Will the Karnataka High Court’s May 11 verdict acquitting former Tamil Nadu Chief Minister Jayalalithaa in the Rs.66.65-crore disproportionate assets case turn out to be an ephemeral victory for her?
With the Karnataka government biding its time to go on appeal and the judgment delivered by Justice C.R. Kumaraswamy coming under a cloud after B.V. Acharya, the Special Public Prosecutor (SPP) in the appeals, exposed a “glaring arithmetical error” in it, attention has now shifted to the Supreme Court. Acharya has recommended to the Siddaramiah-led Congress government that it is “a fit case for appeal” in the Supreme Court.
Justice Kumaraswamy, who acquitted Jayalalithaa, Sasikala Natarajan, V.N. Sudhakaran, and J. Ilavarasi, the four accused in the case, did his own calculation and concluded that the disproportionate assets acquired by the accused were only 8.12 per cent above their known sources of income. Citing the Supreme Court ruling in the Krishnanand Agnihotri case, he said that when disproportionate assets were less than 10 per cent, the accused could be acquitted.
Justice Kumaraswamy said: “If we remove the exaggerated value of the cost of construction and marriage expenses, the assets will work out to Rs.37,59,02,466. The total income of the accused, [their] firms and companies is Rs.34,76,65,654. Lack of proportion amount is Rs.2,82,36,812. The percentage of disproportionate assets is 8.12. It is relatively small. In the instant case, the disproportionate asset is less than 10 per cent and it is within permissible limit. Therefore, the accused are entitled for acquittal. When the principal accused [Jayalalithaa] has been acquitted, the other accused, who have played a lesser role, are also entitled for acquittal.”
In his 919-page order, the judge maintained that the accused borrowed Rs.24 crore from nationalised banks to buy immovable properties, firms and companies and that the amount should be considered their “lawful income”. “Borrowing loans from nationalised banks and acquiring properties is not an unlawful activity,” he opined. He harped on the Rs.24-crore bank loan on page after page, calling it “positive evidence”.
Justice Kumaraswamy thus overturned the verdict of the Special Judge of the trial court, Michael D’Cunha, who on September 27, 2014, found Jayalalithaa, who was then Tamil Nadu Chief Minister, guilty of possessing assets disproportionate to her known sources of income. The judge estimated her disproportionate assets at Rs.53.60 crore.
The check period for the case was from July 1, 1991, to April 30, 1996, when Jayalalithaa was Chief Minister during her first term. Jayalalithaa, on her own volition, had drawn a salary of Re.1 a month for the entire period. Jayalalithaa is the general secretary of the All India Anna Dravida Munnetra Kazhagam (AIADMK), and was voted to power for a third time in May 2011. Special Judge D’Cunha said that on July 1, 1991, Jayalalithaa had assets worth Rs.2.01 crore, including the assets of the partnership firms of Jaya Publications and Sasi Enterprises. But by April 30, 1996, her total wealth had shot up to Rs.53.60 crore against her legitimate income of Rs.9.91 crore. He held that the disproportionate wealth belonged to Jayalalithaa and nobody else. He asserted that “all the assets and pecuniary resources found in the possession of” Sasikala, Sudhakaran and Ilavarasi in the names of various firms and companies “actually belong to” Jayalalithaa.
The judge, therefore, convicted and sentenced all the four accused to four years’ simple imprisonment under the provisions of the Prevention of Corruption Act (PCA), 1988, and the Indian Penal Code (IPC). While he imposed a fine of Rs.100 crore on Jayalalithaa, he directed the other accused to pay a fine of Rs.10 crore each. Jayalalithaa was disqualified as a member of the Tamil Nadu Assembly as a corollary of her conviction and she ceased to be the Chief Minister.
Under Section 8 of the Representation of the People Act, 1951, anyone who is convicted and sentenced to imprisonment under the Act stands disqualified from the date of conviction for six years plus the period of sentence. So Jayalalithaa ceased to be the Chief Minister from September 27, 2014, and she was barred from contesting elections for the next 10 years ( Frontline , October 17, 2014 ,and October 31, 2014).
