But this time the notes were supposedly brought from the Reserve Bank of India's (RBI's) Indore unit for Krishna Industries to make plywood.
However, the police have passed on this piece of information to the CBI, which is probing illegal mining, and the RBI for investigation.
The police questioned Krishna Industries' owner, Sreenivasa, who said the notes were in no way connected with the Reddy brothers, but were brought from Indore through an auction.
Bellary superintendent of police Dr Chandragupta told HT the RBI's normal practice was to shred old notes or those with some wrong prints and dump them in its yards. Such notes were used for paper making, which Sreenivasa did, he added.
"However, a team has been to Indore to verify the facts given by him. We have been in touch with the RBI and they have the same opinion of the factory owner." One of the Reddy brothers, former tourism minister Janardhana Reddy, is now in jail in Bangalore and had been denied bail by the designated CBI court. Apart from the note-burning case, large sums of money had once been thrown into a canal when the CBI launched raids in Bellary a few months before the arrest of Reddy last year.