Case: R. Sai Bharathi Vs. J. Jayalalitha &amp; Others

The Government of Tamil Nadu formed a Tamil Nadu Small Industries Corporation Limited (for short ˜TANSI. It was registered under the Companies Act, 1956 as a Government Company. The entire shares, namely, 100% of the shares of the said Corporation, were held by the government In the Memorandum of Association it is stated that the said company is formed ˜to take over from the Government of Tamil Nadu any of their production and/or servicing units with rights and liabilities of the Government of Tamil Nadu so far as they relate to such units. Article 72 of Articles of Association empowers the Government to appoint all the Directors with the power to remove any Director from time to time. Article 79 empowers the Government to appoint and remove the Managing Director. Similarly Government can also appoint a Chairman and Vice-Chairman of the Board. The Chairman can reserve for the approval of the Government any proposals or decisions of the Board in respect of any of the matters regarding (a) increase or reduction of the capital of the Company; (b) loan granted by the Company or giving of a guarantee or any other financial assistance to any person or concern; (c) winding up of the Company; and (d) any other matter which in the opinion of the Chairman be of such importance as to be reserved for the approval of the Government. In respect of any proposal or decision of the Board reserved for the approval of the Government no action shall be taken by the Company until approval of the same has been obtained. The Government also exercises the power to issue directives or instructions as it may deem fit in regard to finances and the conduct of the business and affairs of the Company any the Directors shall duty comply with and give effect to such directives or instructions. TANSI has 10 Directors and all of them were the nominees of the Government of Tamil Nadu, including the Chairman-cum-Managing Director who was an IAS officer2. Article 77-a(4) provides that the Board shall not dispose of the land transferred to the Company by the Government other than to Tamil Nadu Governments/Undertakings/Boards or Government of India Departments/Undertakings/Board without the previous written approval of the Government. A Code of Conduct for Ministers was brought into force by the G.O.Ms. Nos. 1350 on June 16, 1968 which was revised from time to time and clause 2(b) thereto provides that a Minister shall refrain from buying from, or selling to, the Government any immovable property except where such property is compulsorily acquitted by the Government in the usual course and refrain from starting or joining any business. After the formation of TANSI Corporation and transfer of Government Industrial Units to it, some of the units started incurring losses. Therefore a report was sent by TANSI to the Government to the effect that some of the industrial units are consistently incurring losses. On 30th September, 832 can never be made viable whatever measures to be adopted to achieve the objects for which they were set up in the public sector and therefore their continuance will cause a drain on the finance of TANSI. TANSI Enamelled Wires, Guindy and TANSI Foundry, Gindy, situate in Thiru.vi.ka. Industrial Estate were two of the units among the eight identified as the units incurring losses mentioned in the said G.O. Therefore, the Government decided that TANSI should close down the 8 units and explore the possibility of disposing the properties by inviting offers through advertisement in newspapers3. In pursuance of the G.O. Ex. F-21, TANSI Foundry units was officially close as per Ex.P.-33. Out of the total extent of 5.535 acres of land and 3267 sq.mts. of buildings in TANSI Foundry, an extent of 0.545 acres of land and 569 sq.mts. of building were transferred to Tamil Nadu Corporation for Development of Women on 15.5.1987 by TANSI after collecting Rs. 12.21 lakhs, Advertisements were issued on 31.8.1988 for disposal of the remaining extent of land and building and four offers were received. The offers of Ashwini Plastic and ENCOFED were recommended to the Government after the approval of the Board, but the Government did not give approval on the ground that it will be more advantageous to TANSI to call for fresh tenders after parcelling out the land into industrial plots in accordance with the Madras Metropolitan Development Authority rules and regulations. On 30.4.1990 Jaya Publications, an unregistered partnership firm in which J. Jayalalitha, Accused No.1, and Sasikala, Accused No.2, were partners, purchased land adjacent to the TANSI property in dispute from Hitex Equipment company vide sale deed, Ex. P-57, at