Source of the wealth

The judgment in the disproportionate wealth case against Jayalalithaa says the Chief Minister was the real source of the wealth and delineates the ways in which she and her co-accused amassed it.

Jayalalithaa greeting her party workers from her residence in Poes Garden, Chennai, a file photograph.

THE constant refrain in Special Judge John Michael D’Cunha’s September 27 verdict in the “disproportionate wealth” case against Jayalalithaa is that he has no hesitation in holding that all the ill-gotten wealth was accumulated when she was Tamil Nadu Chief Minister from 1991 to 1996 and that it belongs to her and nobody else. In his 1,136-page order, he repeatedly asserts that the real source of acquisition of wealth by the four accused in the case was Jayalalithaa, the first accused. “…I hold that all the assets and pecuniary resources found in the possession of” the other accused, Sasikala Natarajan, V.N. Sudhakaran and J. Ilavarasi, and “in the name of various firms and companies” owned by all the four accused “actually belong to” Jayalalithaa, the judge observes. In another paragraph, he concludes that “the prosecution could show that there was no real source of income” with Sasikala, Sudhakaran and Ilavarasi and that “the public servant is the real source”.

The judgment is shot through and through with the judge’s finding, which places the blame at Jayalalithaa’s doorstep for the untrammelled acquisition of wealth by the four accused.

“Heady mix of power and wealth is the bottom-line of this case,” the judgment says. “Huge accumulation of wealth by the accused in a short span of five years is a telling example of how power would lead to concentration of unlawful wealth, posing veritable danger to democratic structure.”

The order gives an elaborate break-up of “unexplained cash credits” of lakhs of rupees flowing into the current accounts of various companies, such as Sasi Enterprises, Metal King, J. Farm House, Mahasubbulakshmi Kalyana Mandapam, Anjaneya Printers, Fresh Mushrooms, Super Duper T.V. Private Limited, Lex Properties Development Private Limited, and Lakshmi Constructions, in which the accused were partners, and into their savings bank accounts.

Referring to this “unexplained cash” flow, the judgment says: “The accused have failed to offer any satisfactory explanation as to the enormous unexplained credits entered into their bank accounts. Whatever explanation offered by the accused by way of confirmatory letters is proved to be false and bogus. The identity of the persons who provided the source is not proved. The transactions which resulted in the cash credit are also not established…. It is also proved in evidence that the returns and the balance sheets and the profit and loss accounts were manoeuvred solely with a view to offer an explanation about the huge unexplained credits entered in their respective bank accounts. As a result, the accused have failed to prove their defence even by the standard of preponderance of probability.”

The judge, therefore, held the four accused guilty under the Prevention of Corruption Act (PCA) and the Indian Penal Code (IPC). He sentenced each of them to four years’ simple imprisonment and a fine of Rs.100 crore on Jayalalithaa and Rs.10 crore each on the others.

Soon after the verdict was delivered, all the four were lodged in separate cells in the Central Prison complex at Parappana Agrahara, about 20 kilometres from Bangalore. The verdict unseated Jayalalithaa, who was elected Chief Minister for the third term on May 16, 2011, after the All India Anna Dravida Munnetra Kazhagam (AIADMK), of which she is the general secretary, defeated its main rival, the Dravida Munnetra Kazhagam (DMK), in the Assembly elections. Under Section 8 of the Representation of the People Act (RPA), 1951, anyone who is convicted and sentenced to imprisonment under the PCA stands disqualified for six years from the date of his/her conviction plus the period of sentence. This means she cannot stand for elections for the next 10 years unless her conviction is overturned in appeal by a higher court ( Frontline , October 17).

The situation of Jayalalithaa losing power convulsed the AIADMK, where power was concentrated in herself. In a sombre ceremony on September 28, O. Panneerselvam, Finance Minister, took over as Chief Minister. Panneerselvam retained Jayalalithaa’s Cabinet, whose members took tearful oaths. There was more bad news for the AIADMK on October 7 when the High Court of Karnataka declined to grant bail to Jayalalithaa and the three other accused.

Benami property

The prosecution case was that Jayalalithaa had accumulated wealth worth Rs.66 crore disproportionate to her known sources of income, including lands, buildings, a large tea estate, business enterprises, cash, gold and diamond jewellery, in her name and in the names of the three other accused when she was Tamil Nadu Chief Minister from 1991 to 1996. Sudhakaran is the son of Sasikala’s elder sister. He was considered the “foster son” of Jayalalithaa. Ilavarasi was married to Sasikala’s elder brother. Jayalalithaa, of her own volition, had drawn a salary of Re.1 for 27 months as Chief Minister and did not draw any salary for the remaining 33 months of her office as Chief Minister.

