Madras High Court dismisses case filed by Sasikala’s alleged benamidar in ₹1,911 crore demonetised currency case

First Division Bench of Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan refused to interfere with the tribunal’s December 16, 2025 decision to condone a delay of 763 days on the part of the Income Tax department in filing an appeal against the alleged benamidar.

“Once the Appellate Tribunal, on being satisfied with the reasons assigned by the respondents herein, in the interest of substantial justice, has exercised its discretion and condoned the delay, this court sitting in appeal over the same cannot interfere, unless the exercise of discretion was on untenable grounds or arbitrary or perverse,” the Division Bench said.

The history of the case dates back to 2016 when former Chief Minister Jayalalithaa was hospitalised and her close aide Ms. Sasikala had allegedly used ₹1,911 crore of demonetised currency notes to purchase shopping malls, mills and various other immovable properties across Tamil Nadu.

After the death of Jayalalithaa on December 5, 2016, Ms. Sasikala was sentenced to four years of imprisonment in a disproportionate assets case on February 14, 2017.  In October 2017, she came out on emergency parole for five days to meet her then ailing husband M. Natarajan and stayed at the residence of her niece J. Krishnapriya at Habibulla Road in T. Nagar, Chennai.

The Income Tax department suspected that the real reason behind obtaining parole was to take stock of alleged financial transactions that were carried out after the demonetisation of ₹500 and ₹1,000 currency notes on November 8, 2016 and therefore, conducted a search at Ms. Krishnapriya’s residence.

The search supposedly led to the discovery of photographs of the front and back pages of a single loose sheet from Ms. Krishnapriya’s mobile phone. The sheet contained a list of properties and different figures written across those names with the suffix ‘paid’ and ‘to be paid’ and the niece reportedly conceded to have taken the photographs when her aunt was residing in her house.

Further inquiry revealed that immediately after demonetisation, Ms. Sasikala, through her aides, had identified individuals who were desperate to sell their valuable immovable properties but were unable to find purchasers with deep pockets. All those individuals were offered a handsome price for those properties but on condition that the money would be paid only in demonetised currency.

All those who agreed to the deal were paid the currency notes that had been stored in carton boxes at various places in Chennai and the Kodanad Estate owned jointly by Jayalalithaa and Ms. Sasikala.

The recepients of those currency notes used them to settle loans of smaller amounts that they had obtained from different individuals and the rest was deposited in their bank accounts by falsifying other business transactions since the Centre had granted time till December 30, 2016 for depositing the demonetised notes in bank accounts.

The transactions were carried out after making the property owners sign individual Memorandum of Understanding acknowledging the receipt of money, but none of those documents contained the name of the purchaser. Since the MoUs had neither resulted in registration of sale deeds nor transfer of shares, the I-T department considered those individuals to be Ms. Sasikala’s benamis.

Mr. Dinakaran who had reportedly received ₹18 crore in demonetised currency notes for giving away his share in Spectrum Mall at Perambur in Chennai was also subjected to proceedings under the 1988 Act and his properties were attached provisionally. The adjudicating authority under the Act, nevertheless, refused to confirm the order of attachment and hence, the I-T department had filed an appeal against such refusal with a delay of 763 days.