2004(1) Crimes 43 (SC)
Supreme Court of India
(From Madras High Court)
S. Rajendra Babu and P. Venkatarama Reddi, JJ.
R. Sai Bharathi - Appellant
versus
J. Jayalalitha & Ors. - Respondents
Criminal Appeal Nos. 115-120/2002 and 121-127 of 2002
With
Special Leave Petition (Crl.) No. 477/2002
Decided on 24-11-2003

Important points
1. Persons in public life are expected to maintain very high standards of probity and, particularly, when there is likely to be even least bit of conflict of interest between the office one holds and the acts to be done by such person, ought to desist himself from indulging in the same.
2. Ms. Jayalalitha is held not guilty of offences with which she was charged in a case where the property belonging to public sector undertakings was sold to firms of which she was a partner at a time when she held the office of the Chief Minister of the State of Tamil Nadu.

Headnote:(i) Indian Penal Code, 1860 - Section 120B rw/s 13(2) rw/s 13(1)(c) and (d) of Prevention of Corruption Act - Prosecution of Chief Minister of Tamil Nadu and other State officials for offences under - Abuse of position as public servant purchasing Government land belonging to Tamil Nadu Small Industries Corpora­tion Ltd. - Failure to prove - Properties were sold by tender process after due publicity in newspapers - Offer of Jaya Publica­tions was the highest of all the four bids - Charge of conspiracy not established as the properties in question were not purchased at a price lower than the guidelines or market value - No link established to show that there was conspiracy to sell properties at a lesser price so as to cause wrongful loss and wrongful gain to enable A1 and A2 to obtain the same - All the offers were placed before the Sub Committee for consideration - It was not individual decision of A3, Chairman-cum-Managing Director, TANSI - None of the persons who endorsed the file had been attributed with corrupt motive - A5, Special Deputy Collector (Stamps) was only performing his statutory duty in fixing value of properties in question - High Court held justified in acquitting the accused persons - Conviction as recorded by trial Court held unsus­taina­ble.

       Held : The foundation of various charges is that the property in question was deliberately sold for less value with a view to confer pecuniary advantage to the firm consisting of A1 and A2 which resulted in wrongful loss to the Government Company and wrongful gain to A1 and A2. Examination of the evidence on record would indicate that the witnesses had admitted that the properties in question had no guideline value and hence the charge framed that the properties were purchased below the guideline value is defective. Though charge was not based on market value, the learned trial Judge proceeded to consider the prosecution version by taking Rs. 7.32 lakhs as the 'market value' per ground and held that TANSI suffered loss; the High Court, however, having examined as to what exactly was the market value of the properties in question, held in effect that the trial court took into account irrelevant materials and overlooked relevant evidence. As observed by the High Court, the property was sold by tender process and the bidders quoted their offers and the highest offer was that of firms of respondents Nos. 1 and 2 and under the circumstances, unless the tender process was shown to be vitiated, the price quoted by the highest bidder had to be normally taken as the market value. Market value being a variable factor and if a price was quoted and if it was not shown that the tender was vitiated, then the price quoted by the highest bidder had to be taken as the market value. It is the admitted case of the prosecution that Jaya Publications offered Rs. 3.01 lakhs per ground for the entire land and it offered to purchase the superstructure and machinery at Rs. 19.20 lakhs and other bidders quoted less. On an earlier occasion when TANSI Foundry unit wanted to sell 3.26 acres of land to Tamil Nadu Co-operative Sugar Federation, the value of a ground was fixed at Rs. 3 lakhs by the Collector. (Paras 15 and 16)

       In view of the failure of the prosecution to show that the guideline value is Rs. 7.32 lakhs per ground and in view of the positive evidence as brought out through Ex. D-20 and P-61 that the value of the land of TANSI Foundry unit could be about Rs. 3 lakhs per ground particularly when the sale was by way of open tender, it cannot be said beyond reasonable doubt that the property in question had been under-sold and thus there was loss to TANSI. The view taken by the High Court appears to us to be a reasonably possible view. (Para 18)

