V K Sasikala, a close aide of former Tamil Nadu chief minister J Jayalalithaa, had allegedly paid Rs 450 crore in old high-denomination currency notes to buy a sugar factory during demonetisation in 2016, according to an FIR lodged by the CBI.
The Central Bureau of Investigation (CBI) had registered the case on the Madras High Court's directions against Padmaadevi Sugars Limited (PSL) for allegedly causing a loss of Rs 120 crore to the Indian Overseas Bank (IOB). The account was declared fraud in 2020.
Sasikala is not named as an accused in the FIR.
The sugar factory of PSL (formerly known as SV Sugar Mills) that the bank had taken as collateral was attached by the income-tax department under the Benami Properties Transactions Act, according to the FIR.
It is alleged that the I-T department's searches in connection with a case against Sasikala in 2017 resulted in a seizure of documents and loose sheets.
The documents show that "during the period of demonetisation, an amount of Rs 450 crore was paid for the purchase of a sugar mill belonging to the Patel Group", the bank has alleged in its complaint to the CBI. The complaint is now part of the FIR.
Jayalalithaa passed away on December 5, 2016 at a private hospital in Chennai.
The IOB complaint has alleged that Hitesh Shivgan Patel, who was managing the financial affairs of PSL and was also the in-charge of Prabhat Group, had stated on oath that he had received a total of Rs 450 crore in old high-denomination notes towards the sale of the sugar factory at Kancheepuram.
The memorandum of understanding (MoU) regarding the sale of the factory was entered into by Hitesh Shivgan Patel, his father Shivgan Patel and brother Dinesh Patel, the complaint has alleged.
The MoU and original share certificates of SV Sugar Mills Limited, which were held by the Patels and entities of the Patel Group, were seized by the I-T department during searches on November 18, 2017.
The tax department termed it benami property as the Patel Group was holding it even after the payment of Rs 450 crore towards the sale of PSL, along with shares and assets, for the alleged benefit of Sasikala, who paid the amount for the purchase.
The complaint alleges that Sasikala is the beneficial owner and the property in the instant case -- the sugar factory of the PSL in Kancheepuram, along with the land, all the machinery, installations etc. -- is benami.
After taking over the investigation in July, the CBI conducted searches at six locations in Tamil Nadu on August 12 in connection with the case, officials said.
"The allegations in the FIR include fraudulent availing of various credit facilities from the Indian Overseas Bank, misappropriation of property, diversion of bank funds to sister concerns and unrelated entities, siphoning of funds to related parties and interest-free advances to private firms," a CBI spokesperson had said.
The charges also include cash deposits of suspicious origin during the period of demonetisation in 2016, the spokesperson of the agency had said in a statement.
The company and its associate entities are also suspected of transferring funds to shell or benami concerns to conceal the end use of the borrowed amounts, she had said.
Spanned across six locations in Tamil Nadu, including Tenkasi, Chennai and Tiruchirapalli, the search operation was conducted at residential premises of the company's directors and officers as well as at Appu Hotels Limited and Otium Wood Industries, which allegedly had suspicious transactions with PSL.
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