Jayalalithaa's triumph

Madras High Court allows former Chief Minister Jayalalithaa's appeal against her conviction in three cases of corruption and sets aside the sentence. The judgment removes the legal hurdles to her contesting elections.

IN the annals of the Madras High Court, no lawsuit would have triggered as much of interest and suspense as the appeals filed by former Tamil Nadu Chief Minister Jayalalithaa against her conviction and sentence in three corruption cases - the Jaya Publications, Sasi Enterprises and Pleasant Stay Hotel cases. And when Justice N. Dhinakar pronounced his orders on December 4 in a packed court hall, acquitting Jayalalithaa and all the other accused in the three cases, it brought tremendous relief not only to the accused but also to the ruling All-India Anna Dravida Munnetra Kazhagam (AIADMK), of which Jayalalithaa is the general secretary.

The significance of Jayalalithaa's acquittals is that now there are no immediate legal hurdles for her to get elected to the Assembly and be sworn in Chief Minister again. But other stumbling blocks remain. A Special Judge trying the "coal case", in which Jayalalithaa is one of the accused, is expected to pronounce orders in a few weeks. Trial is under way in the "disproportionate wealth case", in which she and others are accused of having amassed assets valued at Rs. 66.65 crores, when she was Chief Minister from 1991 to 1996.

The Jaya Publications and Sasi Enterprises cases are together called the TANSI cases. Jaya Publications and Sasi Enterprises, in which Jayalalithaa and Sasikala were partners, were alleged to have bought properties belonging to the Tamil Nadu Small Industries Corporation (TANSI) at the industrial estate at Guindy in Chennai at less than the guideline/market value. This was alleged to have led to a wrongful loss of Rs.3.5 crores and Rs.66 lakhs respectively to the government. Since Jayalalithaa bought these properties when she was Chief Minister, she was charged under the Prevention of Corruption Act (PCA), which applies to public servants. She and others were also charged under sections of the Indian Penal Code (IPC).

The important findings of Justice Dhinakar in his two separate judgments relating to TANSI, which together ran to 369 pages, were: TANSI property is not government property and so there is no question of Jayalalithaa having bought government property; there is no specific law which bars a public servant from buying property; the Code of Conduct, which requires that Ministers should not buy government property, has no statutory force; "the market value does not lie in the property contemplated to be purchased but in the mind of the person contemplating to purchase the property"; the trial judge was not justified in using market value as the yardstick for concluding that there was a wrongful loss to the government; the prosecution had failed to show that Rs.7.32 lakhs was the guideline value but the defence showed "positive" evidence that the value of the TANSI land property was Rs.3 lakhs a ground (2,400 sq ft); and so "no sinister motive" could be seen in the transaction. Once it was held that there was no wrongful loss or wrongful gain, and a substantive offence is not made out, then there is no conspiracy (Section 120-B of the IPC).

After the Dravida Munnetra Kazhagam (DMK) returned to power in 1996 defeating the AIADMK, the Crime Branch-Criminal Investigation Department (CB-CID) filed the charge-sheet in the Jaya Publications case on November 15, 1996. The six accused were: Jayalalithaa (accused-1); her friend Sasikala Natarajan (A-2); former Chairman and Managing Director, TANSI, T.R. Srinivasan (A-3); former Rural Industries Minister Mohammed Asif (A-4); former Special Deputy Collector (Stamps) S. Nagarajan (A-5); and Jayalalithaa's former Additional Secretary R. Karpoorasundarapan-dian (A-6).

The charges were that the accused, between October 1991 and December 1992, conspired and enabled Jaya Publications to purchase 3.07 acres of land with a superstructure measuring 2,698 sq m belonging to TANSI Foundry, at below the guideline value, and that the building and machinery were undervalued. So Jaya Publications gained more than Rs.3.5 crores and there was a wrongful loss to the government. The State government also suffered losses in the stamp duty and registration fees payable. The charge-sheet said Jayalalithaa "abused her official position at every stage" although no "public interest" was involved in the transaction. She and others were charged under different sections of the IPC including 120-B and 409, and Section 13(2) of the PCA read with 13(1)(c) and 13(1)(d). She was also arraigned under Section 169 which prohibits public servants from buying or bidding for certain property.

