Petitioners say 1988 Act not applicable as it was a forced transaction
The Income Tax department on Friday rebutted the contention that it cannot invoke the Prohibition of Benami Transaction Act of 1988 just because former Chief Minister Jayalalithaa’s close aide V.K. Sasikala had reportedly used demonetised currency notes, which cannot be considered as legal consideration, to purchase several malls and mills in 2016.
Appearing before Justice Anita Sumanth, Additional Solicitor General (ASG) R. Sankaranarayanan said Sasikala was scouting for properties much before ₹1,000 and ₹500 notes were demonetised on November 8, 2016. The payments were made after demonetisation since there was a window period till December 30, 2016 for depositing the notes in bank accounts.
Cash in boxes
According to the I-T department, Sasikala had used ₹1,911 crore stored in carton boxes in various bungalows in Chennai and the Kodanad Estate in the Nilgiris, jointly owned by her and the former Chief Minister. One of the transactions related to purchase of Spectrum Mall at Perambur in Chennai on payment of ₹130 crore in demonetised notes.
However, since the mall was not conveyed to the purchaser even after receipt of the “sale consideration,” the department chose to initiate action against its co-owners Ganga Foundations Private Limited, D.V. Balaji and V.S.J. Dinakaran under the 1988 Act. All three owners moved individual writ petitions before the High Court challenging the proceedings.
Senior counsel R.V. Easwar contended that the entire case of the department would have no legs to stand on the simple ground that payments made in demonetised notes could not be considered as legal consideration at all. Even otherwise, he argued that the 1988 Act would have no application at all on his clients since it was a “forced transaction”.
He said the Act could be invoked only if the purchaser and seller were equal participants in the alleged crime. In so far as the present transaction was concerned, one set of the co-owners of the shopping mall were not interested in selling the property to Sasikala but they were forced to do so under threat, he claimed.
Further stating that ₹130 crore was only a part consideration of the total accepted amount of over ₹192 crore, he said it was nobody’s case that the rest of the consideration was also paid to the promoters of the mall. In such a circumstance, how could the writ petitioners be accused of being benamis of Sasikala, he wondered.
In reply, the ASG claimed that the promoters of the mall were in severe financial trouble and hence decided to sell off the property. They had approached Sudhakar, a real estate agent in Anna Nagar in September 2016 itself. He, in turn, organised a meeting with Sasikala’s lawyer S. Senthil. These meetings took place much before demonetisation, the ASG said.
He also stated that the modus operandi was to pay money to owners of high value properties and enter into Memorandum of Understanding with the sellers on stamp papers which did not contain the name of the purchaser. This was done to facilitate transfer of the properties to the name of Sasikala or any other person of her choice in the future, he said.
Since the ASG could not conclude his arguments on Friday and also because advocate M.R. Venkatesh too had to argue on behalf of Mr. Dinakaran, the judge adjourned the matter to February 11 for further hearing.
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