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CASE NO.:

Appeal (crl.) 115-120 of 2002

Appeal (crl.) 121-127 of 2002

Special Leave Petition (crl.) 477 of 2002

PETITIONER:

R. Sai Bharathi

RESPONDENT:

J. Jayalalitha & Ors.

DATE OF JUDGMENT: 24/11/2003

BENCH:

S. RAJENDRA BABU & P. VENKATARAMA REDDI

JUDGMENT:

J U D G M E N T

RAJENDRA BABU, J. :

These two sets of criminal appeals arise out of two criminal cases filed

against Respondents Nos. 1 to 6 and the fall out thereof unfolding against

currents and cross currents of political vicissitudes. Facts leading to these

appeals are as under:

The Government of Tamil Nadu formed a Tamil Nadu Small Industries

Corporation Limited (for short 'TANSI'). It was registered under the Companies

Act, 1956 as a Government Company. The entire shares, namely, 100% of the

shares of the said Corporation, were held by the government. In the

Memorandum of Association it is stated that the said company is formed 'to take

over from the Government of Tamil Nadu any of their production and/or servicing

units with the rights and liabilities of the Government of Tamil Nadu so far as they

relate to such units'. Article 72 of Articles of Association empowers the

Government to appoint all the Directors with the power to remove any Director

from time to time. Article 79 empowers the Government to appoint and remove

the Managing Director. Similarly Government can also appoint a Chairman and

Vice-Chairman of the Board. The Chairman can reserve for the approval of the

Government any proposals or decisions of the Board in respect of any of the

matters regarding (a) increase or reduction of the capital of the Company; (b)

loan granted by the Company or giving of a guarantee or any other financial

assistance to any person or concern; (c) winding up of the Company; and (d)

any other matter which in the opinion of the Chairman be of such importance as

to be reserved for the approval of the Government. In respect of any proposal or

decision of the Board reserved for the approval of the Government no action

shall be taken by the Company until approval to the same has been obtained.

The Government also exercises the power to issue directives or instructions as it

may deem fit in regard to finances and the conduct of the business and affairs of

the Company and the Directors shall duly comply with and give effect to such

directives or instructions. TANSI has 10 Directors and all of them were the

nominees of the Government of Tamil Nadu, including the Chairman-cum-

Managing Director who was an IAS officer.

Article 77-a(4) provides that the Board shall not dispose of the land

transferred to the Company by the Government other than to Tamil Nadu

Government Departments/Undertakings/Boards or Government of India

Departments/Undertakings/Board without the previous written approval of the

Government. A Code of Conduct for Ministers was brought into force by

G.O.Ms. Nos. 1350 on June 16, 1968 which was revised from time to time and

clause 2(b) thereto provides that 'a Minister shall refrain from buying from, or

selling to, the Government any immovable property except where such property

is compulsorily acquired by the Government in the usual course and refrain from

starting, or joining, any business'. After the formation of TANSI Corporation

and transfer of Government Industrial Units to it, some of the units started

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incurring losses. Therefore a report was sent by TANSI to the Government to the

effect that some of the industrial units are consistently incurring losses. On 30th

September, 1985 the Government decided that eight units mentioned in the

G.O.Ms. 832 can never be made viable whatever measures to be adopted to

achieve the objects for which they were set up in the public sector and therefore

their continuance will cause a drain on the finance of TANSI. TANSI Enamelled

Wires, Guindy and TANSI Foundry, Guindy, situate in Thiru.vi.ka.Industrial

Estate were two of the units among the eight identified as the units incurring

losses mentioned in the said G.O. Therefore, the Government decided that

TANSI should close down the 8 units and explore the possibility of disposing the

properties by inviting offers through advertisements in newspapers.

In pursuance of the G.O., Ex.P-21, TANSI Foundry unit was officially close

as per Ex.P.-33. Out of the total extent of 5.535 acres of land and 3267 sq.mts.

of buildings in TANSI Foundry, an extent of 0.545 acres of land and 569 sq.mts.

of building were transferred to Tamil Nadu Corporation for Development of

Women on 15.5.1987 by TANSI after collecting Rs. 12.21 lakhs. Advertisements

were issued on 31.8.1988 for disposal of the remaining extent of land and

building and four offers were received. The offers of Ashwini Plastic and

ENCOFED were recommended to the Government after the approval of the

Board, but the Government did not give approval on the ground that it will be

more advantageous to TANSI to call for fresh tenders after parcelling out the land

