The headmaster of Upendra Bhanja Upper Primary school at Golia near Buguda was also suspended yesterday for allegedly diverting the rice to the rice mill, police said.
Apart from the headmaster and rice mill owner, two labourers were also arrested on Thursday for allegedly diverting around three quintals of MDM rice, said Inspector In-Charge fo Buguda police station, Ramchandra Biswal.
The labourers transported the rice in six bags from the school to the rice mill on October 30. All the bags containing the diverted MDM rice were seized from the mill, Biswal said.
Diversion of the MDM rice came to fore following an inquiry conducted by a three-member team of officers on the direction of the BEO, Buguda. The inquiry was conducted following allegation by local people after they noticed bags of rice being transported in the night to the rice mill, officials said.
The headmaster failed to produce the records of the rice in the stock and sufficient reasons for diverting the rice to the mill, said.
The BEO lodged an FIR after getting the inquiry report.