Besides, as on July 1, 1991, Jayalalithaa had property and pecuniary resources in her name and in Sasikala’s name only to the extent of Rs.2.01 crore. These included Jaya Publications, Sasi Enterprises and Namadhu MGR , floated by Jayalalithaa and Sasikala as partners. However, after this date, there was a spurt in the acquisition of assets, and Jayalalithaa and Sasikala floated 32 firms in the names of Sasikala, Sudhakaran and Ilavarasi, the prosecution contended.

Some of these 32 firms/companies were J. Farm Houses, J.S. Housing Development, Jay Real Estate, Jaya Contractors and Builders, J.S. Leasing and Maintenance, Green Farm Houses, Metal King, Super Duper TV (P) Limited, Anjaneya Printers Private Limited, Ramaraj Agro Mills Ltd, Signora Business Enterprises, Lex Property Development Private Limited, Riverway Agro Products Pvt. Ltd, Meadow Agro Farms Pvt. Ltd, Indo-Doha Chemicals and Pharmaceuticals Ltd, Sea Enclave, Marble Marvels, Vinod Video Vision, Fresh Mushrooms and Kodanad Tea Estate.

The prosecution argued that during the check period from July 1, 1991, to April 30, 1996, there was no business activity at all in many of these firms. In the remaining firms, the activities were more in the nature of acquiring assets such as lands, buildings and machinery which were not production-oriented. These firms did not file income tax returns or undergo assessment for commercial tax. Jayalalithaa herself did not file her income tax returns for the assessment years 1987-88 to 1992-93, and when this issue was raised in Parliament, she filed the income tax returns for this period in November 1992.

Subsequent to July 1, 1991, assets in the form of movable and immovable property and pecuniary resources such as bank deposits were found acquired not only in the name of Jayalalithaa but also in the names of Sasikala, Sudhakaran and Ilavarasi and in the names of the firms floated by them. Scrutiny of various bank accounts in the names of the four accused and these firms revealed huge credits in cash had been frequently made into them, the prosecution argued. There were frequent transfers of money from one account to another to facilitate illegal acquisition of assets. The huge quantum of such assets, when viewed in the context that Jayalalithaa was the Chief Minister at that time and that the three other accused were living with her under the same roof and they did not have sufficient means to acquire the assets in their names, established that the assets were actually acquired by Jayalalithaa, it alleged.

The income from Jayalalithaa’s known sources, agricultural income and interest from bank deposits and other deposits held in her name and the names of the other accused worked out to Rs.9.34 crore, but the expenditure was assessed at Rs.11.56 crore, the prosecution estimated.

Jayalalithaa’s defence

Senior Advocate B. Kumar, who was the defence counsel for Jayalalithaa, dealt extensively with each and every item of income, expenditure, assets and pecuniary resources attributed to her to show that all her property and assets were acquired out of legitimate sources known to law and that she was falsely implicated at her political opponent’s behest. He argued that the charges levelled against the accused were highly discrepant and unbelievable and suffered from irreconcilable contradictions, especially because a large number of prosecution witnesses had asserted during cross-examination that they were pressured to depose against the accused.

The defence counsel argued that the prosecution could not prove the foundational facts required to bring home the charge of disproportionate assets defined under Section 13(1)(e) of the PCA. He submitted that in view of the charges of conspiracy and abetment levelled against Sasikala, Sudhakaran and Ilavarasi, unless the prosecution established the benami character of the properties standing in their names and in the names of the alleged companies and firms, the burden of explaining the source for the acquisition of these assets did not shift to Jayalalithaa.

Kumar said Jayalalithaa had sufficient property inherited by her, and that during the check period, she had received Rs.2.15 crore by way of gifts on her 44th birthday and had earned large income from her agricultural property and from the business run by her in partnership with Sasikala.

Money in suitcases

In his judgment, Special Judge D’Cunha notes that Sasikala would send cash in “suitcases or bags through domestic servants” to Ram Vijayan and Jayaraman, who were Jayalalithaa’s staff at her residence in Poes Garden, Chennai, to be deposited in banks; consequently, “unexplained cash credits” flowed into the bank accounts of the accused and several shell companies; there was the sudden birth of 32 companies, in which the accused were partners; and “none of these firms transacted any business and there was absolutely no income from any of these companies”. The judgment also establishes how all these firms and companies had received funds diverted from the bank account of Jayalalithaa and how “out of these funds” Sasikala, Sudhakaran and Ilavarasi “acquired properties….”

