The CBI on Thursday conducted searches at the premises of former finance secretary Arvind Mayaram after filing an FIR against him and a UK-based company for alleged corruption in the supply of exclusive colour shift security thread for Indian bank notes, officials said.

The CBI, in its FIR, alleged that Mayaram, the UK-based company De La Rue International Ltd and unidentified officials of the finance ministry and RBI hatched a criminal conspiracy to extend undue favour to the firm.

The agency alleged that Mayaram as finance secretary granted an "illegal" three years extension to an "expired contract" with the company for supplying exclusive colour shift security thread without taking any mandatory security clearance from home ministry or informing the then finance minister, they said.

The extension granted by Mayaram was allegedly the fourth, the FIR said.

The CBI registered the FIR under IPC sections related to criminal conspiracy and cheating and provisions of the Prevention of Corruption Act. It was followed by searches at Jaipur and Delhi residence of the 1978-batch retired IAS officer, days after he had joined the Bharat Jodo Yatra of Congress leader Rahul Gandhi.

The agency had registered a preliminary enquiry in 2018 on a complaint from the Chief Vigilance Officer of the Department of Economic Affairs in the Ministry of Finance.

Based on its findings, the CBI has converted it into a regular case against Mayaram, now economic advisor to Rajasthan Chief Minister Ashok Gehlot.

The agency, in its FIR, said that the Centre had entered into a five-year agreement with De La Rue International Ltd for the supply of exclusive colour shift security thread for Indian bank notes in 2004. The contract was extended four times till December 31, 2015.

The agency has alleged that the then finance minister had authorised the Reserve Bank of India to enter exclusivity agreement with the suppliers of exclusive security features on behalf of the government of India, which was signed with De La Rue on September 4, 2004.

The agreement with the company specifically mentioned that the company had developed an exclusive India specific green to blue colour shift clear text MRT machine readable security thread for use in Indian banknote paper as a security feature and for which the company holds exclusive manufacturing rights.

The CBI found that the company had filed for the patent in India on June 28, 2004, which was published on March 13, 2009, and was granted on June 17, 2011, which shows at the time of the agreement, it did not have a valid patent.

"Enquiry has further revealed that De La Rue made false claims of holding patent and they did not have any patent for their colour shift thread at the time of presentation in 2002 and their selection in 2004," the CBI has alleged.

The agency has alleged that the exclusivity agreement was signed by PK Biswas, executive director, RBI, without verifying the patent claim of De La Rue.

"Enquiry has also revealed that the contract agreement did not have any termination clause," it said. Both RBI and the Security Printing and Minting Corporation of India Ltd (SPMCIL) submitted their reports about the non-possession of the patent by the company on April 17, 2006, and September 20, 2007, respectively.

Mayaram never apprised the same to the then finance minister, the CBI has alleged.

Despite non-possession of the patent, the company kept getting repeated extensions till December 31, 2012, it said.

"Enquiry further revealed that on May 10, 2013, the matter was brought to the notice of Arvind Mayaram, as Secretary, Economic Affairs, that the contract agreement with De La Rue had expired on December 31, 2012; therefore, extension cannot be granted legally," the FIR alleged.

It said Mayaram approved another three-year extension of an expired contract on June 23, 2013, overruling the fact that an extension cannot be granted without obtaining mandatory security clearance from the Ministry of Home Affairs, the FIR alleged.

No approval was taken from the then finance minister on the issue while all previous three extensions -- from September 4, 2009, to June 30, 2011, from July 1, 2011, to December 31, 2011, and from January 1, 2012, to December 31, 2012, were approved by the finance minister, it alleged.

"Enquiry has also revealed that Anil Raghbeer, signatory of Contract Agreement from De La Rue, has received Rs. 8.2 crore from offshore entities apart from the remuneration paid by De La Rue in 2011," the FIR further alleged.