MP sarpanch removed for ‘leasing out’ panchayat to repay ₹20 lakh loan

In a shocking incident, a sarpanch in Guna district, Madhya Pradesh, allegedly ‘leased out’ her panchayat to a local resident to repay a loan of Rs 20 lakh. The panchayat was then ‘transferred’ to a third party via a notarised affidavit.

The administration took swift action after the matter came to light. The sarpanch, Laxmi Bai of Karod panchayat near Guna (about 220 km from Bhopal), was removed from her position on May 9, 2025, and a police case was registered against the individual who took the panchayat on this ‘contract’.

Officials revealed the unusual deal took place in 2022. Following an investigation by the Guna sub-divisional magistrate, an FIR was filed against the person who allegedly took control of the panchayat after promising to clear the sarpanch’s loan.


District Panchayat CEO Abhishek Dubey confirmed that a thorough inquiry was conducted after a complaint, leading to action against both the sarpanch and the other party involved.

Though there were rumors that the loan was taken to fund the 2022 panchayat elections, this was not mentioned in the FIR. The sarpanch’s husband, Shankar Singh, denied the allegations, stating they had not borrowed any money and requested to be left alone.

According to the FIR, sarpanch Laxmi Bai had made an agreement with local resident Ranveer Singh Kushwaha for managing the panchayat’s work. Ranveer signed a notarised affidavit on Rs 100 stamp paper with her, agreeing to repay Rs 20 lakh and give 5% of the TS cost to the sarpanch after project completion.

The FIR states Ranveer offered inducements to Laxmi Bai, a public servant, for improper performance of her duties.

Following the SDM’s probe, the janpad panchayat officials lodged a complaint against Ranveer at Guna Cantonment police station. To prevent disruption of ongoing development projects, an ‘in-charge sarpanch’ is set to be appointed soon.

[With TOI inputs]