Thirteen people including four women have been arrested so far.
"During the raid on hotel, we arrested 10 people. Subsequently three more were arrested. Investigation of the case is still on, but it was pretty organized,'' said Muzaffar Ahmad, Deputy Superintendent of Police, J&K.
Eight women, most of them from very poor families, have been found involved in the racket. The ring leader of the women, however, is still at large.
Police investigation reveals that some of them were being lured on the pretext of jobs by the hotel management but ended up being part of the racket. The challenge for the police, however, is the main accused, 65-year-old hotel owner Mohammed Yakub. They have not been able to interrogate him to their satisfaction because he is a patient of acute diabetes.
"Waiters would call girls and boys over phone. Then they were being provided a room for an hour or so. They would commit wrong in the room. The day hotel was raided, three girls and a man were arrested in front of me," said Gulzar Ahmad, cashier at Nida hotel.
Police say every client was being charged around Rs 3000 rupees and this money was being divided between the owner, waiters and the women. But the biggest share would go to the hotel owner.
Police have already got forensic evidence in some cases, after conducting medical tests on the accused.
Kashmir was earlier rocked by an infamous sex scandal in 2006 in which politicians, bureaucrats and police and security officers were involved. A CBI probe then led to the arrest of some top politicians and senior officers.