A Division Bench of the Madras High Court on Wednesday reserved its orders on a batch of writ appeals filed by alleged benamidars of AIADMK’s former interim general secretary, V.K. Sasikala, challenging the provisional attachment of their shopping malls, paper mills, commercial complexes and resorts, which were allegedly purchased by her on payment of ₹1,674.50 crore in demonetised currency notes in November and December 2016.
Justices R. Mahadevan and J. Sathya Narayana Prasad deferred their verdict after hearing arguments advanced by advocates R. Sivaraman and N.V. Balaji representing the appellants and Special Public Prosecutor M. Sheela for the Income Tax department. The judges indicated that they might allow the adjudicating authority, under the Prohibition of Benami Property Transactions Act of 1988, to proceed with the inquiry and complete it within a time frame.
They also said the appellants would be afforded full opportunity of hearing before the adjudicating authority and they could also cross-examine the witnesses. Earlier, Mr. Sivaraman contended that the initiating authority under the Act itself ought to have allowed the appellants to cross-examine the witnesses, since the law empowers the officer to revoke provisional attachment order if he/she was convinced that there were no materials.
However, Ms. Sheela countered the argument by stating that the initiating authority was not a fact finding authority to allow cross-examination. She said the adjudicating authority would grant that opportunity to the appellants. She also told the court that the appellants had already been served with copies of all documents, which the initiating authority had relied upon to invoke the 1988 Act and attach their immovable properties.
Mr. Balaji told the court that the case of his client D.V. Balaji, owner of the land on which Spectrum Mall at Perambur in Chennai had been constructed, stood on a different footing since no Memorandum of Understanding (MoU) for its reported sale had been recovered by the I-T sleuths. He contended his client had not agreed to sell the mall and that he had not received any consideration whatsoever, as claimed by the department.
Countering this argument, Ms. Sheela said though no MoU had been recovered in the case of Spectrum Mall, other promoters of the mall had given statements conceding that an MoU was entered upon for selling the mall for a negotiated price of ₹192.50 crore. Of the agreed amount, ₹130 crore was given in demonetised currency but the middleman deducted his commission and handed over ₹119.82 crore on December 16, 2016.
The appellants had used the demonetised notes to pay off their debts to multiple individuals and the rest of the amount was deposited in their bank accounts by falsifying their business transactions. Though the government had announced demonetisation of ₹500 and ₹1,000 currency notes on November 8, 2016, it had permitted people to deposit those currency notes in their bank accounts till December 30, 2016.
In the present case, the I-T sleuths had uncovered the modus operandi when Ms. Sasikala came out on emergency parole from the Parappana Agrahara central prison in Bengaluru, where she had been lodged after her conviction in a disproportionate assets case for five days in October 2017, to meet her ailing husband M. Natarajan (since dead). Then, she had stayed in the residence of her niece J. Krishnapriya at T. Nagar in Chennai.
When I-T officials searched the house, they recovered photographs of a handwritten note, containing details of the transactions, from Ms. Krishnapriya’s phone. Subsequent inquiries revealed the use of ₹1,911 crore of demonetised currency notes, not only to purchase malls, mills and resorts but also to offer a loan of ₹237 crore to a government contractor, who supplies provisions for nutritious meal scheme.