Justice Kumaraswamy’s judgment came under a cloud on May 12 after Acharya pointed out the mathematical error in it. The mood in the AIADMK camp, which was exuberant about Jayalalithaa’s imminent return to power, turned sombre, and the opposition parties in Tamil Nadu, which had criticised the verdict, made mincemeat of it. If the error was rectified, Acharya said, Jayalalithaa’s disproportionate assets would shoot up to 76 per cent above her known sources of income.
On page 852 of his order, Justice Kumaraswamy had wrongly totalled the 10 bank loans taken by the accused and their firms at Rs.24.17 crore. The correct total should have been Rs.10.67 crore. The difference was Rs.13.50 crore. The judge included the loans worth Rs.24 crore as lawful income of the accused while calculating their disproportionate assets. The total assets of the accused shown on page 913 of the judgment amounted to Rs.37,59,02,466 and the income at Rs.34,76,65.654. So the disproportionate assets stood at Rs.2.82 crore. These figures were used by the judge to conclude that the disproportionate assets of the accused were only 8.12 per cent above their known sources of income. Acharya said the disproportionate assets stood at around Rs.16.32 crore: Rs.13.50 crore plus Rs.2.82 crore, which worked out to 76.70 per cent above the known sources of income.
The 80-year-old five-time Advocate General of Karnataka said: “The fundamental mistake is in totalling 10 items of the loan. If a decision is made to appeal in the Supreme Court, this will be an excellent point to prove that the acquittal of Jayalalithaa is wrong.” If the error in calculation was corrected, the accused would face conviction even without other evidence, he said.
Subramanian Swamy, the original complainant in the case who is now with the Bharatiya Janata Party (BJP), said he would try to prove in his appeal in the Supreme Court that the High Court judgment was “a tragedy of arithmetic errors” and that Jayalalithaa “will have to resign again as Chief Minister” (if she assumed office again).
The prosecution in the case began when the Dravida Munnetra Kazhagam (DMK), headed by M. Karunanidhi, came to power in May 1996 defeating the AIADMK. The prosecuting agency was Tamil Nadu’s Directorate of Vigilance and Anti-Corruption (DVAC). It filed the charge sheet in the case on June 4, 1997. The prosecution case was that Jayalalithaa, during the check period from July 1, 1991, to April 30, 1996, amassed wealth worth around Rs.66 crore, which was disproportionate to her known sources of income. The wealth included tracts of land near Uthukottai in Thiruvallur district and in Tirunelveli district, buildings, palatial bungalows, the Kodanadu tea estate in Nilgiris district, cash in bank accounts, and gold and diamond jewellery. Jayalalithaa and Sasikala were partners in Jaya Publications, Sasi Enterprises and Namadhu MGR , the party newspaper. The prosecution charged that Jayalalithaa and Sasikala also set up 32 firms in the names of Sasikala, Sudhakaran and Ilavarasi. Most of them were not production-oriented. It was in the names of these shell companies that immovable properties such as agricultural lands, building sites and buildings were bought, the charge sheet said.
Never before has a corruption case against a politician seen such tumult and dramatic turns as this one. If the accused dragged the case for 19 years using every stratagem in the book, the DMK fought tenaciously to bring the accused to book. The hero of many of these battles is the 93-year-old, soft-spoken DMK general secretary K. Anbazhagan. On a writ petition from Anbazhagan, the Supreme Court transferred the trial from Chennai to Bangalore on November 18, 2003, when Jayalalithaa was the Chief Minister. Thus, the Karnataka government became the prosecuting agency.
Special Judge D’Cunha convicted and sentenced Jayalalithaa, Sasikala, Sudhakaran and Ilavarasi to imprisonment under different sections of the PCA and the IPC. The convicts were lodged in the Central Prison at Parappana Agrahara near Bangalore. After the Karnataka High Court declined to grant them bail, the four accused approached the Supreme Court, which suspended their sentences and granted them bail on October 17, 2014. They then appealed in the High Court against their conviction and sentencing.
