Institute of Management

Nirma University

Government and Business

Group Assignment – 1
The Disproportionate Assets Case

Submitted by:
Yash Kothari | Section B | 167262
Riya Thaker | Section B | 167244
Jairaj Mehta | Section B | 167224
Himanshi Chaudhary | Section B | 167221
What are disproportionate assets?
Disproportionate Assets is a term used in India to describe a situation where an individual's net
economic assets significantly exceed the assets he or she should possess after accounting for
the assets that he or she previously held and all legal sources of income.

What is the case?

It was a complaint by Subramanian Swamy in Chennai in 1996 that led to a probe against
Tamil Nadu Chief Minister Jayalalithaa, what later came to be known as the
"Disproportionate assets case" in which she was convicted by a Bangalore court. Jayaram
Jayalalithaa, V.K. Sasikala Natarajan, Tr. V.N. Sudhakaran, Tmt. J. Elavarasi during the
period between 24th July, 1991 and 13th May, 1996 in Chennai and other places in Tamil
Nadu, Jayalalithaa being a public servant, along with V.K. Sasikala Natarajan, Tr. V.N.
Sudhakaran, Tmt. J. Elavarasi, were parties to a criminal conspiracy with the object of
acquiring and possessing pecuniary resources of income to the extent of Rs.
66,65,20,395/- in the names of the mentioned and the thirty-two business enterprises
floated in the name of the same, for which Jayaram Jayalalithaa could not satisfactorily
account and the rest three abetted Jayalalithaa by holding a substantial portion of the
pecuniary resources and property. The case of final came to be known as the
Disproportionate Assets Case.

The accused were convicted under:

Article 109 of the Indian Penal Code which states,

Punishment of abetment if the act abetted is committed in consequence and where no

express provision is made for its punishment. —Whoever abets any offence shall, if the
act abetted is committed in consequence of the abetment, and no express provision is
made by this Code for the punishment of such abetment, be punished with the
punishment provided for the offence.

Explanation. —An act or offence is said to be committed in consequence of abetment,

when it is committed in consequence of the instigation, or in pursuance of the conspiracy,
or with the aid, which constitutes the abetment.

Illustrations
(a) A offers a bribe to B, a public servant, as a reward for showing A some favour in the
exercise of B's official functions. B accepts the bribe. A has abetted the offence defined
in section 161.
(b) A instigates B to give false evidence. B, in consequence of the instigation, commits
that offence. A is guilty of abetting that offence, and is liable to the same punishment as
B.

(c) A and B conspire to poison Z. A, in pursuance of the conspiracy, procures the poison
and delivers it to B in order that he may administer it to Z. B, in pursuance of the
conspiracy, administers the poison to Z in A's absence and thereby causes Z's death. Here
B is guilty of murder. A is guilty of abetting that offence by conspiracy, and is liable to
the punishment for murder.

Article 120B of the Indian Penal Code which states,

Punishment of criminal conspiracy. — (1) Whoever is a party to a criminal conspiracy to

commit an offence punishable with death, 1[imprisonment for life] or rigorous
imprisonment for a term of two years or upwards, shall, where no express provision is
made in this Code for the punishment of such a conspiracy, be punished in the same
manner as if he had abetted such offence.

(2) Whoever is a party to a criminal conspiracy other than a criminal conspiracy to

commit an offence punishable as aforesaid shall be punished with imprisonment of either
description for a term not exceeding six months, or with fine or with both.

Article 13(1)(e) of the Prevention of Corruption Act, 1988 which states,

If a public servant or any person on his behalf, is in possession or has, at any time during
the period of his office, been in possession for which the public servant cannot
satisfactorily account, of pecuniary resources or property disproportionate to his known
sources of income.

Explanation: For the purposes of this section, “known sources of income” means income
received from any lawful source and such receipt has been intimated in accordance with
the provisions of any law, rules or orders for the time being applicable to a public servant.

