Rs.120 Crore Fraud in Indian Overseas Bank, Politician purchased Sugar Factory in Cash

A big twist has come to light in investigation of Rs.120 crore fraud in Indian Overseas Bank (IOB) involving Padmaadevi Sugars Ltd (PSL). First let’s know about the fraud and FIR.

According to the FIR, the directors of Padmaadevi Sugars Ltd cheated Indian Overseas Bank (IOB) of about ₹120 crore. The case is being investigated by the Banking, Securities and Fraud branch of the CBI in Bengaluru, based on the directions of the Madras High Court. The FIR was registered in July 2025, and a month later, in August, CBI teams carried out searches in Chennai, Trichy, and Tenkasi.

Now, the CBI has alleged in a fresh FIR that during demonetisation in 2016, former Tamil Nadu Chief Minister Jayalalithaa’s close aide V K Sasikala purchased a sugar factory in Kancheepuram for ₹450 crore in an all-cash deal. This allegation has surfaced as the agency investigates a ₹120 crore suspected bank fraud case involving Padmaadevi Sugars Ltd. The account was declared fraud in 2020.

The sugar factory of PSL that the bank had taken as collateral was attached by the income-tax department under the Benami Properties Transactions Act.

It is alleged that the I-T department’s searches in connection with a case against Sasikala in 2017 resulted in a seizure of documents and loose sheets. The documents reportedly revealed that ₹450 crore in cash was paid during demonetisation to purchase the sugar mill, which previously belonged to the Patel Group.

Meanwhile, Indian Overseas Bank has cited the income tax findings against Padmaadevi Sugars Ltd as grounds to classify the company’s loan accounts as “fraud”, thereby escalating the seriousness of the case.

Jayalalithaa passed away on December 5, 2016 at a private hospital in Chennai.

The IOB complaint has alleged that Hitesh Shivgan Patel, who was managing the financial affairs of PSL and was also the in-charge of Prabhat Group, had stated on oath that he had received a total of ₹450 crore in old high-denomination notes towards the sale of the sugar factory at Kancheepuram.

The memorandum of understanding regarding the sale of the factory was entered into by Hitesh Shivgan Patel, his father Shivgan Patel and brother Dinesh Patel, the complaint has alleged.

The MoU and original share certificates of SV Sugar Mills Limited, which were held by the Patels and entities of the Patel Group, were seized by the I-T department during searches on November 18, 2017.

The tax department termed it benami property as the Patel Group was holding it even after the payment of ₹450 crore towards the sale of PSL, along with shares and assets, for the alleged benefit of Sasikala, who paid the amount for the purchase.

The complaint alleges that Sasikala is the beneficial owner and the property in the instant case the sugar factory of the PSL in Kancheepuram, along with the land, all the machinery, installations etc. is benami.

After taking over the investigation in July, the CBI conducted searches at six locations in Tamil Nadu on August 12 in connection with the case, officials said.

“The allegations in the FIR include fraudulent availing of various credit facilities from the Indian Overseas Bank, misappropriation of property, diversion of bank funds to sister concerns and unrelated entities, siphoning of funds to related parties and interest-free advances to private firms,” a CBI spokesperson said.

This case has brought attention to both the mystery of cash transactions during demonetisation and the alleged misuse of bank loans, linking them directly to a high-profile political figure.