Kadam, accused of misappropriating over Rs 130 crore from the funds of Lokshahir Annabhau Sathe Magasvargiya Vikas Mahamandal which he headed as chairman, was arrested by the state CID two days back.
Kadam's lawyer Niteen Pradhan said a petition seeking to quash the case has been filed in the High Court.
The petition came up for hearing today before a division bench headed by Justice R V More which directed the CID to file its reply by August 31.
It is alleged that Kadam had transferred over Rs 130 crore funds to the organisations headed by him. The money was meant for the welfare of backward communities for which the corporation was set up.
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Apart from Kadam, three others were also arrested. The accused have been charged under various sections of the Indian Penal Code (IPC) and Prevention of Corruption Act.
The CID had launched a massive hunt for Kadam since July after he was booked for his alleged involvement in the multi-crore scam.