Article 13(2) of the Prevention of Corruption Act, 1988 which states,

Any public servant who commits criminal misconduct shall be punishable with
imprisonment for a term which shall be not less than one year but which may extend to
seven years and shall also be liable to fine.
Convicts

Selvi J. Jayalalithaa was Chief Minister of the State of Tamil Nadu from 24th July 1991
to 13th May 1996. Prior to this, she was a member of the Rajya Sabha from April, 1984
till 27th January, 1989 and further she was a member of Tamil Nadu Legislative
Assembly from 27th January, 1989 till 30th January, 1991. She also acted in the films
during 1964-1972. She was the daughter of Smt. N.R. Sandhya, who acted in films
during 1960’s and died in the year 1971 and by virtue of her Will, Jayalalithaa became
owner of the following property:

(i) Land and building at No.36, Poes Garden, Chennai-86; 


(ii) House at Plot No.36, Door No.8/3/1099 in Sri Nagar 
Officer’s Colony at
Hyderabad City; 

(iii) Lands total measuring 10.20 acres in Sy.No.52 and 
Sy.No.50 of Jeedimetla village
and Sy.No.93/1 of Pet Basheerabad Village in Metchal Taluk in Ranga Reddy Dist. of
Andhra Pradesh with Grape Garden, Farm House and Servants quarters; 

(iv) Land in Sy.No.93/2 to the extent of 3.15 acres in Pet Basheerabad village in Andhra
Pradesh; 


Apart from this property, Jayalalithaa was also in possession of the following;

(v) Agricultural land measuring 3.43 acres in Cheyyur Taluk now in Anna District;
(vi) An old Ambassador car and an old Contessa car; 

(vii) A new Maruti car 
worth Rs. 60,435/-;
(viii) Company shares. 

Thus, the assets, which were in the possession of Jayalalithaa up to 1987, were found to
be worth only Rs.7.5 lakhs. Besides, she also claimed to have possessed balance in her
bank accounts to the extent of Rs.1 lakh and certain items of jewellery.
Sasikala Natarajan is the daughter of C. Vivekanandan, a Medical Compounder, and
her marriage with Mr. M. Natarajan was held in the early 1970’s. Sasikala was initially
an occasional visitor to the residence of Jayalalithaa at No.36, Poes Garden, Chennai-86,
and started permanently living there with her from 1988 onwards and was acknowledged
and declared by Jayalalithaa as her friend-cum-sister. Sasikala continued to live with
Jayalalithaa ever since then.

V.N. Sudhakaran is the son of Sasikala’s elder sister Smt. Vanithamani and T.T.
Vivekanandan. He started residing at No.36, Poes Garden, Chennai-86 in the year 1992
while pursuing his studies at New College, Chennai. Jayalalithaa had acknowledged and
proclaimed him as her “foster son” and had conducted his marriage with Sathiyalakshmi
in Chennai on 7th September 1995 in a lavish celebrations. The wedding of Sudhakaran,
who married the granddaughter of the Tamil film actor Shivaji Ganesan, was held on 7
September 1995 at Chennai and was viewed on large screens by over 150,000 people.
The event holds two Guinness World Records: one is for the most guests at a wedding
and the other is for being the largest wedding banquet. Subsequently, in November 2011,
Jayalalithaa told a special court than the entire ₹6 crores (equivalent to ₹25 crores or
US$3.9 million in 2016) the family of the bride paid expenses associated with the
wedding.

Tmt. J. Elavarasi is the wife of late V. Jayaraman, the elder brother of Sasikala. The
said V. Jayaraman was a Government servant and he died in December 1991 due to
electrocution while attending to works in the Grape Garden of Jayalalithaa at Hyderabad.
Following her husband’s death, Elavarasi came to live at No.36, Poes Garden, Chennai-
86, from the beginning of 1992.
Timeline

The case filed in the court was that, as on 1st July 1991, Jayalalithaa was found in possession of
properties and pecuniary resources in her name and in the name of Sasikala, who was living with
her to the extent of Rs. 2,01,83,957/- including the properties acquired in the name of M/s. Jaya
Publications, M/s. Sasi Enterprises and Namadhu MGR, which had been floated by Jayalalithaa
and Sasikala with themselves as partners. But, after 1st July 1991, there was sudden spurt in the
acquisition of assets and during this period, Jayalalithaa and Sasikala floated several firms in the
names of Sasikala, Sudhakaran and Elavarasi, namely;