The same six persons were accused in the Sasi Enterprises case. The CB-CID filed the charge-sheet on October 22, 1997. It said the accused, between 1991 and 1993, conspired and helped Sasi Enterprises to buy 2,550 sq m of land with a building measuring 1,550 sq m machinery, dies, tools and consumable stores from TANSI Enamelled Wires, Guindy, at undervalued terms. It led to a gain of Rs.66.11 lakhs for Jayalalithaa and Sasikala, which constituted a wrongful loss to the government. The accused were charged under sections of the IPC and the PCA as in the Jaya Publications case.

In the Jaya Publications case, Special Judge P. Anbazhagan convicted and sentenced to imprisonment all the six accused. Jayalalithaa received three years' rigorous imprisonment and a fine of Rs.10,000. Anbazhagan ruled that she had "dishonestly abused her office" as Chief Minister and bought TANSI property. According to him, "there was no force in the argument that TANSI was a private property."

In the Sasi Enterprises case, the only person acquitted was Mohammed Asif. Jayalalithaa was given two years' rigorous imprisonment. In both the cases, Sasikala received the same sentences as her friend. The sentences were passed under Sections 120-B and 409 of the IPC, and Sections 13(2) and 13(1)(c) and (d) of the PCA. Significantly, the Special Judge acquitted Jayalalithaa under Sections 169 and 119 of the IPC. Section 119 deals with "concealing design to commit offence which it is his duty to prevent."

In the Pleasant Stay Hotel case, Jayalalithaa, former Local Administration Minister T.M. Selvaganapathy and three others were charged with illegally granting exemption from building and hill area development control rules for regularising the illegal construction of five additional floors of the hotel at Kodaikanal, the hill station.

Special Judge V. Radhakrishnan, on February 2, 2000, convicted and sentenced Jayalalithaa to one year's rigorous imprisonment under the PCA. The other accused were sentenced to one year in prison.

All the accused in the three cases appealed in the High Court against their conviction and sentence. The DMK government appealed against the acquittal of Jayalalithaa under Section 169 IPC in the two TANSI cases.

JUSTICE DHINAKAR heard extended arguments in the TANSI cases from October 1 to November 1. He heard the arguments in the Pleasant Stay hotel case from November 9 to 22. The prosecution was led by Special Public Prosecutor and Senior Advocate K.V. Venkatapathi. He was assisted by advocates N.R. Elango, Sunder Mohan, P. Wilson and others. The defence was led by Senior Advocate K.K. Venugopal. Other defence lawyers included Senior Advocates N.T. Vanamamalai and Vinod Arvind Bobde.

The prosecution and defence arguments in the TANSI cases centred on these points: whether or not TANSI is a government undertaking; whether the payment made to TANSI amounted to less than the guideline/market value of the properties bought, which led to a wrongful loss for the government; whether Special Judge Anbazhagan caused prejudice to the accused when he substituted the term "guidance value" with "market value"; whether a public servant (Jayalalithaa as Chief Minister) can buy Government property (TANSI property in this case); and whether she attracted Section 169 of the IPC, which prohibits a public servant from buying or bidding for certain property (Frontline, September 28 and November 23, 2001).

Venugopal argued that the trial judge had caused prejudice to the accused by substituting the term "guidance value" with "market value". He contended that the guideline value was the only benchmark and once the prosecution could not establish that Rs.7.32 lakhs a ground was the guideline value, the trial judge was not justified in taking this figure as the market value to hold the accused guilty.

Venkatapathi countered that guideline value and market value were one and the same in the relevant area at the time TANSI properties were bought by Jaya Publications and Sasi Enterprises. In 1990, Jayalalithaa had bought the property of the nearby Heatex Equipment Limited and paid stamp duty for the property, accepting the guideline value of Rs.6 lakhs a ground. In 1991, she bought the property of Idhayam Publications and the sale deed showed that its market value was Rs.4.65 lakhs. Prosecution documents number 70 and 71 also showed that the market value of the land in the industrial estate was Rs.7.32 lakhs a ground in the year the TANSI properties were bought.

Justice Dhinakar said the amendment brought into the Rules under the Stamp Act indicated that "guideline value" and "market value" were different concepts, and that "guideline value" could not be substituted with "market value". The trial judge, having decided to read the charge omitting the words "guideline value", ought not to have taken into consideration the sale deeds relating to Heatex Equipment, Idhayam Publications and so on, to hold that the "market value" of the property was Rs.7.32 lakhs a ground. According to the Judge, the term "market value" itself was "vague, uncertain and a matter of guesswork." It was also not defined in the Stamp Act.

