Disproportionate Assets case

The last word

Print edition : March 17, 2017

Tamil Nadu Chief Minister J. Jayalalithaa's residence at Poes Garden, Chennai is witnessing a beehive of activity on March 05, 2006, due to forthcoming Assembly elections. Photo: Photo: R. Ragu

Silver articles that the Directorate of Vigilance and Anti-Corruption found in the searches at Jayalalithaa's Poes Garden residence in December 1996. Photo: The Hindu Archives

Justice Amitava Roy. Photo: R.V. Moorthy

Andhra Pradesh High Court Chief Justice Pinaki Chandra Ghose. Photo: T. VIJAYA KUMAR

It took two decades for the judiciary to bring the disproportionate assets case against Jayalalithaa to closure, but, in the end, the Supreme Court hit the nail on the head.

ON the morning of June 4, 1997, N. Natarajan, Senior Special Public Prosecutor in the cases of corruption against Jayalalithaa, All India Anna Dravida Munnetra Kazhagam (AIADMK) general secretary and Tamil Nadu Chief Minister from 1991 to 1996, alerted this correspondent over phone about a charge sheet being filed against her. “Come this evening to the court of Special Judge-II. The charge sheet will be filed there against Jayalalithaa in the disproportionate wealth case against her. It will be the case against her,” Natarajan said, laying stress on the words “the case”.

Two decades later, after a relentless battle waged by the prosecution against Jayalalithaa and her co-accused—V.K. Sasikala, V.N. Sudhakaran and J. Ilavarasi—Natarajan’s words proved prescient. On February 14, 2017, the Supreme Court ruled that Jayalalithaa was guilty of amassing wealth beyond her known sources of income when she was Chief Minister (and hence a public servant) from 1991 to 1996. Justices Pinaki Chandra Ghose and Amitava Roy found that the co-accused had conspired with Jayalalithaa and abetted her in accumulating the wealth. Jayalalithaa was the prime accused (A1) in the case, and Sasikala, Sudhakaran and Ilavarasi were A2, A3 and A4 respectively.

In their 570-page judgment, Justices Ghose and Roy said they had analysed the evidence adduced by the parties and concluded that “A1 to A4 have entered into a conspiracy and in furtherance of the same, A1, who was a public servant at the relevant time, had come into the possession of assets disproportionate to her known sources of income during the check period...”. She got them “dispersed in the names of A2 to A4” and in several firms and companies “to hold these on her behalf with a masked front”, the judges said. “The charge of abetment laid against A2 to A4 in the commission of the offence by A1 also stands proved,” the judgment said.

They set aside the order of Justice C.R. Kumaraswamy of the Karnataka High Court pronounced on May 11, 2015, acquitting all the four accused “of all the charges levelled against them”. Justices Ghose and Roy declared, “...we set aside the judgment and order of the High Court and affirm and restore the judgment of the trial court in toto against A2 to A4”. This, in effect, restored the order of the Special Court (trial court) Judge, John Michael D’Cunha, Bengaluru, convicting and sentencing Sasikala, Sudhakaran and Ilavarasi to four years’ simple imprisonment and directing them to pay a fine of Rs.10 crore each. The trial court convicted and sentenced Jayalalithaa to four years’ simple imprisonment under Section 13(1)(e) read with Section 13(2) of the Prevention of Corruption Act (PCA) and imposed a fine of Rs.100 crore on her.

The Supreme Court had transferred the trial in the case from Chennai to Bengaluru in 2003 and appointed the Karnataka government the prosecuting agency. After Judge D’Cunha’s judgment, the four accused appealed in the Karnataka High Court against their conviction and sentence. Justice Kumaraswamy acquitted all the four of all charges. Against this, the Karnataka government appealed in the Supreme Court.

Suspense filled the air in Tamil Nadu for seven months before the Supreme Court judgment was pronounced on February 14. Justices Ghose and Roy had reserved, on June 7, 2016, their orders in the case. But Jayalalithaa, who became Chief Minister after her party was voted back to power in the May 2016 Assembly elections, took ill on September 22, 2016. In the starkest irony in the two-decade-old legal battle, Jayalalithaa, the prime accused in the case, died on December 5, 2016. This sparked a debate on whether the case against the co-accused would collapse following Jayalalithaa’s death (“Uncertain outcome”, Frontline, January 6, 2017).

Trial court judgment restored

Justices Ghose and Roy cleared the air on this in their judgment. The judges said that although there was “inextricable nexus” between Jayalalithaa and the three other accused and they (the judges) had made references to her “role” and “evidence pertaining to her”, the appeals in the Supreme Court against Jayalalithaa’s acquittal “stand abated” because she had expired. However, the judges “reiterated” that since “the charge against A2 to A4 is proved, the conviction and sentence recorded against them by the trial court is restored in full including the consequential directions”.

