Deokar, the former guardian minister of Jalgaon, surrendered at the city police station here at around noon following which he was arrested.
The NCP leader was then produced before a local court which remanded him in judicial custody till January 3, 2014, and sent him to Dhule sub-jail, police said.
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However, he was granted bail by a local court, but the Bombay High Court had later cancelled it.
Deokar, a co-accused along with former housing minister Suresh Jain in the case, had subsequently moved the Supreme Court to evade arrest but the apex court earlier this month directed him to surrender in connection with the scam.
Deokar, NCP's face in Jalgaon in north Maharashtra, faces charges of criminal conspiracy, cheating, forgery and corruption in the scam involving fraud in the construction of 11,000 low cost houses.
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