The trial court should have taken into consideration the sale of 2.52 acres, which was part of TANSI Foundry property, to the Tamil Nadu Co-operative Sugar Federation, and compared it with the sale of the same TANSI Foundry property to Jaya Publications because the price was Rs.3 lakhs a ground in both the portions of the land which together formed a whole. The best benchmark could only be Rs.3 lakhs fixed by the District Collector, which was accepted by the Commissioner of Land Administration.

The prosecution's failure to show that the "guideline value" was Rs.7.32 lakhs a ground and the positive defence evidence that it was Rs.3 lakhs showed that there was no sinister motive in the transaction, especially when the sale was by open tender, Justice Dhinakar ruled.

As regards (Jayalalithaa's) signature on the sale document, the Judge said the witnesses did not specifically state that she signed in their presence. (She had denied that it was her signature.) They only said that she and Sasikala affixed their signatures on the document. The prosecution did not prove that it was Jayalalithaa's signature.

Jayalalithaa was also charged under Section 13(2) read with 13(1)(d) and 13(1)(c) of the PCA. Section 13(1)(d) states: "A public servant is said to commit the offence of criminal misconduct if he (i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or any pecuniary advantage; or (ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; (iii) while holding office as a public servant, obtains for any person any valuable thing or pecuniary advantage without any public interest."

Section 13 (2) states that "any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine."

Since the prosecution did not establish that Jayalalithaa obtained pecuniary advantage by abusing her position as a public servant, guilt under Section 13(1)(d) of the PCA was not made out, Justice Dhinakar ruled. As there was no wrongful gain to the accused and consequent loss to TANSI, dishonesty was not established.

The Judge observed that the Chief Minister was not entrusted with the property of TANSI. The property, he said, was given to TANSI under the Government Grants' Act, 1895, and it was managed by a Board of Directors nominated by the government. It was an independent corporation registered under the Companies Act. Justice Dhinakar quoted from the rulings of the Supreme Court to show that TANSI was not an arm of the government and held that there was "no question of purchasing government property by A-1".

The Judge rejected Janata Party president Subramanian Swamy's charge (the court had allowed him to assist the prosecution) that had the land been parcelled out as industrial plots and sold, it would have fetched a better price. He said TANSI did not do it because it was felt that larger areas would then be lost for laying roads and other purposes. And merely because A-1 and A-2 lived in the same house, it could not be said they were partners in any conspiracy, the Judge said.

He said he was in agreement with the views of the Full Bench of the Andhra Pradesh High Court, which had ruled in Vidadala Harinadhababu v. N.T. Rama Rao (AIR 1990 AP 20) that the Codes of Conduct issued by the Union government and the State government were not statutory in nature, and could not be enforced by the court.

The Judge said Special Public Prosecutor Venkatapathi had argued that since the Code of Conduct contemplated that no Minister should purchase government property, A-1 has committed an offence under Section 169 of the IPC.

Section 169 of the IPC states: "Whoever, being a public servant, and being legally bound as such public servant, not to purchase or bid for certain property, purchases or bids for that property, either in his own name or in the name of another, or jointly, or in shares with others, shall be punished with simple imprisonment for a term which may extend to two years, or with fine, or with both; and the property, if purchased, shall be confiscated."

Venkatapathi argued that the words "legally bound to do" meant that the public servant should omit whatever is illegal. The word "illegal" applied to everything which was an offence, or which was prohibited by law and furnished a ground for civil action. This submission was based on the definition of "illegal" and "legally bound to do" in Section 43 of the IPC.

Justice Dhinakar said a careful reading of the section showed that the words "certain property" dealt with property to be sold under various statutes. According to him, "legally bound to do " was different from "legally bound not to do" because a public servant under Section 169 of the IPC was not legally bound to do an act, namely purchase a property. The judge, therefore, said: "There must be a law prohibiting a public servant from purchasing a property and if the said public servant is not bound by any law, the act of the public servant in purchasing the property does not become illegal. It cannot, therefore, lead to civil action since the extended definition of 'illegal' in Section 43 of the IPC will not come into operation."