They cited an order of the Supreme Court in 2014 stating that the mere fact that the sole public servant (who was one of the accused in that case) had died would not divest the jurisdiction of the Special Judge or vitiate the proceedings pending before him. The judges, therefore, ruled that although “the sole public servant, being A1 in this matter, has died” and “the appeals against her have abated, even then A2 to A4 are liable to be convicted and sentenced in the manner as has been held by the trial judge”. The apex court also said that the trial court had “correctly held in this matter that private individuals can be prosecuted by the court on the ground that they abetted the act of criminal misconduct committed by the public servant”, which fell under Section 13(1)(e) of the PCA.

Although Sasikala, Sudhakaran and Ilavarasi claimed that they had independent sources of income, Justices Ghose and Roy said the facts and circumstances that had been proven in evidence “undoubtedly” pointed out that “A2 to A4 were accommodated in the house of A1 pursuant to the criminal conspiracy hatched by them to hold the assets of A1”. The fact that shell companies had been set up by them and large tracts of land had been acquired out of the funds provided by A1 indicated that “all the accused congregated in the house of A1 neither for social living nor A1 allowed them free accommodation out of humanitarian concern...,” the judgment said.

(The prosecution, during the trial, had alleged that after Jayalalithaa became Chief Minister in 1991, there was a spurt in the acquisition of assets, and Jayalalithaa and Sasikala floated 32 firms or shell companies in which Sasikala, Sudhakaran and Ilavarasi were partners. A number of immovable properties were bought in the name of six of these companies—Meadow Agro Farm Private Limited, Riverway Agro Products Limited, Lex Property Development Private Limited, Signora Business Enterprises, Ramraj Agro Products Private Limited, and Indo-Doha Chemicals and Pharmaceuticals Private Limited. Judge D’Cunha, in his order, directed the confiscation of the immovable properties bought in the name of these six companies.)

Jayalalithaa could not claim non-involvement in these firms, the Supreme Court said. “The flow of money from one account to the other proves that there existed an active conspiracy to launder the ill-gotten wealth of A1 for purchasing properties in the names of these firms,” the court said.

Conspiracy among parties

The constitution of various firms during the period under review was another circumstance establishing the conspiracy among the parties, the judges said. Ten firms were set up on a single day. In addition, Sasikala and Sudhakaran started independent concerns. Apart from buying properties, these concerns undertook no other business activity. Justices Ghose and Roy asserted that the “firms and companies were operating from the residence” of Jayalalithaa and that “it cannot be accepted that she was unaware of the same even though she feigned ignorance about the activities carried on” by Sasikala, Sudhakaran and Ilavarasi. They were residing with Jayalalithaa although there was no blood relationship between them, the judges said. Judge D’Cunha was “meticulous, sensitive, vigilant and judicious” in valuing the assets of the accused, the apex court judges said. On the other hand, the judges said they were of “unhesitant opinion”, after they had analysed the facts and circumstances of the case and considered the evidence placed before them and the arguments advanced by all the parties, that “the impugned judgment and order rendered by the High Court is untenable”.

In his order, citing an earlier Supreme Court ruling, Justice Kumaraswamy said that “it is a well-settled law that according to Krishnanand Agnihotri’s case, when there is a disproportionate asset to the extent of 10 per cent, the accused are entitled for acquittal”. He computed the wealth accumulated by Jayalalithaa at 8.12 per cent above her known sources of income. Justices Ghose and Roy ruled that the apex court’s earlier decision in the Krishnanand Agnihotri case had no application in the wealth case against Jayalalithaa and the accused “cannot avail” themselves of any benefit from it.

They said Justice Kumaraswamy’s computation of the wealth accumulated by Jayalalithaa as 8.12 per cent above her known sources of income was based on a “completely wrong reading of the evidence on record, compounded by incorrect mathematical calculations...”. Since the evidence on record “unassailably” proved disproportionateness of the assets, as contemplated under Section 13(1)(e) of the PCA, it was not essential “to resort to any arithmetic to compute the percentage thereof,” the judges said.

Verdict appreciated

G. Ravikumar, a senior lawyer practising in the Madras High Court, lauded the verdicts of the trial court and the apex court. “The trial judge had done his analysis very well and come to a reasonable conclusion that all the four accused were guilty. The Supreme Court weighed whether the trial court’s order was sustainable in law,” he said.

