cash seizures in Karnataka’s education sector. The Directorate may also refer the matter to the Income Tax Department and education regulatory bodies for further action.
Public education advocates and legal experts have called for stricter monitoring of admission processes and annual audits of private institutions. The ED has stated that further raids and arrests are possible as more financial trails are being verified.
About the Author – Anirudh Mittal is a B.Sc. LL.B. (Hons.) student at National Forensic Sciences University, Gandhinagar, with a keen interest in corporate law and tech-driven legal change.