The BJP, however, came out in strong defence of Jay Shah and rejected the allegations against him.
"This is nothing but crony capitalism by the BJP. Why did Jay Shah close down his company a day before demonetisation was announced? Was he aware of what was going to happen in advance?" Chavan sought to know while speaking to reporters here.
"BJP chief Amit Shah should immediately resign," the former Union minister added.
He said either Amit Shah or Finance Minister Arun Jaitley should clarify how Jay Shah's company increased its business manifold after the BJP came to power at the Centre in May, 2014.
Chavan claimed that a company owned by Jay Shah got a loan of Rs 10.36 crore from a public sector firm under the Ministry of New and Renewable Energy, headed by Piyush Goyal, against a collateral security of just Rs six crore.
"Jay's company did not have any previous experience in windmills or in the renewable energy sector. Yet, Goyal approved the huge loan against a collateral security of just Rs six crore," he said.
Chavan said Kusum Finserve, a company in which Jay Shah had a 60-per cent stake, bought wind farms in Ratlam, Madhya Pradesh, despite it being engaged in stock trading.
"Kusum Finserve was involved in trading of shares. Then, suddenly it bought wind farms in Ratlam. This again is an example of crony capitalism," he alleged.
"This raises many questions which cannot be shrugged off by filing a defamation suit. Amit Shah himself should answer whether he misused his position. These dealings should be probed by the Enforcement Directorate and the CBI," Chavan said.
Meanwhile, senior BJP leaders and Maharashtra ministers came out in Jay Shah's defence and accused the Congress party of defaming him.
Ministers Chandrakant Patil, Vinod Tawde and Mumbai BJP chief Ashish Shelar addressed a press meet at the party's state headquarters here and defended Jay Shah. Maharashtra BJP chief spokesperson Madhav Bhandari was also present.
They rejected the allegations levelled against Jay Shah by Chavan and another Congress leader, Radhakrishna Vikhe Patil.
"The Congress has become frustrated because the BJP is winning elections after elections. They do not know what to do with defeat after defeat. Hence, false allegations are being levelled against Jay Shah," Patil said.
Tawde said, "This is an unethical practice by the Congress. When we criticised the Congress government (over graft), we showed proof. Here, there is no proof (of wrongdoing), just some jugglery of figures.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)