       In the present case, conspiracy was sought to be inferred from the conduct of several accused. The contention on behalf of the State was that while putting a note on 13.1.1992 A-4 had stated that he verified with A-3 and came to know that the market value of the property was Rs. 3 lakhs per ground for larger extent and that A-4 could not have verified it with A-3 on 13.1.1991 and, therefore, conspiracy could be inferred. The note file indicates that A-4 discussed with Secretary (Industries), Joint Secretary (Industries) and Chairman-cum-Managing Director, TANSI (A-3) which means that before he made the said note, he discussed the issue not only with A-3 but also with other two persons and thereafter came to the conclusion that the price was Rs. 3 lakhs per ground. (Para 30)

       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 lessor price so as to cause wrongful loss or wrongful gain or to enable A-1 and A-2 to obtain the property at a price less than its value. (Para 32)

       The circumstances under which the properties were purchased by M/s Jaya Publications and M/s Sasi Enterprises cannot be treated as one obtained in the circumstances arising in Section 13(1)(d). The facts established in the case point out that the properties are not purchased by corrupt or illegal means or by abusing the official position as public servant to obtain pecuniary advantage discarding public interest. The purchase was effected through open sales held by TANSI. The right to sell the properties in question was available with the Corporation which chose to do so in favour of M/s. Jaya Publications and M/s. Sasi Enterprises. It is not established that A-1 or any other person obtained for herself any valuable thing or pecuniary advantage by abusing her position as public servant. On the other hand, as stated earlier, the properties in question were sought to be sold from time to time and pursuant to such steps taken the properties had been sold to two firms in question. The sale has been held pursuant to various resolutions of the Government since 1985 and that the putting up of the properties in question for sale itself was not against any public interest. When the two firms of which A-1 is a partner offered appropriate price the same having been accepted, it cannot be said that it has resulted in obtaining any pecuniary advantage or valuable thing by abuse of the official position. If the properties in question were sold by TANSI in public interest, the obtaining of the same through purchase in such a transaction for valuation consideration which does not fall below market value does not come within the scope of Section 13(1)(d). Thus, the charge under Section 13(1)(d) is not established and we concur with the findings recorded by the High Court in this regard. (Para 34)

       Though we have come to the conclusion that A-1 is not guilty of the offences with which she was charged, it is clear that the property belonging to public sector undertakings was sold to firms of which A-1 is a partner at a time when she held the Office of the Chief Minister. Under the articles of association of the public sector undertaking, there is a requirement that before the sale of property is effected approval of the government is needed and sale cannot be completed without such approval because such an act will be ultra vires the powers of the Board of Directors of the company. Such approval was readily given by the Government machinery, though on paper she remained out of picture. (Para 57)

       Whatever may be our findings on the question of valuation of the property whether it resulted in a pecuniary advantage to A-1 or not, we are clear in our mind that if the officers and others become aware of the fact that the Chief Minister of the State is interested in purchasing some properties, the bureaucracy will be over-enthusiastic to see that the sale goes through smoothly and at a price desired by such Chief Minister. Though we can visualise such situation, such facts have to be established by concrete evidence to be convicted in a criminal case and is hard or difficult to get. At any rate, it is plain that such conduct is opposed to the spirit of the Code of Conduct if not its letter. Morally speaking, Can there be one law for small officials of the Government and another law for the Chief Minister ? In matters of such nature, is the Code of Conduct meant only to be kept as an 'ornamental relic' in a museum but not to be practised ? These aspects do worry our conscience. Respondent No.1 in her anxiety to save her skin went to any length even to deny her signature on documents which her auditor and other Government officials identified. (Para 58)

       (ii) Indian Penal Code, 1860 - Section 169 - Public servant, Chief Minister of State purchasing Government land - Offence under Section 169 is incomplete without the assistance of some other enactment which imposes legal prohibition required - Code of Conduct for Ministers issued in G.O.Ms.No. 1350, dated 26.7.1968 by Government of Tamil Nadu in name of Governor, not having any sanction or statutory force - It cannot be construed to impose a legal prohibition against purchase of property of Government - High Court is justified in holding that 1st respon­dent, the Chief Minister of State at relevant time is not guilty of offence u/s 169 IPC.