the assessed market value of Rs. 6 lakh per ground which is at par with the guideline value of Registration Department. In the general elections held on 13.5.1991 for the Tamil Nadu Legislative Assembly AIADMK party came to power and J. Jayalalitha, accused No.1, became the Chief Minister. On 29.9.1991 Jaya Publications again purchased another adjacent land from Idhayam Publications vide sale deed (Ex. P-8) at the assessed market value of Rs. 7.32 lakhs per ground (270 sq. yard). On 10.10.1991 an advertisement was published for disposal of TANSI Enamelled Wires Units adjacent to the TANSI Foundry in the Thiru.vi.ka. Industrial Estate. Pursuant to this advertisement R.R. Industries and two other companies submitted tenders for purchase. Ex. P-22 is the quotation given by R.R. Industries. The price of one square meter of land had been mentioned in that quotation as Rs. 1850, which works out to Rs. 4.12 lakh per ground4. On 14.10.1991 a meeting was held under the chairmanship of the Chief Minister J. Jayalalitha for the review of the performance of the TANSI AND A-4 Minister for Rural Industries, A-3 Chairman-cum-Managing Director of TANSI, P.W.11 Chief Secretary , PW.14 Secretary Industries Department and P.W. 16 Secretary, Finance Department attended the said meeting and several decisions were taken for the revival of TANSI. One of the decisions taken at the meeting is that TANSI may sell the properties of its unit which are defunct and TANSI Foundry unit was identified as a defunct unit and the estimated sale price was fixed at Rs. 1.5 crore, but without any land valuation report on record. It was also decided that TANSI must identify more such properties for sale and can send a proposal to the Government along with all details and togography sketches recommending the sale and that the vacant sites available for the running units can be plotted out into industrial lots for selling them at market value with a view to raise some resources. On 6.11.1991 Government directed all public sector undertakings to obtain prior approval of the Government in respect of all tenders for works, equipment etc and all purchases whether by open tender or by limited tender enquiries etc. where the value of the contract exceeds Rs. 1 crore. It also directed that the proposals should be sent with the recommendation of the Board to the Administrative Department concerned and that Administrative Department may follow circuit procedures to circulate the file to concerned Minister, Minister for Finance and Chief Minister5. The Board of Directors of TANSI resolved to constitute a Sub-Committee consisting of the Directors for evaluating the offers received in respect of TANSI Enamelled Wires pursuant to the advertisement issued on 10.10.1991 and to make recommendations for the disposal of the assets of the closed units of TANSI. The members of the Sub-Committee appointed by the Board were Chairman-cum-Managing Director of TANSI, who is the Director of TANSI, Abdul Hasan, the Director of TANSI and Joint Secretary, Industries Department, and C. Madakkannu. Chief Engineer (Buildings), PWD, who is also the Director of TANSI. Advertisements were caused to be published in leading newspapers on 21.11.1991 calling for offers through tenders for the purchase of the property of TANSI Foundry. A letter was addressed by the Managing Director (A-3) to the Sub-Registrar, Adayar (PW-1) intimating that they want to dispose of land in Thiru.Vi.Ka. Industrial Estate and requesting to furnish the guidelines price of the lands situate in Block No.5 at Alandur. Sub-Registrar, Adayar replied (Ex. D-39) that there was no guideline value for survey numbers 86, 87, 88, 90, 91 Part, 92 Part and 93 Part, in Block No. 5 of Adayar Village which are the properties in dispute. He further stated that in the adjoining property in Block No. 6 of Thiru.Vi.Ka. Industrial, Estate, the value of one sq.feet was Rs. 305/-, which worked out to Rs. 7.32 lakhs per ground. It is important to note that Block Nos. 1 to 6 Adayar Village are situated in Thiru.vi.ka Industrial Estate. The Sub- Committee of TANSI met on 25.11.1991 to consider the offers for the disposal of TANSI Enamelled Wires Unit for which an advertisement was published on 10.10.1991. The tender given by R.R. Industries and other two tenders given by other companies were placed before the Sub-Committee and it passed a resolution calling for a report regarding the guideline price of the land and a report from the Public Works Department regarding the value of the buildings. After consideration of all the offers of the Sub-Committee decided that TANSI may try again for better offer by giving advertisements. Again advertisements were published on 21.11.1991 