Indore firm accused of selling fake stainless steel:Jodhpur company received garbage; sellers claimed metal wouldn’t stick to a magnet, raising fraud allegations

In a major online auction fraud exposed in Madhya Pradesh, a Jodhpur-based company claims it was swindled of nearly Rs 20 lakh after an Indore firm allegedly delivered scrap instead of stainless steel. The alleged scam took place on the MSTC e-auction platform, the government-backed, widely trusted online auction portal under India’s Ministry of Steel. MSTC platform, a trusted e-auction service MSTC, a “mini-ratna” company under the Ministry of Steel, has conducted over 4 lakh e-auctions, earning the trust of industrial buyers across India. However, this incident raises questions about the platform’s credibility, as it allegedly facilitated a large-scale, planned fraud involving Pegasus Inland Container Depot Pvt. Ltd., an Indore-based firm, and Suraj Enterprises from Jodhpur. According to the complaint, the Indore firm misrepresented the quality and quantity of stainless steel scrap in an auction and delivered worthless scrap instead. How the alleged fraud unfolded The chain of events began in the last week of August 2025 when MSTC uploaded details of an upcoming auction on its portal. 1. Auction listing: Pegasus Inland Container Depot claimed to have 26,800 kilograms of “stainless steel scrap (Ziric grade)” available for auction. Arun Kumar, listed as the authorized contact person, was given as the point of contact, but no images of the material were uploaded on the MSTC platform—a clear red flag. 2. Verbal assurances over phone: Suraj Enterprises, a Jodhpur-based metal scrap business, expressed interest in the auction. With no photographs available, they contacted the phone number provided on the portal. Arun Kumar, who identified himself as the company manager, allegedly assured them of 100% stainless steel purity. To further convince the buyer, Pegasus involved the firm’s director, Harish Sharma, who claimed that the stock was certified by a government agency and that official certification was available. Trusting these assurances and the credibility of MSTC, Suraj Enterprises placed a bid in the auction held on September 5, 2025, won the lot, and paid the full amount. A delivery order was issued on October 22. Delivery reveals scrap instead of stainless steel On November 3, 2025, representatives of Suraj Enterprises—Mohammad Shahid, Mahesh Vaidya, and Naveen Tapadia—arrived near Pithampur, Indore, to receive the delivery. Pegasus managers Arun Kumar and Harish Sharma were present for guidance. When the container was opened, the Jodhpur team discovered that the material was not stainless steel. A magnet test confirmed that the metal was iron-mixed scrap. According to the complaint, the shipment contained no Ziric-grade stainless steel; not even 1% matched the promised quality. The entire lot was essentially worthless scrap. Suraj Enterprises immediately raised objections at the site, demanding the material originally promised. Pegasus allegedly refused, citing MSTC’s “As Is Where Is Basis” rule, claiming the buyers had no grounds for complaint. Indore firm’s contradictory response When Bhaskar contacted Pegasus, both the manager and director reportedly shifted responsibility. Arun Kumar claimed the container belonged to customs and that auction rules dictated the lot be sold “as is,” providing buyers 15–20 days to inspect. He added, “It is not our responsibility whether it is scrap or steel; this is the condition of the material, and our role is only custodial.” Director Harish Sharma echoed similar statements, asserting, “The material is imported and handled by customs. We are just custodians. Valuation and reserve price are determined by authorized customs evaluators. Inspection before bidding is mandatory. This matter is between MSTC and the buyer; we are not involved.” Jodhpur firm refutes Pegasus claims Suraj Enterprises strongly refuted these statements, alleging that the material delivered was not customs property but private property of Pegasus, intentionally swapped to deceive buyers. Naveen Tapadia said, Customs officials confirmed the material is not theirs. Pegasus deliberately replaced the goods and did not disclose its country of origin. This was a planned fraud. Mahesh Vaidya added, We were lied to over the phone, reassured, and then sold scrap under the pretense of stainless steel. We demand our money back. This is not a scrap sale; it is a scam. Implications for MSTC and industry trust The incident raises serious concerns about MSTC’s role in safeguarding buyers during online auctions. While the platform is widely regarded as reliable, cases like this demonstrate the potential risks of fraud even on government-backed platforms. Industry experts suggest that this case could lead to stricter verification processes for auctioned materials, including mandatory photo uploads, third-party certifications, and on-site inspections before finalizing payments. Suraj Enterprises has filed a formal complaint against Pegasus Inland Container Depot, demanding a full refund. MSTC has yet to issue a statement regarding the matter. Legal experts note that if the allegations are verified, the case could involve civil fraud charges and potentially criminal proceedings under Indian contract and trade laws. The matter is likely to attract scrutiny from both industry regulators and government authorities.