On January 5 this year, a single-judge bench began the appeal proceedings. G. Bhavani Singh, appointed SSP by the Karnataka government in the trial court, continued to represent the prosecution in the appeals by Jayalalithaa and others in the High Court. But there was a crucial difference this time. It was the Tamil Nadu DVAC and not the Karnataka government which authorised Bhavani Singh on September 29, 2014, two days after Special Judge D’Cunha gave his verdict, to appear for the prosecution in the appeals in the High Court.
Soon after Justice Kumaraswamy began hearing the appeals, Anbazhagan mounted a fresh assault. As the DMK felt Bhavani Singh had colluded with the defence during the trial, Anbazhagan filed a writ petition in the Karnataka High Court challenging his appointment as the SPP. He also filed an application before the judge praying that he be allowed to assist the prosecution and be made an intervener in the appeals, just as he was allowed to do earlier by the trial court. On February 5, Justice Kumaraswamy rejected Anbazhagan’s plea, saying that he was “a political opponent” and had no statutory right to be heard.
Appointment of public prosecutor Senior Advocate R. Shunmugasundaram and the advocate A. Saravanan, who appeared for Anbazhagan, said the DMK leader challenged the appointment of Bhavani Singh to represent the prosecution on two grounds. The first was that the State government had no locus standi to appoint Bhavani Singh after the Supreme Court transferred the trial from Chennai to Bangalore in 2003. To back this argument, Shunmugasundaram and Saravanan quoted from the Supreme Court’s verdict in Jayendra Saraswathi Swamigal aliasSubramaniam vs the State of Tamil Nadu . In that order, the Supreme Court ruled: “Once a case is transferred as per Section 406 of the Code of Criminal Procedure [CrPC] to another State, the transferor State no longer has control over the prosecution to be conducted in a court” in the “State to which the case has been transferred.”
Besides, the CrPC provided for the appointment of a Public Prosecutor for each court at various levels—the magistrate’s court, the sessions court, the High Court and the Supreme Court, Shunmugasundaram and Saravanan said. So a Public Prosecutor appointed for a lower court could not claim that he would appear in the superior courts, too.
Finally, a Division Bench of the Karntaka High Court, comprising Justices N. Kumar and B. Veerappa, in its order on February 11, declared the authorisation given by the DVAC to Bhavani Singh to represent the prosecution non estfactum because Tamil Nadu had lost its territorial jurisdiction over the case. However, Justices Kumar and Veerappa declined to direct the Karnataka government to appoint another SPP when the former’s order appointing Bhavani Singh in the trial before Special Judge D’Cunha still existed. They said that once an SPP was appointed to a particular criminal case under Section 24(8) of the CrPC, he/she had a right to appear for the prosecution before the magistrate, sessions and higher courts at the stages of inquiry, trial or appeal without a separate permission from the State to which the case was transferred.
So Anbazhagan approached the Supreme Court seeking a stay on the February 11 order of the Division Bench and the February 5 order of Justice Kumaraswamy. In a split verdict, Justice Madan B. Lokur asserted that Tamil Nadu had no authority to appoint Bhavani Singh as the SPP in the appeals. Justice R. Banumathi ruled that Tamil Nadu’s hasty order of September 29, 2014, authorising the DVAC to “engage Mr Bhavani Singh in the appeals” was “without authority and non-est in the eyes of law”. However, she said the SPP could appear in the appeals because he was an SPP in the entire case and not just for the trial.