and 22.11.1991 calling for tenders for purchase of the property of TANSI Foundry, four tenders were received at the TANSI office and they were opened in the presence of all the tenders on the same day. Ex. P-29 is the offer of Jaya Publications in which J. Jayalalitha, A-1 and Sasikala, A-2 are partners. Ex. P-13 is the offer of Aban Constructions and Ex. D-15 is the offer of ENCOFED. Tamil Nadu Small Industries Development Corporation (SIDCO) also submitted a tender. Jaya Publications offered to purchase the entire land at the rate of Rs. 3.01 lakhs per ground. Aban Constructions offered to purchase the landed property at the rate of Rs. 1,77,325/- per ground, but it offered to purchase only 1.72 acres and not the entire property. ENCOFED offered to purchase 2000 sq.mts of land at rate of Rs. 1,33,333 per ground while SIDCO offered to purchase the land at Rs. 502/- per sq.mt6. All the offers were placed before the Sub-Committee for consideration and it decided that A-3 who is the Chairman-cum-Managing Director, TANSI, should negotiate with Jaya Publications since the offer of Jaya Publications was Rs. 1,82,13,150/- which is the highest of all the four bids and they should take up the matter with the Board by a note in circulation for a decision regarding the disposal of the property. Ex.P-30 are the Minutes of the meeting of the Sub-Committee and the same were initiated by P.W. 8 and A-3. The Board considered the matter and it was noticed that the value offered for the land by the highest bidder was Rs. 1,62,93,150 which worked out to Rs. 3.01 lakhs and that though it was much lower than Rs. 7.30 lakhs which was the guideline value for Block No. 6 of Thiru.vi.ka. Industrial Estate, it was marginally higher than the value fixed by the Collector under Ex. D-20 as the Collector had fixed the price per ground for the property at Rs. 3 lakhs. The note further indicated that TANSI had already decided to sell 2.52 acres of land of the same unit to Tamil Nadu Sugar Federation at Rs. 3 lakhs per ground and, therefore, the price of Rs. 3.01 lakhs offered by Jaya Publications could be considered reasonable. It was also taken into consideration that Rs. 19.20 lakhs was offered by the highest bidder for the building and that heavy structures available at TANSI Foundry may be useful for a heavy engineering workshop and for a buyer who does not intend to put up a heavy engineering workshop, the value is only notional and at best is only a scrap value. Therefore, members of the Board recommended to the Government selling a portion of the land of about 2.98 acres at the rate of Rs. 1,350/- per sq.mt., that is, Rs. 3.01 lakhs per ground, and that the exact extent of the land to be sold could be measured at the time of handing over and the exact amount could be collected and the building measuring 2698 sq. mts. could be sold at a cost of Rs. 19,20,200/-. The resolution was unanimously adopted and signed by the Managing Director and other seven Directors. A proposal was sent to the Government on 30.12.1991 and the proposal of TANSI was examined by the Government. There were certain notings made therein that the rate of 3 lakhs per ground was much lower than the guideline value of Rs. 7.30 lakhs per ground as mentioned by Registration Department. Further, the file was marked to ˜Minister (Rural Industries), Minister for Finance and Chief Minister. It is stated that the markings to other Ministers were cancelled by the Minister (Rural Industries). The Minister for Finance approved the proposal on 14.1.1992. By G.O.Ms. No. 18 issued on 20.1.1992 the Government approved the sale of TANSI Foundry property to Jaya Publications. Jaya Publications, in turn, was informed of the decision of the Government by Ex. P-36 with which a draft sale agreement for getting N.O.C. from the Income Tax Department, was enclosed. An agreement for sale was entered into between TANSI and Jaya Publications on 4.3.1992 and the said document was registered conditionally because the value of the land and building was less the market value and guideline value. Board of Directors of TANSI took note of the fact that the actual extent of land sold was 3,0786 acres when it was measured7. Under Section 47-A of the Indian Stamp Act (as in force in Tamil Nadu), Sub-Registrar, Adayar, P.W.1, referred to the Special Deputy Collector (Stamps) A-5 for fixing the market value of the TANSI Foundry land by his proceedings Ex. P-3 as the value was less. By proceedings dated 7.12.1992, Ex. P-6, he fixed Rs. 3.00 lakhs per ground as the market value of the TANSI Foundry land. In Writ Petition No. 472 of 1993 in the High Court of Madras relief is sought for setting aside the sale deeds executed in favour of