1. M/s. J. Farm Houses; 


2. M/s. J.S. Housing Development; 

3. M/s. Jay Real Estate; 

4. M/s. Jaya Contractors and Builders; 

5. M/s. J.S. Leasing and Maintenance; 

6. M/s. Green Farm Houses; 

7. M/s. Metal King; 

8. M/s. Super Duper TV (P) Ltd., 

9. M/s. Anjaneya Printers Pvt. Ltd., 

10. M/s. Ramraj Agro Mills Ltd., 

11. M/s. Signora Business Enterprises Pvt., Ltd., 

12. M/s. Lex Property Development Pvt., Ltd., 

13. M/s. Riverway Agro Products Pvt., Ltd., 

14. M/s. Meadow Agro Farms Pvt., Ltd., 

15. M/s. Indo Doha Chemicals & Pharmaceuticals Ltd., 

16. M/s. A.P. Advertising Services; 

17. M/s. Vigneswara Builders; 

18. M/s. Lakshmi Constructions; 

19. M/s. Gopal Promoters; 

20. M/s. Sakthi Constructions; 

21. M/s. Namasivaya Housing Development; 

 22. M/s. Ayyappa Property Developments; 

23. M/s. Sea Enclave; 

24. M/s. Navasakthi Contractors and Builders; 

25. M/s. Oceanic Constructions; 

26. M/s. Green Garden Apartments; 

27. M/s. Marble Marvels;
28. M/s Vinod Video Vision;

29. M/s Fax Universal;

30. M/s Fresh Mushrooms;
31. M/s. Super Duper TV;
32. M/s. Kodanadu Tea Estate;

Further, during the period from 1st July 1991 to 30th April 1996 there were no business activities
in respect to most of the above firms. The major activities with others were in concern to
acquisition of Lands, Machinery, Building, etc., which were not production oriented. These firms
did not file any income tax return in the said period either. No calculation of commercial tax in
respect to these firm was conducted either. Jayalalithaa did not file her income tax return either
for the period of 1987-88 and 1992-93 till November 1992. When this issue was raised in the
Parliament, she filed her returns in November 1992 for the above period. Scrutiny of various
bank accounts maintained in the names of the convicts and in the names of the above firms
disclosed that huge credits in cash had been frequently made into various accounts, which were
not commensurate with the income of the individuals and of the firms concerned. There were
frequent transfers of amounts between one account to the others to facilitate illegal acquisition of
assets. The huge quantum of such assets, when viewed in the context that Jayalalithaa was
holding the office of the Chief Minister and that the rest were living under the same roof with her
and not having sufficient means to acquire the assets in their names, established that the assets
were actually acquired by Jayalalithaa. It is further alleged that, the four accused amassed
properties and pecuniary resources to the tune of Rs. 66,65,20,395/- as of 30th April 1996, which
was grossly disproportionate to the known sources of income of the public servant and her
associates. According to the Supreme Court report on the following case, the income from
known source of the former Chief Minister and her associates in the given time frame including
rental income, interest income on deposits in names of the accused, agriculture income and
salary as Chief Minister of the State of Tamil Nadu in total accounted to Rs. 9,34,26,054/- while
the expenses in the same period accounted to a total of Rs. 11,56,56,833/- which goes on to
project that the acquired and possessed pecuniary resources and properties by the accused are
overwhelmingly disproportionate by Rs. 66,65,20,395/- which is an offence of criminal
misconduct under Section 13(1)(e) and Section 13(2) of the Prevention of Corruption Act, 1988.

Then on 14th June 1996, Dr. Subramanian Swamy, the then President of the Janta Dal lodged a
complaint against Selvi Jayaram Jayalalithaa alleging that after assuming the office of Chief
Minister of the State of Tamil Nadu she had acquired properties and earned income
disproportionate to her sources of income. Smt. Letika Saran, a senior IPS Officer, took up the
investigation, collected records and documents from various sources.

