Full Jaya verdict: Properties obtained by taking loan, Jaya has always filed returns since young age

Bengaluru, May 11: The Karnataka High Court on Monday acquitted J Jayalalithaa and three others and in its order states that the immovable properties were acquired by borrowing huge loans from nationalized banks.

In a lengthy 919 page verdict the court has gone into various aspects before setting aside the order of the trial court. Justice Kumaraswamy delivered the verdict today at 11 am and the entire judgment could be read here

Key points in verdict:

- Jaya has filed returns since she was a minor
-Property purchased after taking loans from nationalized banks
-Confiscation of properties not correct
-Evidence in Sudhakaran marriage case is only hearsay

Here is what Justice Kumaraswamy said while reading out the judgment:

Observations by the High Court

The power to confiscate can be exercised only with respect to the property which was actually used in commission of offence. One of the contentions raised by learned Counsel for the appellants is that no notice have been served on the companies and firms, therefore confiscation is bad in law.

Parties interested have not been heard. The learned Sessions Judge cannot straight away confiscate the property without giving a hearing to the interested parties.

Statement recorded under sections 161 and 162 can be looked into during the trial and enquiry. The question of confiscation arises only after conclusion of trial. Even statement of accused or witnesses can be looked into for disposal of the property which takes place at the conclusion of the enquiry or trial of the case.

It is well settled that an order of confiscation without holding an enquiry is illegal. While disposing of the property, reasons for choosing a particular mode should be stated.

The court should give a finding that in case the accused is convicted for an amount of money or value of property procured by himself as an offence, then only there will be compliance of section 12[1] of Criminal Law [Amendment] Ordinance, 1944.

Property earned by taking loans from nationalized banks

The Trial Court should know what amount of the Accused has to forfeit. At the first instance, property will be attached. The Anti Corruption and Investigating Agency made an application for attachment of the property. Subsequently, after conclusion of the trial, the property in question was confiscated.

I understand that there are several miscellaneous first appeals filed before this Court with regard to attachment. Therefore, I do not want to express any opinion with regard to attachment. Even in case if there is acquittal of the Accused, it will not have the effect of terminating the attachment.

However, since no notice have been issued to the Accused, the Trial Court has not considered the statement of witnesses and also the statement of the accused and also the evidence placed on record. The Trial Court has failed to appreciate the evidence in a proper perspective.

The immovable properties were acquired by borrowing huge loan from the Nationalised Banks. It is difficult to infer that the properties were acquired by means of ill-gotten money. Therefore, in my view, confiscation of the properties by the Trial Court is not sustainable in law.

The private complaint

Dr. Subramanian Swamy filed a private complaint before the Principal Sessions and District Judge, Chennai in Miscellaneous Petition No.3238/1996 which was registered. After registration of the crime, exercising the power under section 210 of Cr.PC, both private complaint and the complaint instituted under the Police report were clubbed.

Accused No.1 was arrayed as Accused in the First Information Report. Though names of accused Nos. 2 to 4 were mentioned in the first information report, they were not arrayed as Accused. Benami transaction was also alleged in the first information report. But, the investigating agency did not file charge sheet for benami transaction.

The provision under section 13[1][e] of the Prevention of Corruption Act connotes if he or any other person on his behalf is in possession or clearly suggests that any person to have resources on behalf of the public servant that would be included in his assets, in the sense that, he would have to account to these assets also.

So the prosecution mainly relies on sections 13[1][a] and 13[1][e] of the Prevention of Corruption Act.
The charge sheet was filed against Accused Nos. 1 to 4. The allegation is that the Accused No.1 amassed wealth and Accused Nos. 2 to 4 purchased various properties.

But, the prosecution has not adduced any evidence to the effect that Accused No.1 instigated or conspired together with Accused Nos. 2 to 4 to acquire lands and immovable properties.

Jaya has filed returns since she was a minor

The prosecution mainly relies on evidence of the Sub-Registrar and brokers and also the sale deeds. Except marking the sale deeds, there is no other evidence. The burden lies on the prosecution to establish benami transaction. The prosecution has not adduced any evidence with regard to allegation of benami transaction. Accused No.1 is cine actress.

She has filed returns since she was a minor. The property bearing No.36, Poes Garden, was acquired by her mother and also Natya Kala Nikethan.

Accused No.1 acquired adjacent property of Poes Garden for sum of Rs.8 lakhs. Except this, she has not purchased any property. The allegation of prosecution is that Accused Nos.2 to 4 purchased the property from the ill gotten money of Accused No.1.

The value of immovable property acquired amounts to Rs.6,24,09,120/- i.e., agricultural lands. Kodanadu Tea Estate was acquired by Accused Nos. 2 to 4 and it is worth about Rs.3.50 Crores.