Jaya Publications and Sasi Enterprises on the ground that the sale deeds are invalid documents and for resumption of land by the Government. We are not concerned with this writ petition in these proceedings8. A private complaint was lodged before the IX Metropolitan Magistrate Court, Saidapet, seeking to punish J. Jayalitha, respondent No.1 herein, for offence under Section 169 IPC for having purchased Government land in violation of Code of Conduct for Ministers. In view of several complaints and on the basis of media reports, the Government referred the matter to C.B.C.I.D. on which a crime came to be registered in crime no. 17 of 1996 Ex. P-75 is the First Information Report in the said crime. Investigation was taken up by P.W. 27 and two cases were registered as Special C.C. No. 4 of 1997 and Special C.C. No. 13 of 1997 against the respondents9. A-1 was charged under Section 120-B IPC, Section 13(2) read with Section 13(1)(c) & 13(1)(d) of the Prevention of Corruption Act, and Sections 409, 169 and 420 read with Section 34 IPC. A-2 was charged under Section 120-B IPC, Sections 13(2) read with Section 13(1)(c) and (d) of the Prevention of Corruption Act read with Section 109 IPC, under Section 409 read with 109 IPC, 169 read with 109 IPC and 420 read with 34 IPC. A-3 was charged under Section 120-B IPC, Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, Section 119 IPC read with Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, and under Sections 169 read with 109, 420 and 409 IPC. A-4 and A-5 were charged under Section 120-B IPC, under Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, under Section 119 IPC read with Section 13(2) read with 13(1)(d) of the Prevention of Corruption Act, and under Section 169 read with Section 109 IPC. A-6 was charged under Section 120-B IPC, under Section 119 read with 13(2) read with 13(1)(d) of the Prevention of Corruption Act and under Section 13(2) read with 13(1)(d) and with 109 IPC10. The Trial Judge convicted A-1 under Section 120-B read with 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act. He also convicted A-1 under Sections 13(2) read with 13(1)(c) and 13(2) read with 13(1)(d) of the Prevention of Corruption Act and under Section 409 IPC and for each charge, A-1 was directed to suffer rigorous imprisonment for a period of three years and to pay a fine of Rs. 10,000/- with the direction that in default of payment of fine, A-1 will suffer simple imprisonment for three months. Similarly, the trial Judge convicted A-2 under Sections 120-B IPC read with 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act, under Sections 13(2) read with 13(1)(c) of the Prevention of Corruption Act read with 109 IPC, under Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act read with 109 IPC and under Section 409 read with 109 IPC. A-3 to A-5 were convicted under Sections 120-B IPC read with 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act and under Sections 13(2) read with Section 13(1)(d) of the Prevention of Corruption act and each of them was sentenced to suffer rigorous imprisonment for a period of three years and to pay a fine of Rs. 10,000/- in default of which each of them was directed to suffer simple imprisonment for three months for each charge. A-6 was convicted under Sections 120-B IPC read with 13(2) read with 13(1)(c) and (d) of the Prevention of Corruption Act and he was sentenced to suffer rigorous imprisonment for three years and to pay a fine of Rs. 10,000/- with a default sentence of simple imprisonment for three months. The learned trial Judge further directed that the sentences imposed upon the accused will run concurrently. A-1 was acquitted of the charge framed under Section 420 IPC and also the charge under Section 169 IPC. A-2 was acquitted of the charges framed under Section 169 read with 109 IPC and 420 read with 34 IPC. A-3 was acquitted under Sections 119 IPC read with 13(2) read with 13(1)(d) of the Prevention of Corruption Act and under Sections 169 read with 109 IPC, 420 IPC and 409 IPC. A-4 and A-5 were acquitted of the charges framed under Sections 119 IPC read with 13(2) read with 13(1)(d) of the Prevention of Corruption Act and Sections 169 read with 109 IPC. A-4 is stated to have died subsequent to the disposal of the appeal in the High Court and before these proceedings were filed in this Court. A-6 was acquitted of the charges under Sections 119 IPC read with 13(2) read with 13(1)(d) of the Prevention of Corruption Act and under Sections 13(2) read with 13(1)(d) of the Prevention of Corruption of Act and 109 IPC. The charge under Section 420 IPC was dropped in view the concession made on behalf of the State of Tamil Nadu in Criminal Appeal Nos. 