The Telangana High Court on Tuesday refused to quash a first information report against Bharat Rashtra Samithi leader KT Rama Rao in connection with alleged irregularities in conducting the Formula E car racing event in Hyderabad in February 2023, Bar and Bench reported.

Justice K Lakshman dismissed the petition filed by the former state minister seeking to quash the case. He also rejected a request from Rao’s counsel to stay his arrest in the matter for 10 days for him to file an appeal against the order.

The Telangana Police’s Anti-Corruption Bureau filed the FIR on December 19 based on a complaint filed by Municipal Administration and Urban Development Principal Secretary M Dana Kishore.

The FIR alleged that Rs 54.88 crore was paid to Formula E Operations Limited and others in “gross violation of established procedures” while Rao was the Municipal Administration and Urban Development minister.

Rao, the son of former Chief Minister K Chandrashekar Rao, has denied irregularities in the payments made for the events.

The Bharat Rashtra Samithi MLA was booked under the Indian Penal Code section pertaining to criminal breach of trust (409). The Prevention of Corruption Act was also invoked.

Subsequently, Rao moved the court seeking to quash the case. On December 20, the court granted him interim protection from arrest.

During the proceedings on Tuesday, Senior Advocate C Aryama Sundaram, representing Rao, told the court that the case was a political and personal vendetta against him, according to Bar and Bench. He added that Rao could not be prosecuted on account of a policy decision taken in 2023.

The Bharat Rashtra Samithi government at the time had stepped in to fund the Formula E event in October 2023 after its sponsors pulled out, Sundaram said, adding that this was done to prevent a loss of revenue to the state and as the event had already been widely advertised.

However, the state government, represented by Advocate General Sudarshan Reddy, claimed that the FIR was registered after a preliminary inquiry, Bar and Bench reported. Reddy said that the governor had also granted sanction to go ahead with the prosecution on December 17.

Reddy noted that there were multiple allegations against Rao, including the transfer of crores to a foreign entity without consulting the relevant state authorities or departments, and even before a contract had been finalised, Bar and Bench reported.

According to the FIR, the Municipal Administration and Urban Development department signed an agreement with Formula E Operations Limited, based in the United Kingdom, and Ace Nxt Gen Private Limited, based in India, to conduct the Formula E races for seasons 9, 10, 11 and 12 in Hyderabad.

Ace Nxt Gen Private Limited was the sponsor for the event.

Season 9 of the event was conducted on February 11, 2023, for which the Telangana government incurred an expenditure of Rs 12 crore.

However, Ace Nxt Gen Private Limited backed out of the agreement before season 10, following which discussions were held for the state government to take up the role of the sponsor.

Formula E Operations Limited subsequently furnished two invoices before the government – one for Rs 22.69 crore on September 25, 2023, and the second for Rs 23.01 crore on September 29, 2023.

The chief engineer of the Hyderabad Metropolitan Development Authority at the time approved the transfer of the amounts on October 3, 2023, and October 11, 2023, claimed the FIR.

These transfers, in British pounds, are said to be in violation of Reserve Bank of India regulations, prompting the central bank to impose a fine of Rs 8 crore on the Telangana government that was headed by K Chandrashekar Rao at the time, according to The Indian Express.

The fine was paid by the Congress government that had been elected in December 2023, the FIR stated, leading the new government to investigate the cause of the fine. This led to the discovery of the alleged violations and financial irregularities, which in turn led to the Anti-Corruption Bureau’s investigation.

The Anti-Corruption Bureau has also alleged that requisite approval was not sought from relevant authorities before the amount was transferred.

In December, the Enforcement Directorate summoned Rao to appear before it on January 7 in connection with the matter.