"You (D Roopa) are required to get an apology duly published in all leading newspapers in the next three days, failing which, I will be constrained to initiate appropriate legal proceedings both civil and criminal, against you to recover damages from you and the same is quantified as Rs 50 crore tentatively," Mr Rao said in the notice issued to Ms Roopa, a copy of which is with PTI.
Ms Roopa had alleged that Rs 2 crore had exchanged hands to provide special facilities to Sasikala and had dragged Rao into the case, claiming there was a "talk" that he was also a beneficiary.
Though she was eased out of the prison department subsequently, she continues to stick to her stand. Mr Rao claimed the allegations have caused severe damage to his name, fame and integrity, apart from causing mental agony to him.
He argued that if Ms Roopa could take pictures elsewhere on prison premises, how could she miss to take photos of a convict getting VIP treatment such as setting up of a kitchen in her cell to get special food.
"The reason is obvious she could not take photo because the kitchen was not existence at all," he claimed.
Mr Rao also said he would be approaching the income tax department to find out the "trail of Rs 2 crore".
"I will be approaching the concerned in the income tax department to find out the source from where the alleged Rs 2 crore was mobilised, who carried it, who is its recipient and where is it stored, so that the guilty of various provisions of tax laws are brought to book," he said.
The Karnataka government had shunted out Ms Roopa on July 17.
Ms Roopa, in an audio clip sent to PTI, said she had "done her duty".
She also urged the Anti-Corruption Bureau to take a lead from a confessional statement made by Australia-based NRI VC Prakash to the Delhi Police in connection with the election commission bribery case.
Prakash had confessed that he had helped arranging meetings between the AIADMK party leaders, including Deputy General Secretary TTV Dinakaran and Sasikala, inside Parapana Agrahara prison as he "knew some jail officials".
The confessional statement of Prakash, says "Mallikarjun (a close aide of Dhinakaran) also asked me to help organise their meetings with Sasikala lodged in Bangalore jail as I knew some jail officials."
Prakash, who was till recently holding a minister of state rank in the government, also had confessed that he had helped Mallikarjun, to send Rs 2 crore to Delhi.