In a scathing report tabled in the Lok Sabha, the public accounts committee said certain officials holding key posts committed "unpardonable irregularities" under the ruse of welfare of servicemen and that they must be punished.
It asked the ministry to apprise the committee within four months about the punishment meted out to the officials involved in the scam.
The committee, headed by Congress leader Mallikarjun Kharge, called the alleged irregularities in the management of defence land a "monumental failure" at all levels of governance.
The Adarsh scam related to apartments in a tony part of town in Mumbai which were meant for the families of Kargil heroes. But army officers, politicians and bureaucrats were allegedly alloted flats in violation of the rules.
Seen as a symbol of corruption, the scam had kicked up a huge political storm after it surfaced in 2010, leading to the resignation of then Congress chief minister Ashok Chavan.
A high-level inquiry committee appointed by the defence ministry had named former Army chiefs, Gen. N C Vij and Gen. Deepak Kapoor, and several other retired military officials for their alleged complicity in the scam. The CBI is also carrying out a probe into the scam.
"The committee are shocked to note that the action taken note of the ministry is silent about action initiated against a group of officials holding key posts in the ministry who violated rules and regulations and committed unpardonable irregularities under the ruse of welfare of servicemen, war widows and children," it said.
A parliament official said the recommendation of the panel is not binding on the government.
The PAC also slammed the defence ministry for failing to carry out a physical survey and verification of its entire land pool and said it left scope for the "alienation" of its land in an "arbitrary and collusive manner".
The panel also desired that the environment ministry take action against officials of the Maharashtra Coastal Zone Management Authority who failed to detect violations in the construction of the high-rise housing complex.
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