BackJayalalithaa’s second Pongal explained: Why HC said her riches weren’t illegal
The court said that the sum of assets and expenditure outstrips her total income by just `2.82 crore and was withing permissible levels
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What’s the difference between 27 September, 2014 and yesterday in Tamil Nadu? The first was a day of penance for many as they wondered how a mere mortal could sentence a goddess.
On Monday, the day after mother’s day, it was Amma’s day again. J. Jayalalithaa has established herself as a colossus in Tamil Nadu where she has been chief minister four times in the past, and the supremo of the AIADMK which is currently in power there.
She was convicted by a trial court in Bangalore in September 2014 for an offence under the Prevention of Corruption Act.
What corruption?
This was not regarding any particular corrupt act or scam. Under the Prevention of Corruption Act, public servants, including chief ministers, who possess more property than their income from known legal sources can account for, is guilty of criminal misconduct. Expenditure by the public servant is also accounted for while tallying the property.
Having and spending more money and property than a public servant can account for carries a jail term of one to seven years for the public servant and for anyone who helps them accumulate such gains.
Jayalalithaa was accused of having accumulated assets disproportionate to her known sources of income, with the help of three associates, during her first term as chief minister between 1991 and 1996.
That’s a long time ago. Why did it take so long and why is all this happening in Karnataka rather than Tamil Nadu?
The initial complaint was filed by Subramanian Swamy, now a BJP leader, in 1996. After investigation, a trial commenced in a court in Chennai and several witnesses were examined. AIADMK came back to power in 2001 and some witnesses recanted their statements against Jayalalithaa and the others.
K. Anbazhagan, general secretary of rival party DMK, filed a petition in the Supreme Court seeking to transfer the case out of Tamil Nadu as he claimed that a fair trial could not take place in the state while Jayalalithaa was chief minister.
The case was transferred to Karnataka and the prosecution was handed over to Karnataka in 2003. The Supreme Court stayed proceedings in the case between 2005 and 2010 while hearing an appeal on clubbing various similar cases together.
A special court was constituted in Karnataka just for this case and it finally gave its decision in September 2014 that Jayalalithaa had accumulated a sum of ₹ 55 crore and spent ₹ 8.5 crore during her term as chief minister between 1991 and 1996 when her income from known legal sources was only ₹ 9.91 crore.
The court held her guilty of criminal misconduct for having assets disproportionate to her known sources of income and sentenced her to five years of jail and fined her a sum of ₹ 100 crore. This not only meant she had to step down from post of CM and go to jail but also that she would be disqualified for a period of six years from contesting elections.
So, has she been in jail since then?
Immediately after the judgment by the trial court, she was jailed in Bangalore but an appeal was immediately filed in the Karnataka high court. However, the high court refused to grant bail pending hearing of the appeal.
Jayalalithaa’s lawyers petitioned the Supreme Court where her sentence was suspended and she was released after she spent 21 days in jail. The Supreme Court, noting that 18 years had already passed in the case, directed the Karnataka high court to set up a special bench to hear this case and give a verdict in three months.
The matter in the high court progressed at a fast and smooth pace, barring one dispute about which state government should appoint the prosecutor (this was finally determined to be Karnataka government rather than Tamil Nadu government).
The judgment was delivered yesterday, on 11 May, acquitting Jayalalithaa and her associates of all charges and setting aside the judgment of the lower court.
Why did the Karnataka high court reverse the decision of the lower court? Surely the question of how many undeclared assets one has can’t be that complicated?
The Karnataka high court heard arguments on behalf of Jayalalithaa and her associates and also read written arguments filed by the prosecution, the informant Subramanian Swamy and by the intervenor, K. Anbazhagan, and disagreed with the lower court on several points.
According to the Karnataka high court, several assets were wrongly included when counting Jayalalithaa’s assets. Some expenditure relating to the wedding of a co-accused, Sudhakaran, who is said to be her foster son, was also wrongly attributed to her. The high court took note of the fact that the bride was the granddaughter of the great moviestar of yesteryears Sivaji Ganesan.
Not only did this mean that the bride’s family would be more than capable of footing the bill of most of the wedding expenses as is customary but also that it is likely that no remuneration was sought or paid for the performances of A.R. Rahman and Mandolin Srinivas at the wedding.