The judgment also details a deposit scheme floated by Jaya Publications, which published Namadhu MGR , a daily newspaper of the AIADMK. The scheme was for Jaya Publications to collect deposits without interest from subscribers on the promise of free supply of Namadhu MGR until the deposit was withdrawn; Jaya Publications reportedly received Rs.14.01 crore in deposits during the check period and Sasikala sought to include this money as Jayalalithaa’s and Sasikala’s income.

“What emerges” from the evidence, the judgement says, is “the story of the deposit scheme canvassed by the accused has taken birth only after the filing of the charge sheet on [June 4, 1997]. There is not even a stray evidence to suggest that the said deposit scheme was in circulation any time before the registration of the criminal case against the accused.”

With “regard to the magnitude of the disproportionate assets acquired by the accused and the gravity of the offence, there is no scope for any leniency or sympathy in this case”, the judge said.

Check period

“Undoubtedly, the selection of the check period has an important bearing in deciding the guilt of the public servant for the offence of disproportionate assets under Section 13(1)(e) of the Act,” the Special Judge said. The prosecution had placed before the court the details of all the assets and properties held by Jayalalithaa from 1970 and had taken into account the income derived from these properties in the form of rentals, interest from deposits, agricultural income, and so on, to enable the court to have a fair view of the controversy, he added. Besides, nobody argued that the choice of the check period had disadvantaged the accused in any manner.

He further ordered that necessary directions be issued to the banks concerned to remit the fixed deposits and cash balance in the bank accounts of the accused towards the adjustment of the fine amounts. If the fine amount paid still fell short after the adjustment, the gold and diamond ornaments seized and produced before the court (after setting apart 7,040 grams of gold with proportionate diamond jewellery), as observed in the body of the judgment, shall be sold to the Reserve Bank of India or the State Bank of India or publicly auctioned to make the deficit good.

All immovable property registered in the names of Lex Property Developments Private Limited, Meadow Agro Farms Private Limited, Ramaraj Agro Mills Private Limited, Signora Business Enterprises (P) Limited, Riverway Agro Products (P) Limited, and Indo-Doha Chemicals and Pharmaceuticals Limited, which had the accused as partners and had already been attached under government orders, shall be confiscated by the State government, the judgment says.

Judge D’Cunha said he took into account the manner in which the accused acquired these assets when he decided on the quantum of sentence. It was established in evidence that Sasikala, Sudhakaran and Ilavarasi, who were Jayalalithaa’s close associates, had actively abetted the commission of the crime by holding substantial portions of the assets in their names and in the partnership firms set up by them. Judge D’Cunha said: “I have come to the conclusion that these firms were constituted only to siphon off the unlawful resources accumulated by A-1 [Jayalalithaa]. It is held that none of the accused contributed any share to the capital of the firms or carried on any business in the name of the firms. The only activity carried on by the firms is to open bank accounts and get transfer of money from the accounts of A-1 and invest them for the purchase of huge properties for and on behalf of A-1.”

In furtherance of the conspiracy, Sasikala, Sudhakaran and Ilavarasi even bought defunct companies, opened accounts and acquired vast properties in the names of these companies out of the funds provided by Jayalalithaa, the judge said. “It is proved beyond doubt that the source for all the acquisition was provided by A-1, which she could not satisfactorily account for. Thus, the prosecution has brought home the guilt of all the accused for all the offences charged against them,” he ruled.

It was proved in evidence that at the commencement of the check period, Jayalalithaa had assets worth Rs.2.01 crore, including the assets of the partnership firms of Jaya Publications and Sasi Enterprises, Judge D’Cunha said. By April 30, 1996, her total wealth had risen to Rs.53.60 crore against her legitimate income of Rs.9.91 crore. The judge pointed out that this value was not the present market value of the assets. The value of the disproportionate assets possessed by the accused was determined on the basis of the actual cost incurred by the accused for acquiring the properties from 1991 to 1996.

The judge said: “That was the time when the accused could buy 900 acres of plantation land for Rs.7.5 crore and ordinary agricultural land for just Rs.10,000 per acre. At that rate, the entire village could have been purchased for Rs.53 crore. The magnitude of the assets acquired by the accused has to be viewed in that background. Even otherwise, the total extent of land purchased by the accused either in their individual names or in the names of firms and companies comes to nearly 3,000 acres and their present market value is left to our imagination.”