The Income Tax Department has ‘provisionally attached’ Mindtree shares worth Rs 660 cr belonging to VG Siddhartha, the founder of Cafe Coffee Day and the son in law of former Congress leader and Karnataka Chief Minister SM Krishna.
Mindtree said it received intimation from the Income Tax Department that it had provisionally attached about 75 lakh shares belonging to VG Siddhartha and Coffee Day Enterprises.
The IT company has been told not to allow the shares to be transferred to a third party till further notice or till July 25.
VG Siddhartha is not a promoter of the company, but is one of its bigger shareholders.
As of December, he — along with Coffee Day Enterprises and Coffee Day Trading — held close to 3.35 cr share in the company, worth about Rs 3,000 cr in total.
The raid comes in the context of a widespread crackdown on businessmen in Karnataka on charges of tax evasion, particularly those seen as close to the Congress Party.
The Bharatiya Janata Party, whose government at the center controls central agencies like the Income Tax Department, has been engaged in a battle to seize control of the government in Karnataka from the Congress-JDS coalition.
However, the BJP is short by a few MLAs.
There have been allegations that the party has been trying to ‘persuade’ some of the MLAs belonging to the ruling alliance to resign, so that the ruling front will lose its majority and the BJP can form a government in the state.
A recent attempt, dubbed ‘Operation Lotus 2’ failed to produce results after the Congress and the JDS successfully ‘defended’ their MLAs from being poached.
It was about a year-and-a-half ago that the Income Tax Department had conducted raids at the offices of Siddhartha, founder of the Amalgamated Bean Coffee Trading Company and arguably India’s biggest businessman in the coffee sector.
After emerging successful in the coffee trading business, Siddhartha launched Cafe Coffee Day in Bangalore in the 1990s. Designed as a space for young people to hang out, the CCDs became a big hit in India’s IT city.
The chain is currently estimated to have close to 2,000 outlets in India, mostly in the southern states where coffee is more popular.