The high court relied upon the precedent of State of Maharashtra versus Wasudeo Ramachandra Kaidalwar where in a similar case of disproportionate assets of a public servant, the court held that the prosecution needed to prove the origin of the assets. Therefore, if the accused succeeds in proving it is more than 50% likely that the assets could have come from his father-in-law, then the accused would be acquitted.
Applying the same principle here, the high court held that apart from a small amount of expenses by the groom Sudhakaran, all expenses were taken care of by the bride’s family.
Didn’t she have a newspaper or something too?
Yes, one of the other substantial points raised by Jayalalithaa was that her income from a deposit subscription scheme operated by her company Jaya Publications were not considered. The scheme essentially boiled down to Jaya Publications sending copies of a magazine/newspaper named Namadhu MGR, published by it, to subscribers who had a deposit with it.
The trial court found several things amiss here, including the fact that the newspaper, which runs such a scheme, did not seem to have a list of subscribers. The trial court further found that income tax returns had not been filed in respect of the income from the deposit scheme and also termed it strange that one person would claim to have subscribed to a large number of copies of the same newspaper.
The trial judge also made some observations that the receipts produced with respect to this scheme seemed artificially aged. This time the high court, however, permitted the accused to account for ₹ 4 crore under the head of the Namadhu MGR deposit scheme though the accused had sought that ₹ 14 crore be considered as income from that scheme.
It is possible to criticise the high court here: it should have either allowed the full ₹ 14 crores or not at all. Now it appears some middle figure has been picked without giving proper reasons for it. The high court also permitted her to account for a larger sum for her agricultural income.
Surely this is hardly new. Why did it not come up earlier at trial?
It is obvious from the trial court order that the lower court judge was applying a high standard of proof for the accused’s case.
The high court was able to consider several other sources for information and proof, like that of the income tax authorities and other bodies, which were not accepted by the lower court.
This necessarily resulted in recognising more sources of income and therefore arriving at a higher overall legitimate income. The high court finally held that the total of Jayalalithaa’s assets and expenditures during her first term as chief minister amounted to ₹ 37.59 crore whereas her income for that period was ₹ 34.76 crores.
Hold on, that’s still a lot of illegal money!
Not enough. The high court said that though the sum of assets and expenditure outstrips the total income of Jayalalithaa in the period by ₹ 2.82 crore, this difference was less than 10% of the total. Jayalalithaa could therefore not be held guilty of criminal misconduct for possessing assets disproportionate to known sources of income.
The high court relied on the 1976 case of Krishnanand Agnihotri vs State of Madhya Pradesh where a three-judge Supreme Court bench held that where the excess of assets over income is relatively small (i.e. 10% or less), the offence of disproportionate assets could not be made out.
In the trial court’s calculation, that chasm between assets and income was much wider and therefore the question of applying this 10% rule didn’t arise.
Lucky break for Jaya then?
Section 13(1)(e), which criminalises possession of disproportionate assets, also imposes an onerous burden on the public servant, in that you don’t need to prove overtly corrupt acts to hold the public servant guilty.
Even so, it does not seek to penalise every penny of assets in excess of the known sources of income but only seeks to penalize possession of assets which are “disproportionate" to known sources of income.
Perhaps it is in this light the Supreme Court in 1976 rightly held that only a discrepancy of more than 10% of assets should qualify as being criminal for being out of proportion with known sources of income.
The high court thus acquitted Jayalalithaa and said that when the person playing the main role is acquitted, the others who played a minor role should also be acquitted.
What happens now? She gets to reign happily ever after?
She is now eligible to be sworn back in as chief minister of Tamil Nadu.
She will then have to get elected from some constituency to the Tamil Nadu Legislative Assembly within a period of six months. However, it is possible that the prosecution or the informant may challenge the order of the high court in appeal before the Supreme Court.
While Jayalalithaa can continue to hold office while such an appeal is pending before the Supreme Court, the final judgment in such an appeal would determine whether she gets to hold on to her seat. But for now, it’s second Pongal for her and her supporters.
Vikram Hegde is a lawyer who takes interest in political and governance issues.
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