Moradabad (Uttar Pradesh), Jun 1 (IANS): A fake telephone server exchange that cost the Department of Telecommunications a loss of nearly Rs 7 lakh per day, allowing users to make international calls at local rates in the Moradabad district, has been busted.

The Moradabad police, in a joint operation with BSNL officials, have busted the racket being run in Transport Nagar area, officials said.

The main accused, identified as Owais Alam Malik, along with two other gang members --Pushpendra and Pawan Kumar -- have been arrested from Noida's Sector 62.

The police had found a fake exchange in Noida, and during investigation, they learnt that Malik was running a similar set up from his house in Moradabad.

A raid was conducted by BSNL officials and Majhola SHO and seven SIM boxes, VOIP Gateway along with other equipment used to run the telephone exchange were recovered from the house.

Malik, a resident of Moradabad, is a software engineer and had worked at an IT firm for 10 years. He had also started his own web designing and computer essential supply work.

Officials said that his two illegal set-ups may have caused a loss of Rs 50 crore to the government.

Moradabad ASP Anil Yadav said, "A few days ago, UP police busted an illegal telephone exchange in Noida. Owais Alam was arrested with two others and he told the police that a similar set up was present in Moradabad."

An FIR has been registered under relevant sections of the IPC and the Indian Telegraph Act, the ASP said.