The prosecution itself has shown the property of Accused Nos. 1 to 4 firms and companies to the extent of Rs.9,34,26,053.56/- whereas the loan borrowed by Accused Nos. 1 to 4 and also firms and companies is to the extent of Rs.24,17,31,274/-.

Also read: Jaya verdict: Only Karnataka can file appeal says Advocate General

The marriage expense

Insofar as marriage expenditure is concerned, Accused No.1 has disclosed that she has spent about Rs.28,68,000/- for bearing marriage expenses. DW.1 - Ramkumar has deposed that he has spent about Rs.92 lakhs.

Bank passbook is also produced and marked. The bride's father Narayanswamy was a Professor in IIT. His evidence on record discloses that he has spent about Rs.18 lakhs. There is positive evidence to the effect that party workers of AIADMK has met the expenses of food and pandal. Engineers valued pandal based on plan.

Their evidence is to the effect that without inspecting the pandal, they have given statement of expenditure that might have occurred. Their evidence is hear-say. The evidence on record reveals that party workers took up the responsibility of erecting pandal.

Sri A.R. Rahman and SriMandolin Srinivas have performed music with free of cost. The bridegroom's grandfather is Mr. Sivajiganeshan. He was a famous Tamil film actor. He was also known to A.R. Rahman.

Now the question that arises is what is the amount that was spent by Accused No.1 for the marriage of Accused No.3. Accused No.1 has declared in her income tax returns that she has spent about Rs.28,68,000/-. In our Hindu customs, it is bride's family members who take care of marriage expenditure. Nominal expenditure will be borne by bridegroom's family.

Just because Accused No.1 was Chief Minister at that time, we cannot saddle all the marriage expenses on her part. Relying on income tax returns towards expenditure of marriage, I consider that she has spent about Rs.28,68,000/-.

Besides, evidence of father of bride is withheld by the prosecution. Accused No.3 Bridegroom has also not entered the witness box. The Priest who has performed the marriage has not been examined. The Contractor for putting up pandal has not been examined in this case.

Prosecution was unable to prove the disproportionate assets of Jayalalithaa

The extent of disproportionate assets

It is well settled law that according to Krishnanand Agnihotri's case, when there is disproportionate asset to the extent of 10%, the accused are entitled for acquittal. A circular has been issued by the Government of Andhra Pradesh that disproportionate asset to the extent of 20% can also be considered as a permissible limit.

The margin of 10% to 20% of the disproportionate assets has been taken as a permissible limit, taking into consideration the inflatory measures. Since the value of apparels and slippers etc., are of insignificant value, I did not deduct this amount from the assets of DV & AC.

The Prosecution has mixed up assets of Accused, firms and companies and also added the cost of construction i.e., Rs.27,79,88,945/- and marriage expenses at Rs.6,45,04,222/- and valued the assets at Rs.66,44,73,573/-. If we remove the exaggerated value of cost of construction and marriage expenses, the assets will work out at Rs.37,59,02,466/-.

The total income of the Accused, 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% and it is within permissible limit. Therefore, Accused are entitled for acquittal. When the principal Accused has been acquitted, the other Accused, who have played a lesser role are also entitled for acquittal.

Trial court has not appreciated evidence

After examining the evidence, this Court is in a position to say that the findings arrived at are erroneous, or contrary to evidence then not only there is no legal prohibition to do so but in the interest of justice, that must be done.

In this case, the Trial Court has ignored the Income Tax proceedings as minimum evidentiary value. The Trial Court has not appreciated the evidence in a proper perspective. Though the Trial Court in its judgment mentioned that the accused availed loan by the Indian Bank, but it has not considered the same as income.

Therefore, the Trial Court has erred in not considering the loans as income. Even the valuation though disputed by the defence, the Trial Court has failed to examine the evidence relating to cost of construction at that relevant time and simply arrived at a conclusion that 20% of the cost has to be reduced without appreciating the evidence placed on record.

This 20% reduction is calculated on surmises and conjectures. The Trial Court has assessed the Marriage Expenses at Rs.3,00,00,000/-. There is no acceptable evidence to point-out that A-1 has spent about Rs.3,00,00,000/-. In spite of it, the Trial Court has arrived at a figure of Rs.3,00,00,000/- as modest and conservative estimation.

Arriving at Rs.3,00,00,000/- towards marriage expenses and fixing liability of Rs.3,00,00,000/- to A-1 alone is not proper. Most of the claims put-forth by the accused have been rejected by the Trial Court. It is the contention of the learned counsel for the appellants that without treating the witnesses as hostile, the witnesses were recalled and cross-examined.

The questions are put in such a manner that whether what they have stated in the examination-in- chief is correct or in the cross-examination is correct by securing answer to this question and also by adopting this method, they cannot wipe-out the answers elicited in the cross-examination. This is also one of the factors, which weigh in favour of the accused.

If the witness gives different statements at different stages, it is unsafe to place reliance on them. Taking into consideration of overall circumstances and 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.

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