CBI arrests Tamil Nadu businessman in Rs 170 crore cash seizure case

New Delhi: CBI on Wednesday arrested businessman J Sekar Reddy and his associate K Srinivasulu after Income Tax searches at his residence and office in Chennai resulted in seizure of 127 kg of gold and over Rs 170 crore in cash post demonetisation.

CBI sources said his links with the son of Tamil Nadu Chief Secretary Nadu P Rama Mohana Rao are also under the scanner of I-T department as it is believed that Reddy, a contractor, allegedly received his help to get state-wide sand mining contract. Rao's premises are being searched by I-T department today.

CBI has registered a case of criminal conspiracy and cheating under Indian Penal Code besides provisions of Prevention of Corruption Act against Reddy and his two associates for conversion of currency in violation of RBI norms, the sources said.

They said it was alleged that I-T department searches had resulted in seizure of over Rs 170 crore in cash which included newly-introduced notes of Rs 2,000 worth Rs 34 crore (seized in two different occasions) besides 127 kg gold from him and his associates Srinivasa Reddy and Prem Kumar.

CBI case is related to seizure of Rs 24 crore of new currency notes from a Tata Ace load vehicle belonging to a Vellore resident, Rishi Kumar, on December 9 following searches at Reddy's residence in Chennai.

"Reddy and his associates had, with the help of unknown public servants of different banks, converted the unauthorised cash held by them in old currency notes, thereby depriving the public in enforcing their right," CBI alleged in its FIR.

It said the bank officials, who are allegedly entrusted with the distribution of new currency notes as per instructions of Reserve Bank of India, defied the RBI instructions and helped Reddy for a "consideration".

"Reddy, Prem Kumar and K Srinivasulu, had in conspiracy with unknown bank officials and public servants converted unaccounted cash held by them in the form of old currency notes to new Rs 2,000 currency notes, cheating the government of India," it alleged.

A CBI court remanded J Sekar Reddy and K Srinivasulu in judicial custody till January 3, 2017. They were remanded in custody by special judge for CBI cases Vijayalakshmi.

In its FIR, CBI said the case against them was that the two had exchanged Rs 34 crore as new currency out of the total seized amount.

Both had changed the currency within 24 days from the date the demonetisation was announced (November 8), the FIR stated.

Both were charged under IPC sections 409 (criminal breach of trust by public servant, or by banker, merchant or agent), 420 (cheating and dishonestly inducing delivery of property) and 120B (punishment of criminal conspiracy) and under 13(1) and (2) of Prevention of Corruption Act.

The judge also posted to December 23 the bail pleas by Reddy and Srinivasalu and a petition by CBI seeking the two into its custody.