The matter went to a three-member bench of the Supreme Court, headed by Justice Dipak Misra and consisting of Justices R.K. Agrawal and Prafulla C. Pant. The bench ruled on April 27 that the Tamil Nadu government “had no authority” to appoint Bhavani Singh as the SPP. It asserted that only Karnataka, the sole prosecuting agency in the appeals, “was authorised to appoint the Public Prosecutor”. The judges struck down Bhavani Singh’s appointment and called it “bad in law”. Justices Misra, Agrawal and Pant asked Justice Kumaraswamy not to consider Bhavani Singh’s written arguments presented to him. Furthermore, they directed Anbazhagan and the Karnataka government to file their written arguments before Justice Kumaraswamy by April 28. They told the judge that he should consider these written arguments and that his “consideration should be manifest in the judgment”.
Those who argued for Anbazhagan in the Supreme Court and the Karnataka High Court included Senior Advocates T.R. Andhyarujina, Shunmugasundaram and C.V. Nagesh, apart from V.G. Pragasam and Saravanan. Saravanan said that when Anbazhagan decided to challenge the appointment of Bhavani Singh as the SPP in the appeals, the motive was not to delay the appeals or get Jayalalithaa convicted again. “We intervened only to ensure that proper procedures are adopted in deciding these cases. We intervened whenever there was a subversion of procedure.”
To the AIADMK’s consternation, the Karnataka government brought back the veteran advocate Acharya as the SPP in the appeals. As the SPP during the trial, he was a thorn in the flesh of counsel for the accused. He resigned in August 2012 complaining of pressure from the BJP and “untold hardship” at the instance of interested parties.
The Supreme Court’s April 27 order set the stage for the judgment to be delivered by Justice Kumaraswamy, who completed the hearings in March.
On May 11, just before the clock struck 11, Justice Kumaraswamy walked into Court Hall No.14, which was teeming with AIADMK leaders, advocates and media personnel, and read out the order, which said the four criminal appeals by Jayalalithaa, Sasikala, Sudhakaran and Ilavarasi “are allowed”. He set aside Special Judge D’Cunha’s order, convicting and sentencing them to imprisonment.
“Taking into consideration the overall circumstances and the material placed on record, in my view, the judgment and finding recorded by the trial court suffers from infirmity and it is not sustainable in law,” the judge said.
Within moments, celebrations broke out in Bangalore and across Tamil Nadu. AIADMK cadres in Chennai made a beeline to the residence of Jayalalithaa. They broke coconuts in front of wayside Ganesha shrines as a votive offering. Jayalalithaa said the verdict erased the blot on her reputation.
Judge Disagrees with trial court’s findings In his order, Justice Kumaraswamy disagreed with the trial judge’s findings, be it with regard to the value of the immovable properties bought by the accused, the money spent on the mega wedding of Sudhakaran, the cost of construction of additional and new buildings by the accused, or the subscription scheme offered by Namadhu MGR , owned by Jaya Publications.
With regard to the marriage expenses of Sudhakaran, Justice Kumaraswamy said Jayalalithaa’s “liability” was only Rs.28.60 lakh. (The trial judge estimated it at Rs.3 crore and the prosecution at Rs.6.45 crore.) The judge belaboured the point that it was “a customary practice” among Hindus for the bride’s family to meet the expenses of a marriage and that the bride’s family, in this instance, was “financially sound”. He dwelt on the testimony of Ramkumar, the bride’s maternal uncle, that he had spent Rs.92 lakh on the wedding. (Sudhakaran’s wife Sathyalakshmi is the daughter of the late film actor “Sivaji” Ganesan’s daughter Shanthi.) Although Narayanaswamy, the bride’s father, a lecturer at Indian Institute of Technology Madras, was the proper person to speak about the expenses of his daughter’s wedding, he was not examined, the judge said.
He did not see eye to eye with the trial judge’s findings on the subscription deposit scheme floated by Namadhu MGR . It was a scheme to canvas subscribers for the party’s daily newspaper. The prosecution and Anbazhagan called it a fictitious scheme and “an afterthought”. The scheme attracted thousands of applications and fetched Rs.14 crore as revenue. This amount should be taken into account as lawful income, counsel for Jayalalithaa and Sasikala said.