Section 189 of the Railways Act, 1989, prohibited a railway servant from purchasing or bidding for any property put to auction under Sections 83, 84, 85 and 90 of the Act, and so forth. There was a similar provision in the Cattle Trespass Act, 1871.

"The code of conduct not having a statutory force, Section 169 of the IPC cannot be resorted to by the prosecution to hold that A-1 purchased the property and that the other accused have abetted her in the commission of the offence," Justice Dhinakar said.

The Judge quashed the charges against A-3 (Srinivasan, who was Chairman and Managing Director, TANSI). Evidence indicated that the sale price of the land and the buildings was decided by TANSI's Board of Directors, to which the government gave approval. Srinivasan had no independent authority to decide these matters, the Judge said. There was no material against A-4 (Asif) to hold him guilty. The value fixed by A-5 (Nagarajan) at Rs.3 lakhs a ground could not be said to amount to undervaluation. He acted properly and no fault could be placed at his doorstep. A-6 (Karpoorasundara-pandian) had not committed any offence either.

Justice Dhinakar handed down a similar judgment in the Sasi Enterprises case.

IN the Pleasant Stay Hotel case, Special Judge Radhakrishnan had convicted and sentenced Jayalalithaa (A-1) to one year's rigorous imprisonment under the PCA for her role in granting illegal exemption in 1994 to the hotel from the building and hill area development control rules. The other accused in the case were Selvaganapathy (A-2); former Secretary, Municipal Administration and Water Supply H.M. Pandey IAS (A-3); the hotel's executive director, Rakesh Mittal (A-4) and managing director Palai N. Shanmugham (A-5). Radhakrishnan convicted all the five accused under Section 120-B IPC and sentenced them to one year's R.I. each. He held them guilty of conspiring to grant the exemption.

While the Judge acquitted Jayalalithaa of the offence under Section 477-A of the IPC (falsification of records), Selvaganapathy was sentenced under that section. The charge was that Selvaganapathy as Local Administration Minister in May 1994 wilfully falsified the file received from P.C. Cyriac, then Secretary, Municipal Administration and Water Supply Department, by removing an additional note from Cyriac containing objections for granting the exemption. The first three accused were also charged with obtaining pecuniary advantage for the hotel without any public interest, granting exemptions and relaxations to the hotel from rules and norms.

Mittal and Shanmugham were convicted under Section 109 of IPC (punishment for abetment). All the accused appealed in the High Court. Shanmugham died on April 9, 2000 and his appeal, therefore, abated.

In the arguments before Justice Dhinakar, Venkatapathi said the case rested on circumstantial evidence.

Arguing for Jayalalithaa, Venugopal referred to an observation of a Division Bench of the High Court on her and Selvaganapathy "not applying their mind" (when they approved the unauthorised construction). Since the Division Bench had said there was non-application of mind, there was no mens rea on their part for committing the offence under Section 13(1)(d) of the PCA, Venugopal said. "Non-application of mind is a far cry from corruption, illegal means and abuse of power... Dishonesty and mens rea should be attached to the act which turns out to be against public interest," he added. There was no wilful and deliberate attempt on her part to favour Mittal and Shanmugham, he said.

Vinod Arvind Bobde, Senior Advocate, who appeared for Selvaganapathy, argued that as Minister he had taken into consideration tourism as a matter of public interest when he approved the file (relating to legalising the unauthorised construction). Since Section 13(1)(d) of the PCA invoked the phrase "without public interest", the prosecution should establish that the order was passed without any public interest, he argued. "The Minister did not have any motive or interest but was acting as a public functionary with bona fide intention."

P.L. Narayanan, counsel for Pande, said his client did not show any undue interest in favouring the hotel promoters when building rules were amended. P.S. Raman, counsel for Mittal, said Mittal had sent the proposal (for legalising the construction) only to the Housing and Urban Development Department for perusal, and not to the Local Administration Department. This ruled out the conspiracy angle, Narayanan said.

In his reply, Venkatapathi said there had been several circumstances that established Jayalalithaa's culpability. As Chief Minister she approved the file relating to the hotel. In her statement to the police she said the Secretary had read out the entire matter to her. This meant that she was aware of the various objections from the Director of Town and Country Planning, the Architecture and Aesthetics Aspects Committee (AAAC) headed by the Chief Secretary and the Secretary, Local Administration and Water Supply.

