DISPROPORTIONATE ASSETS AND ACCOUNTABILITY UNDER PREVENTION OF CORRUPTION ACT

The Prevention of Corruption Act (the PC Act), 1988 seeks to combat and eliminate bribery and corruption amongst public servants; and punish those who abet or conspire with a public servant in the commission of any offence punishable under this Act.

In the case of State of Karnataka vs. Selvi. J. Jayalalitha and others decided by the Supreme Court on 14^th February, 2017, the Court has held late Selvi. J. Jayalalitha, the then Chief Minister of the State of Tamil Nadu (a public servant at the time of institution of the case) [A1], Sasikala Natarajan [A2]; V.N. Sudhakaran [A3]; and J. Elavarasi [A4] guilty under the PC Act and the Indian Penal Code (IPC) 1860, on the grounds that a public servant (or person connected to the public servant) being in possession of pecuniary resources or properties disproportionate to his known sources of income during service which cannot be satisfactorily accounted for.

In this case, A1 was held guilty of:

criminal misconduct (four years imprisonment and a fine of Rs.100 crores); and

committing criminal conspiracy with the object of acquiring and possessing pecuniary resources and assets to the extent of Rs.53,60,49,954/- beyond the known sources of income of A1 (six months imprisonment and a fine of Rs. one lakh).

Whereas, A2, A3, and A4 have been held guilty:

of committing criminal conspiracy with the object of acquiring and possessing pecuniary resources and assets to the extent of Rs.53,60,49,954/- beyond the known sources of income of A1 (imprisonment of six months each and a fine of Rs.10,000/- each); and

for abetting the commission of offence of acquisition and possession of pecuniary resources and properties to the extent of Rs.53,60,49,954/- beyond the known sources of income of A1 (imprisonment of four years each and a fine of Rs.10 crores each).

The Supreme Court has ruled that any of the aforesaid accused, A1/A2/A3/A4, who is in default of payment of the fine amount, shall undergo one more year of imprisonment.

The aforesaid verdict of the Supreme Court has been based on the following significant findings of the Trial Court (“the Court”):

The value of disproportionate assets and pecuniary resources found in possession of A1 as on4.1996, which have not been satisfactorily accounted, has been calculated by the Court as Rs. 53,60,49,55,954/-;

The huge amounts of cash credits have not been explained by the Respondents. Also, a few Prosecution Witnesses have testified that huge amounts of cash deposits were made in the current accounts of A2 to A4 (but not A1) and their firms during the check period (7.1991 to 30.4.1996). The Court, thereby, concluded that these resources that were at all relevant times held by A2 to A4 on behalf of A1 for veiling her otherwise unexplained disproportionate assets is unassailable.

The Balance Sheets and the Income Statements of the Companies of A3 and A4 have reflected that there has been no conduct of business activities or profit earning during the Check Period and a few Prosecution Witnesses have stated that huge sums of money have been disbursed to the accounts of A3 and A4 by the staff of A1 on the instructions of A2, the in-charge of A1’s financial affairs. Thus, the Court concluded that all the assets and pecuniary resources found to be possessed by A2 to A4 and their firms had actually belonged to A1. Thereby, establishing the ingredients of the offence under section 13(1) (e) of the PC Act.

The free flow of money from one account to the other of the Respondents and their firms/companies also proved beyond reasonable doubt that all the Respondents have actively participated in the conspiracy to launder the ill-gotten wealth of A1 for purchasing properties in their names.

The Supreme Court has, thereby, restored the order of the Trial Court and has set aside the order of the Karnataka High Court on the grounds that it had been based on completely wrong reading of the evidence on record compounded by incorrect arithmetical calculations.

Daliparthy Harini

Legal Associate

The Indian Lawyer