With the Karnataka High Court setting aside the conviction of J Jayalalithaa in the disproportionate assets case, she is all set to become CM again. Here’s a graphic account of why the high court decided to give her a clean chit
By V Seshadri
Justice CR Kumaraswamy of the Karnataka High Court surprised both legal observers and civil society when, on May 11, he set aside the conviction and sentencing of former Tamil Nadu chief minister J Jayalalithaa and three other accused in a disproportionate assets (DA) case. While Jayalalithaa was Accused No 1 (A1), the others were her friend Sasikala (A2); VN Sudhakaran (A3), Jayalalithaa’s foster son and biological son of Vanithamani, Sasikala’s sister; and J Elavarasi (A4), widow of Sasikala’s brother, Jayaraman.
The trial judge, Michael D’ Cunha, had, on September 9, 2014, found the four accu-sed guilty and sentenced them to four years imprisonment, besides imposing a `100-crore fine on Jayalalithaa. This resulted in her disqualification from holding an elected office for 10 years, and she ceased to be the chief minister of Tamil Nadu.
O Paneerselvam had replaced her as CM after her sentencing
O Paneerselvam, one of her loyalists, replaced her as CM and she became the first CM in office to be directly sent to jail. Jayalalithaa and her co-accused appealed against their conviction and sentences in the Karnataka High Court, after obtaining bail from the Supreme Court.
The prosecution alleged that Jayalalithaa was a public servant and had abused her position as CM of Tamil Nadu to amass wealth disproportionate to her known sources of income. It also alleged that Accused Nos 2, 3 and 4 actively assisted her in achieving this objective. It was further alleged that all the assets were acquired by Jayalalithaa in her name or in the name of the other accused or in the name of as many as 32 business enterprises.
Jayalalithaa contended that the prosecution failed to prove that all these assets were acquired out of her funds. Prosecution had to establish that the properties were acquired from the ill-gotten wealth of Jayalalithaa. It claimed it had clinching circumstantial evidence to show this, as it is not prudent to expect direct evidence on this subject.
A case of conspiracy is generally proved only by leading circumstantial evidence and the court will have to draw proper inferences from the circumstances which are established in the case. In this case, the prosecution claimed that such evidence has been presented. It is settled law that the court has to consider the cumulative effect of all the circumstances so proved.
“Litigation made by persons who advance the political gain and to settle the scores under the guise to fight a legal battle should not be entertained,” the high court observed.
The trial judge had concluded that none of these accused had any independent sources of income to purchase the valuable assets, which admittedly have been purchased in the names of various companies of which, either A2 or A3 or A4 were partners or directors. Some of the companies which were not doing any business or profit have been acquired by A2, A3 and A4 only for the purpose of acquiring properties, the source of which is from A1.
The trial court, in its judgment in para-97 has pointed out how huge, unexplained cash amounts were credited into the various accounts standing in the name of accused or the companies owned by them. The trial judge also pointed out how the accused failed to explain these credits. Thus, he found that Jayalalithaa was in possession of assets and pecuniary resource of not less than `55 crore, though the assets were standing in the names of A1 to A4 or the various companies owned by them.
Both Jayalalithaa and Sasikala tried to establish that Jaya Publications of which they were the partners, received interest-free deposits to the extent of `13 crore or so from thousands of subscribers on the promise of free supply of copies of the magazine published by it. The trial court concluded that this theory was only an after-thought invented for the purpose of this case. The trial court concluded that the prosecution had proved beyond doubt the acquisition of disproportionate assets to the extent of`55 crore.
Sasikala, Jayalalithaa’s friend and a
co-accused in the case, was also exonerated of
Jayalalithaa’s friend-turned-foe Subra-manian Swamy was the original complainant in the case.
RISE TO POWER
Jayalalithaa is the daughter of NR Sandhya, who acted in films during the 1960s. Jayalalithaa acted in films from 1964-1972. Sandhya died in 1971. As per her will, she bequeathed her shares in the properties belonging to Natyakala Nikethan to Jaya-lalithaa. Up to 1987, Jayalalithaa was in possession of properties worth about `7.5 lakh, agricultural lands measuring 3.43 acres, an old Ambassador and an old Contessa Car, a new Maruti car, company shares, bank balance to the extent of `1 lakh and jewels. She floated business firms, Jaya Publications, Namadhu MGR and Sasi Enterprises between 1988 and 1990, with the other accused as partners. These firms did not generate any income.