Venkatapathi said that two ingredients were necessary to bring home the offence under Section 13(1)(d) of the PCA. They were mens rea and actus reus. Mens rea is the mental state, that is, the intention to commit a crime. Actus reus is the act of a public servant obtaining a valuable thing or pecuniary advantage without any public interest. The circumstances established against her showed that there was mens rea. And the Division Bench of the High Court had found actus reus.

Venkatapathi explained that the concept of "non-application of mind" was a ground for judicial review of an administrative action. It meant application of mind to irrelevant factors and non-application of mind to relevant factors. The High Court had ruled that relevant factors were not taken into consideration and irrelevant factors were considered in this case.

Referring to Bobde's argument that Selvaganapathy took the public interest of tourism into consideration, Venkatapathi said there was only one public interest involved in this issue and that was the protection of the environment. Besides, the Minister had not spelt a single word about tourism in his order, Venkatapathi said.

IN his order, which ran to 143 pages, Justice Dhinakar said that to appreciate the case it was necessary to be convinced that the additional dissenting note prepared by Cyriac was a genuine document. According to Cyriac, he took two photocopies of the note. He retained one and gave the other to prosecution witness 17 (the Joint Secretary in the department). In his evidence, Cyriac gave contradictory versions on why he did not hand over the copy to Pandey who took over from him as Secretary. Justice Dhinakar observed that the trial judge made an error in saying that Selvaganapathy was aware of the additional note as there was no evidence to that effect.

He ruled out any conspiracy in the transfer of Cyriac and the appointment of A-3 (Pandey) in his place. The Judge said he was unable to accept the suggestion that Cyriac "was deliberately dislodged from his position with a view to bringing in a pliable officer."

Justice Dhinakar rejected the prosecution's argument that there was a conspiracy in bringing an amendment to Section 217-Q of the Tamil Nadu District Municipalities Act. (The amendment empowered municipalities to exempt or relax any rule made under Chapter X of the Act even for buildings owned by individuals if they did not affect the ecology of a hill station.) A number of appeals were pending before the government for such relaxation and the government was contemplating grant of exemption in appropriate cases.

The separate notification on the relaxation of Development Control Rules under Section 113 of the Tamil Nadu Town and Country Planning Act was not at the instance of either A-1 or A-2, the Judge said. (The Section stipulates that the Rules have to be notified.) He added, "The learned trial judge has misdirected himself on a question of fact" when he held that the notification was issued at the instance of A-1 and A-2 because he did not consider the evidence of the Additional Government Pleader. The Judge, therefore, said that the notification was not in pursuance of any conspiracy.

Justice Dhinakar said the investigative officer's evidence that A-1 to A-3 did not receive any monetary consideration assumed significance. Unless it was shown that it was a dishonest order (granting exemption for an additional five floors), A-2 could not be blamed for it, the Judge said. Even if the order could not be maintained legally, he could not be accused of receiving illegal gratification, the Judge said. He was only guilty of legal mala fide and not factual mala fide. The Judge said, "I am unable to hold that A-2 passed the order with corrupt motive."

In the absence of material to show that Jayalalithaa, Selvaganapathy and Pandey received illegal gratification, the accused could not be held guilty, for performing their official functions. Justice Dhinakar said: "Men are infallible and therefore, if the order is contrary to rules and hence incorrect, no prosecution can be launched." He ruled that the prosecution's contention that mere exercise of power to confer pecuniary advantage to another person even without any dishonesty could attract the penal provisions of the PCA could not be accepted.

To make out the offence of criminal misconduct, two requirements were necessary, the Judge said. They were: the absence of any public interest and the knowledge of the accused that his act is without any public interest. "If the accused acted bona fide without any public interest believing that he is acting in public interest, he is not guilty of offence of criminal misconduct."

The hotel bed strength in Kodaikanal remained static even though the demand for beds had gone up. In 1991, the number of beds available was 1,200 against a demand of 2,120. Venkatapathi's contention that the Minister did not specifically say that he was passing the order in the interest of tourism did not necessarily mean that Selvaganapathy did not consider the tourism aspect because he had said the hotel site should be used to the optimum level. The Judge also acquitted Selvaganapathy of the charge of falsification of records. Justice Dhinakar remarked that the trial judge exceeded his jurisdiction when he said the collective wisdom of the legislature in passing the Amendment Act could not be treated as being in public interest. The court could not question the collective wisdom of the legislature.