In May 1997, હઝારે protested against the alleged malpractices in the purchase of powerlooms by the Vasantrao Naik Bhathya Vimukt Jamati Vikas Manch and the Mahatma Phule Magasvargiya Vikas Mandal. These institutions were directly under the charge of then Maharashtra Social Welfare minister Babanrao Gholap of the Shiv Sena, since their managing committees were dissolved after the Shiv Sena-BJP government came to power in the state in 1995. હઝારે also raised the issue of alleged massive land purchase by Gholap's wife Shashikala in Nashik between April to September 1996. He forwarded the available documentary evidences in support of his allegations to then Maharashtra Governor P. C. Alexander. On 4 November 1997, Gholap filed a defamation suit against હઝારે for accusing him of corruption. He was initially arrested in April 1998 and was released on a personal bond of Rs 5,000. On 9 September 1998, અણ્ણા હઝારે was imprisoned in the Yerawada Jail after being sentenced to simple imprisonment for three months by the Mumbai Metropolitan Court. The sentencing came as a huge shock at that time to all social activists. Leaders of all political parties except the BJP and the Shiv Sena came in support of him Later due to public protests, the Government of Maharashtra ordered his release from the jail. After release, હઝારે wrote a letter to then chief minister Manohar Joshi demanding Gholap's removal for his role in the alleged malpractices in the Awami Merchant Bank. Gholap resigned from the cabinet on 27 April 1999.