Order Attaching of Rs.1600 cr Benami Properties of VK Sasikala upheld by Madras HC

A division bench of the Madras High Court upheld a single judge’s decision by rejecting the petitions that contested the IT department‘s attempt to attach at least 14 benami properties valued at more than 1,600 crore of former AIADMK interim general secretary VK Sasikala’s benamidars in accordance with the Benami Properties Transactions Act, 1988.

The high-value assets include Spectrum Mall in Perambur, Marg Realities Limited, Bonjour Bonheur Pvt Ltd, Ganga Foundation Pvt Ltd, Global Infoserv Limited, and Venus Meridian Agencies Pvt Ltd.

The orders were issued after a group of writ appeals filed against a single judge’s order dated October 21, 2021 were dismissed by the bench of Justice R Mahadevan and Justice J Sathya Narayana Prasad.

The companies and its promoters allegedly operated as Sasikala’s benami and spent more than Rs 1,600 crore on various properties using demonetised currency notes. The value of Spectrum Mall’s shares alone was Rs 130 crore.

One of the benamis, the Gaga Foundation, filed a lawsuit in court to contest the department’s order from January 20, 2020, which confirmed the provisional attachment of the 65 percent of the company’s shares in the mall that it possessed.

The problem relates to I-T raids carried out in November 2017 on the company’s property as a result of a separate search carried out at several locations associated to Sasikala. S Senthil Kumar, the company’s managing director, provided a statement that was taped while various documents were being searched for.

Using the evidence, the department started legal action against the corporation under the Benami Act, which led to the attachment of its shares in the shopping centre. The foundation claims that the corporation owned 65 percent of the shares in Spectrum Mall, which was a joint venture between the company and the landowners.

The business chose to sell the property in 2016 because it was paying too much interest on its bank borrowings. S Senthil, an attorney, made a purchase proposal while claiming to be Jayalalithaa’s representative in negotiations. The ultimate price came to Rs 192.5 crore.

The IT’s temporary attachment of the appellants’ properties was challenged by the appellants on the grounds that Sasikala had allegedly spent Rs 1,674 crore between November and December 2016 on the purchases. They claimed that the initiating authority had prohibited them from questioning witnesses in cross-examination and that the initiating authority had not provided any supporting documentation for the charge.

Such arguments were refuted by Special Public Prosecutor M Sheela, who claimed that all copies of the documents had been provided to the appellants by the inquiry body. The initiating authority is not a fact-finding body to permit appellants to question the witnesses in cross-examination. The appellants would be given that chance by the adjudicating body, she continued.

The SPP asserted that other mall promoters concurred that the MoUs were signed to sell the mall for Rs 192.50 crore when an appellant claimed he did not enter into an MoU with Sasikala and others for selling the spectrum mall.

The bench concluded after recording the arguments that the appellant’s contention in this regard cannot be accepted.

The division bench stated that they did not find any errors in the order issued by the first respondent while sustaining the single judge’s decision. The sole court correctly upheld this and instructed the respondent authorities to continue according to the law. Therefore, the appellant has not established a case to challenge the judgement, the court ruled.

The appellants included businessmen, an exclusive resort, and an infrastructure and real estate company. The Benami Prohibition Unit’s accusations were supported by information obtained during a 2017 IT search of Sasikala’s residence in T Nagar. The agency has obtained images of handwritten papers from Sasikala’s relative Krishnapriya’s phone.