The check period for the probe against the accused is from July 1, 1991 to April 30, 1996. As on July 1, 1991, Jayalalithaa was found to be in possession of properties and pecuniary resources in her name and Sasikala, who was living with her, to the extent of `2,01,83,957. These included the properties acquired in the name of Jaya Publications, Sasi Enterprises and Namadhu MGR.
After July 1, 1991, the acquired assets by her gathered momentum and A3 and A4 came to live with her and Sasikala at 36, Poes Garden, Chennai. During this period, Jaya-lalithaa and Sasikala, along with A3 and A4, floated 32 partnership firms and companies. There was no business activity in these companies. The activities were more in the nature of acquiring lands, machinery, buildings and vehicles which were not production-oriented. No income tax returns were filed by these firms. No assessment for commercial tax was done with respect to the businesses of these firms.
The trial judge was thus convinced that prosecution clearly proved beyond reasonable doubt that she and the three other accused possessed properties disproportionate to their known sources of income. The burden was shifted to the accused to satisfactorily account for the properties acquired. They, according to the trial judge, were unable to do so.
Jayalalithaa showed NIL income and wealth from 1985-86 and ceased to be an actress since 1979. After becoming chief minister, she doubled her income, tripled her wealth despite drawing only `1 per month as salary of CM. It is obvious she is some kind of financial wizard, said the trial judge.
These findings of the trial judge, however, failed to convince the Karnataka High Court. “Litigation made by persons who advance the political gain and to settle the scores under the guise to fight a legal battle should not be entertained,” the high court observed.
“The government servant is to satisfactorily account for the disproportionate assets and not to prove his claim with mathematical exactitude (accuracy) beyond all possibility of doubt,” the high court reasoned citing previous judgments.
The essence of benami is the intention of the parties and often, such intention is shro-uded in a thick veil, which cannot be easily pierced through. But such difficulties do not relieve the prosecution of the serious onus on it to submit proof, in place of conjectures or surmises.
The trial judge rejected this evidence on imaginary and flimsy ground. It was for the prosecution to prove beyond reasonable doubt and by means of legal evidence that these were benami properties of accused No 1, the high court held.
On the foster son’s wedding expenses incur-red by Jayalalithaa, the high court concluded that Jayalalithaa spent only `28,68,000, and the other expenses were borne by the girl’s family and partymen.
The prosecution alleged that the accused acquired about 306 properties. But the high court found that the accused had borrowed loan for more than `24 crore. This loan was utilized for acquiring immovable properties, namely, agricultural lands, sites etc.
Borrowing loans from nationalized banks and acquiring the properties is not an unlawful activity, the high court held. The Director of Vigilance and Anti-Corruption has inflated the value of assets of the accused to the extent of `91,34,568, the high court found.
Merely because A2 to A4 were living with A1 does not itself contemplate the offence of conspiracy; conspiracy construes any combination or agreement between two or more persons to do an unlawful act and there must be reason to believe that there was conspiracy and the accused persons were members of that conspiracy, the high court reasoned.
Where evidence is only circumstantial, the circumstance in their totality must be such as would not only be consistent with the guilt of the accused, but also inconsistent with any reasonable hypothesis of his innocence, the high court observed.
“If we remove the exaggerated value of cost of construction and marriage expenses, the assets will work out at `37,59,02,466.
“The total income of the accused, firms and companies is `34,76,65,654. The percentage of disproportionate assets is 8.12 per cent. It is relatively small and it is within permissible limit (10 per cent). Therefore, the accused are entitled for acquittal,” the high court concluded.
TAKEN OFF GUARD
The high court’s verdict has surprised the Special Public Prosecutor (SPP) in the case, BV Acharya. He replaced G Bhavani Singh, whose appointment as SPP by Tamil Nadu was declared as illegal by the Supreme Court.
]The high court’s verdict has surprised SPP BV Acharya who had replaced G Bhavani Singh. His appointment as SPP by Tamil Nadu was declared illegal by the Supreme Court.
While the Supreme Court, on April 27, 2015, declared that Karnataka, not Tamil Nadu, was the sole prosecuting agency, it ironically gave Karnataka government just a day’s time to file a written statement, thus raising concerns that principles of natural justice might have been violated by the denial of permission to make oral arguments by Karnataka. But the Karnataka high court has blamed the government of Karnataka for lack of diligence in appointing the SPP during the hearing of the appeal.
The case is sure to be heard finally by the Supreme Court, with either the State of Karnataka or the complainants appealing against the verdict.
Meanwhile, Jayalalithaa is set to return as CM of Tamil Nadu.