The case has been registered against Verinag Development Authority's the then chief executive officer Nazir Ahmad, the then executive engineers Rashid Lone and Roomy Raina, and three other officials, a SVO spokesman said.
He said after the case was registered, searches of the residential and office premises of accused were conducted at Srinagar, Verinag and Budgam.
"During the searches incriminating evidence and documents with regard to movable and immovable properties were recovered and these are under scrutiny," the spokesman said.
The spokesman said Ahmad and the other officials have been accused of fraudulently preparing a liability worth Rs 28 crore without doing any work on ground.
"During verification conducted by the SVO, it was revealed that the Ahmad and Lone, and other officials have violated rules and accorded approvals against the detailed project report (DPR) of Greater Verinag, mostly in favour of a person.
"The verification further revealed that the accused have also extended undue benefit to people for allotment of projects against DPR Sarbal Lake in violation of procedure, besides rates allotted were exorbitant which resulted in huge loss to the state exchequer," the spokesman said.