Only ill-gotten assets a crime, observes SC judge

"How can it be proved Jayalalithaa was the source of funds?"

June 01, 2016 08:04 pm | Updated November 17, 2021 03:07 am IST - New Delhi

Tamil Nadu Chief Minister Jayalalithaa. File photo

Tamil Nadu Chief Minister Jayalalithaa. File photo

Acquisition of assets per se is not a crime unless proved that the source of funds is illegal, the Supreme Court observed on Wednesday, while hearing the wealth case involving Tamil Nadu Chief Minister Jayalalithaa.

In the first hearing after Ms. Jayalalithaa was voted back to power in the State, a Bench of Justices P.C. Ghose and Amitava Roy met Karnataka’s submissions charging the three co-accused — N. Sasikala, J. Elavarasi and V.N. Sudhakaran of criminal conspiracy, abetment and possession of disproportionate assets with a barrage of questions.

“Disproportionate assets is not a crime. It is only a crime if it is proved that the source of the money is illegal. Otherwise it [the illegality of disproportionate assets] is only an inference,” Justice Amitava Roy orally observed.

The observation came when senior advocate B. V. Acharya, appearing for Karnataka, described the HC judgment as “perverse beyond imagination.”

The court asked how Karnataka could prove that the money “circulated” among the co-accused was that of Ms. Jayalalithaa.

Ms. Jayalalithaa had argued that the prosecution cannot “presume” she was the source of the money flow merely because the co-accused lived in the same house as her.

She had further contended that there was no basis to allege that properties held by five companies — Indo-Doha Chemicals and Pharmaceuticals Pvt. Ltd., Signora Enterprises Pvt. Ltd., Ramraj Agro Mills Ltd., Meadow Agro Farms, and Riverway Agro Products — were “for and on behalf of Ms. Jayalalithaa.”

In his response to these arguments, special public prosecutor and senior advocate B.V. Acharya, representing the Karnataka government, submitted that Ms. Jayalalithaa cannot at this point, in the Supreme Court, distance herself from her co-accused and their assets.

“In calculating disproportionate assets, value of assets, expenditure and income of all accused has been taken jointly along with that of firms and companies (34 in number)... Neither the High Court nor the trial court has considered the assets or disproportionate assets of each accused separately. Hence the accused cannot now make out a case in these appeals contrary to the concurrent findings of the two courts and without even a plea in this behalf,” Mr. Acharya submitted.

Here, the court again intervened to ask whether Karnataka had any proof to show that the money “enjoyed, utilised” by the accused persons was that of Ms. Jayalalithaa alone and not received from a lawful source.

Probative value

Justice Roy asked whether the findings of the income tax authorities and the tax returns of the accused had no probative value in the trial court.

“We are not saying it [income tax authorities’ findings] is binding, we are saying it has probative value. A criminal court has to assess the evidence, but cannot overcome the probative value of income tax findings,” Justice Roy asked.

Again, Ms. Jayalalithaa had earlier countered why income tax assessments relied on by the High Court after conscious evaluation, treated as final and tested on the basis of testimonies of several witnesses should now be re-opened in the apex court.

Counsel Dave asked how Rs. 1.5 crore received from (party) cadres as gifts on birthdays could be described as a lawful source of income. “Such practices of bribery and corruption will destroy the very foundation of our economy,” Mr. Dave argued.

Three options

He said the Supreme Court, in an appeal, had three options: either confirm the Karnataka High Court judgment and acquit the accused or confirm the lower court judgment and convict them or refer the appeal back to the High Court.

The court said referring the appeals back to the High Court would be akin to upholding the lower court’s conviction and this would be injustice to the accused.

The Bench scheduled the next hearing for June 7, when senior advocate Siddharth Luthra, counsel for Karnataka, will make submissions regarding the seizure of assets of the five companies.

Senior advocate Harin Raval, counsel for Ms. Jayalalithaa, has also been given time to argue in the next hearing.

Corrections and clarifications

Due to an editing error, an earlier version of this report stated that the Bench made the observation on disproportionate assets when senior advocate Dushyant Dave, arguing for Karnataka, made a submission. The court's observation came when Mr. B. V. Acharya, also for Karnataka, was making his arguments.

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