The VHP on Tuesday alleged the case against Kanchi Shankaracharya Jayendra Saraswati was fabricated.
The organisation had come to this conclusion on the basis of enquiries made by it, VHP vice president S Vedandam told reporters in Kancheepuram.
Enquiries with the bank in which the mutt had an account had revealed there was no large-scale withdrawal of cash as alleged by police, he said.
More or less all payments were made by cheques, Vedandam said.
He alleged an international conspiracy had been hatched against the Sankaracharya and the Centre was under international compulsion to arrest him.
The VHP leader said several national and regional parties, including the ruling AIADMK in Tamil Nadu, in a bid to project themselves as champions of secularism, had supported the seer's arrest.