Special Judge D’Cunha, however, said in his verdict that what emerged from the evidence of the defence witnesses, who gave “stereotyped evidence”, was that “the story of the deposit scheme canvassed by the accused has taken birth only after the filing of the charge sheet” against Jayalalithaa and the others on June 4, 1997. He noted that “there is nothing in the entire evidence indicating that the accused had declared the said deposit before the Income Tax authorities any time during the check period.” The scheme’s existence became known only in 1998 in the returns filed on behalf of the said firms, he added.
In contrast, Justice Kumaraswamy said the scheme “was introduced in the year 1990” and that the “total amount received by Jaya Publications under the above deposit scheme from its subscribers was Rs.14,23,89,000” (about Rs.14.23 crore). If the evidence of the defence witnesses was taken into consideration, even if there was a delay in the filing of the tax returns, this could not be a factor to reject the whole claim of the assessee, he said. “For the evidence adduced by the defence will have some force.” This should be considered while assessing the income mentioned by the defence. Justice Kumaraswamy concluded: “Jaya Publications’ activities are printing textbooks, publishing, real estate and Namadhu MGR newspaper. In my view, a sum of Rs.4,00,00,000 has to be taken as an income earned by Jaya Publications.”
With regard to the purchase of immovable properties such as agricultural land and building sites in different parts of Tamil Nadu, Justice Kumaraswamy estimated that the accused paid Rs.6.24 crore to buy the assets. The Special Judge did not give a separate estimation for the immovable properties bought by the accused.
There was no unanimity between the DVAC and Justice Kumaraswamy on the cost of construction of new and additional buildings on properties acquired by the accused. The constructed area was 1,66,839 square feet. While the DVAC estimated the cost of construction at Rs.27.79 crore, Special Judge D’Cunha put it at Rs.21 crore and Justice Kumaraswamy “gave a finding” that it was Rs.5.10 crore. “The learned sessions judge has simply on guesswork reduced the cost of construction to the extent of 20 per cent, without verifying the evidence and material placed on record,” Justice Kumaraswamy said.
Special Judge D’Cunha estimated Jayalalithaa’s “legitimate income” at Rs.9.91 crore by the end of the check period, that is, April 30, 1996. But her assets shot up from Rs.2.01 crore on July 1, 1991 (the beginning of the check period), to Rs.53.60 crore. In Justice Kumaraswamy’s calculation, while the income of the four accused, their firms and companies was Rs.34.76 crore, the assets were worth Rs.37.59 crore. So the disproportionate assets amounted to 8.12 per cent of the income and was “within the permissible limit” of 10 per cent, he said, and acquitted all the accused.
Special Judge D’Cunha said that the flow of money from one bank account to other accounts held by them proved beyond doubt that “all the accused had actively participated in the conspiracy to launder the ill-gotten wealth”. It was established in evidence that Sasikala, Sudhakaran and Ilavarasi had actively abetted the commission of the crime by holding substantial portions of the assets in their names and the partnership firms set up by them, he said. “…The only activity carried on by the firms is to open accounts and get transfer of money from the bank accounts of [accused No. 1] A-1 and invest them for the purchase of huge properties for and on behalf of A-1,” he added.
Justice Kumaraswamy rejected the trial judge’s finding on the allegations of criminal conspiracy and abetment against the accused. The former said, “Since the conspiracy is often hatched up in utmost secrecy, it is impossible to prove the same by direct evidence.” The accused No.2-4 had borrowed huge amounts of money and acquired immovable properties such as agricultural lands. “The source of income is lawful. Object is also lawful. Just because accused numbers two to four stayed along with the accused number one itself is not a component with which the court can come to a conclusion that the accused numbers one to four abetted and conspired and acquired the property in an improper way,” he said.
He criticised the Karnataka government for not showing diligence in appointing an SPP to represent the prosecution in the appeals heard by him. It did not appoint an SPP even four months after the hearing began.
Justice Kumaraswamy had a word of advice for political parties: litigation by persons to advance their political gains and settle scores under the guise of fighting a legal battle “should not be entertained”.