During the course of investigation, the order passed by special court to investigate was
challenged before the High Court of Madras. The investigation was stopped for a brief period of
time, and thereafter the High Court was pleased to direct the Director of Vigilance and Anti
Corruption (DVAC), Madras to look into the allegations made, and finally an FIR was launched
against Jayalalithaa on 18th September, 1996.

During the course of further investigation several incriminating evidence were found which
registered Sasikala, Sudhkaran and Elavarasi as co-accused. Hence, an application was filed
before special judge on 22nd January 1997 for incorporating additional offences under Article
120B and Article 109 of Indian Penal Code, read along with Section 13(1)(e) and Section 13(2)
of the Prevention of Corruption Act, 1998.

The accused and co-accused all plead not guilty.

The course of investigation went on and hearings of witnesses followed, both for prosecution and
defense. On 18th November 2003 in a Transfer Petition, the Supreme Court transferred the case
to the State of Karnataka. The Government of Karnataka by its order dated 27.12.2003 duly
accorded sanction for establishment of the Special Court at Bangalore and by Notification dated
19.02.2005, duly appointed Shri B.V. Acharya, Senior Advocate and former Advocate General
of Karnataka as Public Prosecutor to conduct the said matter.
Thereafter, The High Court in 2014, on its analysis came to the conclusion that the value of
assets at the end of the check period in respect of accused, together along with the
firms/companies involved was Rs. 66,44,73,537/- and accepted the value of the assets as
indicated by the prosecution. The High Court, thereafter applying the principles lay down in
Krishnanand Agnihotri Vs. The State of Madhya Pradesh case projected the following
calculations to ascertain the percentage of disproportionate assets:

Particulars Amount Total Amount

(in Rupees) (in Rupees)

Assets as per 66,44,73,573

Director of Vigilance and Anti Corruption

Cost of Construction:
As per DVAC 27,79,88,945
Less: As per records and findings (5,10,54,060)
Total (A) 22,69,34,885

Marriage Expenses:
As per DVAC 6,45,04,222
Less: As per findings of the High Court (28,68,000)
Total (B) 6,16,36,222

(A+B) 28,85,71,107

Less: (A+B) (28,85,71,107)

TOTAL ASSETS 37,59,02,466

Serial No. Particulars Amount (in Rupees)

1. Loan as Income 18,17,46,000

2. Income from Grape Gardens 46,71,600

3. Gifts 1,50,00,000

4. Sasi Enterprises 25,00,000

5. Jaya Publications and Namadhu MGR 4,00,00,000

6. Super Duper T.V. Pvt. Ltd. 1,00,00,000

7. Rental Income 3,22,000

8. Income assessed by DVAC 9,34,26,054

TOTAL INCOME 34,76,65,654

Disproportionate Assets:

Total Assets – Total Income = Rs. 37,59,02,466 – Rs. 34,76,65,654 = Rs. 2,82,36,812

Disproportionate Assets
Percentage of Disproportionate Assets = [ ] ∗ 100
Income

2,82,36,812
= [34,76,65,654] ∗ 100

= 8.12%
In accordance to the calculation as projected before, the High Court following the principles of
Krishnanand Agnihotri vs The State of Madhya Pradesh case held that when there is
disproportionate asset to the extent of 10% or below, the accused are entitled to acquittal and
accordingly the High Court passed the following order acquitting the accused:

“(A) Criminal Appeal Nos.835/2014, 836/2014, 837/2014 and 838/2014 are allowed.

[i] The Judgment of Conviction and Sentence passed in Spl.C.C.No.208 of 2004, dated
27.9.2014, on the file of the 36th Additional City Civil & Sessions Judge, Bengaluru, is hereby
set- aside. Appellants-Accused Nos.1 to 4 are acquitted of all the charges leveled against them.

[ii] The Bail bonds of A1 to A4 are discharged.

(B) The Appeals in Criminal Appeal Nos.17/2015, 18/2015, 19/2015, 20/2015, 21/2015 and
22/2015 are allowed in part.

