The five-member Justice Chandresh Bhushan Committee, formed to check the alleged irregularities, decided that the examination be held afresh.
The test for admission into three medical colleges and eight dental colleges was conducted at various centres across the state Aug 13 and about 7,500 students appeared for it.
Soon after the test, authorities were flooded with complaints of the paper having been leaked and sold for Rs.500,000. There were also complaints of pencils having been used instead of pens. Students alleged that the test of a few students was conducted in places other than the allotted examination rooms.
The matter was brought to the notice of Chief Minister Shivraj Singh Chouhan who sought a detailed report in this regard.
The Justice Bhushan Committee immediately served a notice to the Association of Private Medical and Dental Colleges (APDMC) seeking a reply on the alleged irregularities during the test.
Meanwhile, Chaturbhuj Dubey, an employee of a local college R.K. Dhawan Foundation, was arrested Aug 16 and Rs.1.2 million recovered from his possession, apart from several post-dated cheques running into several millions.
Dubey admitted to have received the amount from students for admission into medical colleges.
"Investigations reveal that the foundation was deeply involved in heavy transactions for admissions into private medical and dental colleges," said a police official.
The police team also reportedly uncovered huge financial transactions from the accounts of over a dozen employees of the college. They have now sought the help of the income tax department to keep a tab on these accounts.
The APDMC said these allegations of malpractice were baseless and its members protested the cancellation of the exam. Ashok Khurana, secretary of APDMC, said they would move the High Court against the decision.
The committee's decision, however, has been welcomed by political parties.
Vishnu Datt, national secretary of the Akhil Bharatiya Vidyarthi Parishad (ABVP), the student's wing of the Bharatiya Janata Party (BJP), said it was a victory of the poor and meritorious students.
Said Manak Agrawal, Madhya Pradesh Congress general secretary: "The tests should now be conducted by the State Professional Examination Board."