395-397 of 2000 decided by this Court on 25.4.2002 and reported in 2000(4) SCC 44411. The accused preferred Crl. Appeal Nos. 972, 973, 974, 977, 981 and 987 of 2000 before the High Court. The High Court by a judgment pronounced on 4.12.2001 allowed Criminal Appeals by acquitting all the accused and dismissing the State appeal12. Summary of the Findings of the High Court are as follows:1. There is no evidence to indicate that the Guideline Value had been fixed in respect of the property in question. In fact, the witnesses admitted that there was no guideline value for this property2. The charge framed by the Trial Court is based on the Guidelinee and it is not permissible to proceed on the basis of market value as the two concepts are different and, therefore, the procedure adopted by the Trial Court prejudices the accused. Prosecution has not established that market value of the land sold to firms of respondents Nos. 1 and 2 is Rs. 7.32 lakhs or more than the price fetched3. The properties were sold by tender process after due publicity in newspapers and the highest bid has been accepted. Hence the price offered and accepted cannot result in wrongful loss to one party and gain to another party in the absence of any vitiating circumstances4. The Guideline Value not having been established acceptance of Rs. 3 lakhs per ground is reasonable on the basis of the evidence on record, particularly in view of the offer accepted pursuant to the tender process. Thus there is no wrongful loss to one party or gain to another party5. Price paid for small extents of land or additional stamp duty claimed on that basis are paid without demur cannot form a test for fixing the market value of the land in question6. The value mentioned in Ex. P.5 for the building or the super-structure ought to have been taken into consideration by the Trial Court as the same contained the necessary details and though it is stated that Exs. P.58 and P.59 were prepared after ascertaining relevant details, no material was placed in support of the same before the court and therefore, it could not be said that the properties had been purchased at a lesser value than what is just7. The sale effected by TANSI Enamelled Wires to M/s. Sai Enterprises is not vitiated. The Sub-Committee Rejected the offer of M/s. R.R. Industries of Rs. 4.12 lakhs on the basis of guideline value. It is only much later the Sub-Committee realised from Ex. D-39, letter of the Sub-Registrar, that the subject matter of sale therein is only of an extent of 240 sq. feet and is in respect of a small shed. There are other reasons also to reject the offer of R.R. Industries8. The charge of the conspiracy could not be established as the properties in question were not purchased at a price lower than the Guideline or market value nor is there any independent material to conclude that there is any conspiracy to commit offences charged herein9. There is no link established to show that there is a conspiracy to sell the properties at a lesser price so as to cause wrongful loss and wrongful gain to enable A-1 and A-2 to obtain the same10. In view of the finding recorded that there was no Guideline Value and by reason of the properties sold at Rs.3 lakhs per ground there was no pecuniary advantage to M/s. Jaya Publications, the charges under Section 13(2) read with Sections 13(1)(c) and 13(1)(d) of the PA Act were not established11. In regard to A-3, the High Court held that the decision to offer the land in question was that of the Board and not his individual decision and he followed the decision of the Sub-Committee and, therefore, in view of the collective decision taken by the Board or the Sub-Committee he cannot be held to be guilty of any charge12. In regard to charge against A-4, none of the persons who endorsed the file had been attributed with corrupt motive and, therefore, there was no evidence worthy of consideration13. A-5, who was the Special Deputy Collector (Stamps), was only performing his statutory duty and fixed the value of the properties in question at Rs. 3 lakhs per ground after notice to the concerned parties. Hence he cannot be held to be guilty of any charge. Moreover, since A-5 was an appellate authority under the statute, he cannot be held to conspire to fix the value at Rs. 3 lakhs per ground, though it may fetch much higher value in the market13. Against the decision of the High Court in the said appeals, the State Government not having filed any petitions or appeals, a private party is permitted to file these appeals by special leave. Dr. Subramaniam Swamy with permission has filed a separate special leave petition and no leave is granted to him but he has been allowed to address arguments only.