An allegation against a public servant that he or she had amassed wealth beyond his/her known sources of income was “one of the exceptional offences” that the public servant could be charged with under Section 13(1)(e) of the PCA, Ravikumar said. It is an offence wherein the accused has to prove that the accumulated properties or income came from a legitimate source. “This is one of the exceptions in the general rule of criminal jurisprudence. Normally, the prosecution has to prove that the accused had committed a crime, but here the accused have to prove that the assets are not disproportionate to their known sources of income. This comes under Section 13(1)(e) of the PCA. Here the scope of the defence is very limited,” he said.

In the disproportionate wealth case against Jayalalithaa and the co-accused, the prosecution had proved that she had amassed wealth to the tune of Rs.66.65 crore, which did not add up considering the salary (Re.1 a month) she had been drawing as Chief Minister from 1991 to 1996 and her earlier income, Ravikumar said. The accused, therefore, had to dislodge the allegation that this wealth came from an unlawful source and they had to do so to the satisfaction of the court. “In this case, the accused did not offer any satisfactory explanation that she [Jayalalithaa] derived her income from a lawful source. In a full-fledged trial, the trial court analysed the entire oral and documentary evidence and found that all the accused were guilty in the sense that the first accused, a public servant, had accumulated wealth from unlawful sources and the other accused had aided and abetted her and misused her office in this. The Supreme Court, after a thorough appreciation of the entire oral and documentary evidence, upheld the judgment of the trial court,” Ravikumar said.

Judge D’Cunha had done his analysis very well and had reached a reasonable conclusion that the accused were guilty and it was an impartial analysis, he said. The trial judge gave his findings with reason. The Supreme Court had also correctly appreciated the facts of the case and given its verdict, the lawyer said. The apex court’s judgment had a strong message that public servants who amassed wealth unlawfully and others who abetted them in that would be punished, Ravikumar said.

Sunder Mohan, a lawyer practising in the Madras High Court and the Supreme Court, called the apex court verdict “a well-considered judgment both on facts of the case and the law”. He said the Supreme Court had gone into “the minute details of the transactions made by the accused and the evidence let in on that”. He listed the areas where there was a major difference in the calculations done by the prosecution and the defence. They related to the income of Jayalalithaa during the period under review, the cost of the new and additional construction made, the huge expenses relating to the marriage of Sudhakaran in 1995 (who was then Jayalalithaa’s foster son), and so on. The Supreme Court did not accept the argument of the defence and the finding of Justice Kumaraswamy that the loans taken by the accused from banks amounted to income. Some of the loans had been repaid during the check period. So their being included as income amounted to double entry, Sunder Mohan said.

The Supreme Court did not accept the argument of the defence that the gifts that Jayalalithaa had received should be considered as income. The Supreme Court also disagreed with the argument that the properties acquired in the name of the six companies were not bought with A1’s money. Sunder Mohan pointed to the sharp observation made by Justices Ghose and Roy that “the unimpeded, frequent and spontaneous flow of funds from the account of A1 to those of the other co-accused and the firms/companies involved, overwhelmingly demonstrate the collective culpable involvement” of the accused in the transaction and render them to “masked banking exchanges”.

Opinion is divided among lawyers on whether the fine of Rs.100 crore, imposed by the trial court on Jayalalithaa, has been restored. Sunder Mohan said it was not restored because she was dead and the appeals against her acquittal by the Karnataka High Court had abated. According to Ravikumar, the Supreme Court had found Jayalalithaa guilty of amassing wealth disproportionate to her known sources of income but as she was dead could not be asked to pay a fine.

However, legal experts agree that the immovable properties bought in the name of the six companies, in which A2 to A4 were partners, will be confiscated. This was one of the directions given by Judge D’Cunha in his judgment. Justices Ghose and Roy observed in their judgment that “we are of the opinion that the order of confiscation/forfeiture of the properties standing in the name of the six companies... made by the trial court is unexceptional”. They “restored” the direction of the trial court towards confiscation/forfeiture of the attached property of the six companies and declared that the trial court’s direction amounted to “an order by this court as well”.

A letter from the Editor


Dear reader,

The COVID-19-induced lockdown and the absolute necessity for human beings to maintain a physical distance from one another in order to contain the pandemic has changed our lives in unimaginable ways. The print medium all over the world is no exception.

As the distribution of printed copies is unlikely to resume any time soon, Frontline will come to you only through the digital platform until the return of normality. The resources needed to keep up the good work that Frontline has been doing for the past 35 years and more are immense. It is a long journey indeed. Readers who have been part of this journey are our source of strength.

Subscribing to the online edition, I am confident, will make it mutually beneficial.

Sincerely,

R. Vijaya Sankar

Editor, Frontline

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
×