[i] Order of the Trial Court relating to confiscation of the properties, both movable and
immovable, is hereby set aside.”
Following that, Mr. B.V. Acharya, learned senior counsel appearing on behalf of the State of
Karnataka contended that if the final figures arrived by the High Court are accepted and apparent
errors therein including calculation and arithmetical errors as also error apparent on the face of
the record are corrected, the disproportionate assets will be more than Rs.35 crores and this alone
is sufficient to sustain the conviction, according to him. He presented the following table:

Serial No. Particulars Amount (in rupees)

1. Omission of Expenses (Corrected) 14,38,93,645

2. Totaling Error (Corrected) 13,50,00,000

3. Admission Registration Valuation of Construction 3,50,05,210

4. Admission Registration Business Income of Jaya 2,84,05,151

Publications

5. Gift – which is illegal 1,50,00,000

Disproportionate Assets = Rs. 35,73,04,006

And Incomes will be = Rs. 16,92,60,503

35,73,04,006
Percentage of Disproportionate Assets = (16,92,60,503) ∗ 100

= 211.09%.

Hence, he submitted that this process was alone sufficient to sustain the conviction. This was
taken into absolute consideration and the Supreme Court set the judgment of 2014 by the High
Court of Karnataka aside.
On April 27, 2015, the Supreme Court help appointment of Bhavani Singh wrong as a prosecutor
in law but denied the appeal of a fresh hearing.

Later in May 2015, the Karnataka High Court acquitted Jayalalithaa of all corruption charges.
Following this verdict, Jayalalithaa resumes her position as the Chief Minister of Tamil Nadu.

On 5th December 2016, Jayalalithaa dies of cardiac arrest and almost two months later on 14
February 2017, Sasikala and others accused were found guilty on corruption charges.

All charges against Jayalalithaa were abated and dropped due to her untimely death.
Public and political upheave that followed the verdict:

Such events create a disturbance in the state and the political scenario. Following the verdict,
many shops, malls and movie theatres remained closed and public transport was totally shut own.
The neighboring state of Karnataka and Kerala stopped inter-state buses to Tamil Nadu. A state-
owned bus was set ablaze near Kanchipuram before passengers were made to alight. The
governor of Tamil Nadu, K. Rosiah ordered operations to maintain law and order and, while the
police said that the situation was under control, opposition parties complained of violence. The
leader of Dravida Munnetra Kazhagam, M. Karunanidhi, wrote to the President of India and the
Prime Minister seeking restoration of peace. The Central Home Ministry offered support to
control violence. Venkatesan, a 65-year-old fan of Jayalalithaa, immolated himself in Chennai as
a mark of protest and died later in hospital. Another follower tried self-immolation in front of the
house of Jayalalithaa at Poes Gardens but was stopped by the police.

It is also to be carefully noticed, that all the accused, Jayalalithaa and her associates used
business enterprises and corporations to launder off their money successfully, which is the
wealth they created from corruption. The level of involvement of business in this case of intrinsic
nature and it is during the analysis of this case that one founds how reputation building for a
business can be very tough in a scenario such as this where multiple fraud firms could be running
even by people of the stature of an Honorable Chief Minister who is considered to be a goddess
in herself not just the constituency she was elected from but the complete state where she held
the office of affairs of the state.
What textual concepts was I able to relate?

• The first concept related here is the Dominance Model. According to this model, the
business and government stay in the top of the hierarchical structure that rules/controls
the masses.

• The second is Legal Power. Legal power is an authority by which one person enables
other to do an act for him/her.

• Third is Political Power. In social science and politics, power is the ability to influence or
outright control the behavior of people. The term "authority" is often used for power
perceived as legitimate by the social structure.
References:

• The verdict of the Supreme Court on the Disproportionate Assets Case.

• "Jayalalithaa wealth case: timeline of events". The Hindu. Retrieved 2017-02-21.

• "Jayalalithaa acquitted by Karnataka High Court in DA case – Read judgment and case
history". 1, Law Street. 11 May 2015. Retrieved 2015-05-11.

• "Jayalalithaa Bail Order – Supreme Court – 17.10.2014". 1, Law Street. 17 October 2014.
Retrieved 2015-05-03.

• "Jayalalithaa guilty in assets case, Gets 4-year jail term".