Court's reasoning:
the price offered by the respondents and accepted by TANSI cannot be termed to be not a fair price in regard to the properties in question going by the state of evidence on record. If the value of the properties is determined, as stated above, the view taken by the High Court in respect of the value charges under Section 13(1)(c)(d), 13(2) of the Prevention of Corruption Act and under Sections 409 and 120-B IPC would stand to reason22. The guideline value has relevance only in the context of Section 47-A of the Indian Stamp Act (as amended by TN Act 24 of 1967) which provides for dealing with instruments of conveyance which are undervalued. The guideline value is a rate fixed by authorities under the Stamp Act for purposes of determining the true market value of the property disclosed in an instrument requiring payment of stamp duty. Thus the guideline value fixed is not final but only a prima facie rate prevailing in an area. It is open to the registering authority as well as the person seeking registration to prove the actual market value of property. The authorities cannot regard the guideline valuation as the last word on the subject of market value. This position is made clear in the explanation to Rule 3 of Prevention of Undervaluation of Instruments Rulessaid land forms part of the land out of which a portion is sold to the firms of respondents. The contention of the prosecution that this is not a comparable transaction has been rejected by the High Court for valid reasons. The approach of the High Court cannot be said to be relevant or perversedo not think that this aspect assumes any significance especially in view of the fact that one of the terms in the advertisement itself stipulates that the actual area to be sold will be according to measurement. Thus the view taken by the High Court in this regard in perfectly in order and calls for no interference31. On scrutiny of the entire evidence led by the prosecution the charge of conspiracy cannot stand as there is no link to show that the conspirators agreed to have the property sold or the property purchased at a lesser price so as to cause wrongful loss or wrongful gain or to enable A-1 ad A-2 to obtain the property at a price less than its valueproperty in question belonged to TANSI a Government Company nd it was neither trust property nor was it entrusted to or under the control of the Chief Minister or any Minister. Hence, Section 13(1)(c) of the Prevention of Corruption Act is not attracted to the facts of the caseHigh Court did not accept the evidence of PW-12. This evidence does not in any manner advance the case of the prosecution to establish that A-6 has committed any offence40. The trial Judge proceeded on the basis that A-5 committed an error in taking into consideration the sale to SIDCO for fixing the market value of the property in dispute though, in fact, document NO. 1442 of 1991 was not the sale to SIDCO. But these documents have not been put to A-5 and he had no opportunity to explaining the circumstances under which these documents had come into existence and, therefore, the trial Judge was not justified to test his veracity with reference to those documents. Therefore, A-5 cannot be attributed with any misconductTherefore, there was no entrustment of the said properties and it cannot be said that A-1 had dominion over the said properties either as the Chief Minister or as the Minister of Industries and in any case, the evidence does not establish the ingredient of dishonest disposal or conversion of property for personal use . Thus the charge under the aforesaid section is also not established as rightly held by the High Court