       Held : Section 169 IPC bears the marginal heading "Public Servant unlawfully buying or bidding for property" (emphasis supplied). Section 169 IPC sets out that (1) the person should be a public servant, (2) in such capacity as public servant, he is legally bound not to purchase or bid 'certain property’, and (3) either in his name or in the name of another or jointly, or in shares with others. The offence under Section 169 IPC is incomplete without the assistance of some other enactment which imposes the legal prohibition required. "The enactment containing the prohibition naturally and necessarily defines the area which is covered by it, both as to the class of public servants to whom it applies and the nature of the dealings in which those servants are prevented from engaging" [Vide 11 Cr.L.J. Reports 613, Narayan v. Emperor]. Therefore, in order to come within the clutches of Section 169 IPC, there should be a law which prohibits a public servant from purchasing certain property and if he does it, it becomes an offence under Section 169 IPC. Section 481 Criminal Procedure Code, Section 189 of the Railways Act, 1989 and Section 19 of the Cattle Trespass Act, 1871 and instances of that nature in several enactments are available in which persons mentioned therein shall not directly or indirectly purchase any property at a sale under those Acts. Similarly Section 136 of the Transfer of Property Act provides that no Judge, legal practitioner, or officer connected with any Court of Justice shall buy or traffic in, or stipulate for, or agree to receive any share of, or interest in, any actionable claim and no Court of Justice shall enforce, at his instance, or at the instance of any person claiming by or through him, any actionable claims so dealt with by him as stated above. Thus, in these circumstances where a law has prohibited purchase of property or to bid at an auction, the prohibition contained therein will be attracted and will become an offence under Section 169 IPC. (Paras 46 and 47)

       In our view, the Code of Conduct not having a statutory force and not enforceable in a Court of law, nor having any sanction or procedure for dealing with a contravention thereof by the Chief Minister, cannot be construed to impose a legal prohibition against the purchase of property of the Government so as to give rise to a criminal offence under Section 169 IPC. In law, there must be a specific provision prohibiting an act to make it illegal. (Para 50)

       There is no law which debars the Chief Minister from participating in a sale conducted by any Department of the Government or any of the Corporations or any public sector undertaking affording a cause for civil action especially when no fraud or illegal gain is involved. Therefore, we are constrained to hold that the offence under the aforesaid provision has not been established. In fact, there is nothing in the charge to indicate nor did the prosecution take a specific stand at any stage of the trial that the purchase of TANSI foundry property by A-1 from the Government would furnish a ground for a particular civil action. The nature of civil action that could be initiated cannot be left to the guess work and the accused cannot be expected to meet such case at this stage. (Para 50)

       That A-1 was a public servant and the properties were purchased by the firm in which she was a partner, would be insufficient to establish a charge under Section 169 against her as the main ingredient of the aforesaid provision is not established. The High Court is justified in holding that the first respondent is not guilty of the offence under Section 169 IPC and the other respondents not guilty of abetment. (Para 52)

       (iii) Indian Penal Code, 1860 - Sections 405 and 409 - Criminal Breach of Trust by a public servant - Chief Minister of the State purchasing Government property - No entrustment of said proper­ties - It cannot be said that A1 had dominion over the said prop­erties either as Chief Minister or Minister of Industries - Evi­dence does not establish ingredients of dishonest disposal or conversion of property for personal use - Charge under Section 409 IPC held not established. (Para 53)

       Result : Appeal dismissed.