into industrial plots in accordance with the Madras Metropolitan Development

Authority rules and regulations. On 30.4.1990 Jaya Publications, an unregistered

partnership firm in which J.Jayalalitha, Accused No. 1, and Sasikala, Accused

No. 2, were partners, purchased land adjacent to the TANSI property in dispute

from Hitex Equipment company vide sale deed, Ex.P.-57, at the assessed market

value of Rs. 6 lakhs per ground which is at par with the guideline value of

Registration Department. In the general elections held on 13.5.1991 for the

Tamil Nadu Legislative Assembly AIADMK party came to power and

J.Jayalalitha, accused No. 1, became the Chief Minister. On 29.9.1991 Jaya

Publications again purchased another adjacent land from Idhayam Publications

vide sale deed (Ex.P-8) at the assessed market value of Rs. 7.32 lakhs per

ground [270 sq. yards]. On 10.10.1991 an advertisement was published for

disposal of TANSI Enamelled Wire Units adjacent to the TANSI Foundry in the

Thiru.vi.ka.Industrial Estate. Pursuant to this advertisement R.R. Industries and

two other companies submitted tenders for purchase. Ex.P-22 is the quotation

given by R.R. Industries. The price of one square meter of land had been

mentioned in that quotation as Rs. 1850, which works out to Rs. 4.12 lakh per

ground.

On 14.10.1991 a meeting was held under the chairmanship of the Chief

Minister J. Jayalalitha for the review of the performance of the TANSI and A-4

Minister for Rural Industries, A-3 Chairman-cum-Managing Director of TANSI,

P.W. 11 Chief Secretary, P.W. 14 Secretary Industries Department and P.W. 16

Secretary, Finance Department attended the said meeting and several decisions

were taken for the revival of TANSI. One of the decisions taken at the meeting is

that TANSI may sell the properties of its unit which are defunct and TANSI

Foundry unit was identified as a defunct unit and the estimated sale price was

fixed at Rs. 1.5 crore, but without any land valuation report on record. It was also

decided that TANSI must identify more such properties for sale and can send a

proposal to the Government along with all details and topography sketches

recommending the sale and that the vacant sites available for the running units

can be plotted out into industrial lots for selling them at market value with a view

to raise some resources. On 6.11.1991 Government directed all public sector

undertakings to obtain prior approval of the Government in respect of all tenders

for works, equipment, etc and all purchases whether by open tender or by limited

tender enquiries etc. where the value of the contract exceeds Rs. 1 crore. It also

directed that the proposals should be sent with the recommendation of the Board

to the Administrative Department concerned and that Administrative Department

may follow circuit procedures to circulate the file to concerned Minister, Minister

for Finance and Chief Minister.

The Board of Directors of TANSI resolved to constitute a Sub-Committee

consisting of the Directors for evaluating the offers received in respect of TANSI

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Enamelled Wires pursuant to the advertisement issued on 10.10.1991 and to

make recommendations for the disposal of the assets of the closed units of

TANSI. The members of the Sub-Committee appointed by the Board were

Chairman-cum-Managing Director of TANSI, who is also the Director of TANSI,

Abdul Hasan, the Director of TANSI and Joint Secretary, Industries Department,

and C.Madakkannu, Chief Engineer (Buildings),PWD, who is also the Director of

TANSI. Advertisements were caused to be published in leading newspapers on

21.11.1991 calling for offers through tenders for the purchase of the property of

TANSI Foundry. A letter was addressed by the Managing Director (A-3) to the

Sub-Registrar, Adayar (P.W. 1) intimating that they want to dispose of land in

Thiru.Vi.Ka.Industrial Estate and requesting to furnish the guidelines price of the

lands situate in Block No. 5 at Alandur. Sub-Registrar, Adayar replied (Ex.D-39)

that there was no guideline value for survey numbers 86, 87, 88, 90, 91 Part, 92

Part and 93 Part, in Block No. 5 of Adayar Village which are the properties in

dispute. He further stated that in the adjoining property in Block No. 6 of

Thiru.Vi.Ka.Industrial Estate, the value of one sq.feet was Rs. 305/-, which

worked out to Rs. 7.32 lakhs per ground. It is important to note that Block Nos. 1

to 6 of Adayar village are situated in Thiru.vi.ka.Industrial Estate. The Sub-

Committee of TANSI met on 25.11.1991 to consider the offers for the disposal of

TANSI Enamelled Wires Unit for which an advertisement was published on

10.10.1991. The tender given by R.R. Industries and other two tenders given by

other companies were placed before the Sub-Committee and it passed a

resolution calling for a report regarding the guideline price of the land and a

report from the Public Works Department regarding the value of the buildings.

After consideration of all the offers the Sub-Committee decided that TANSI may

try again for better offer by giving advertisements. Again advertisements were

published on 21.11.1991 and 22.11.1991 calling for tenders for purchase of the

property of TANSI Foundry, four tenders were received at the TANSI office and

they were opened in the presence of all the tenders on the same day. Ex.P-29

is the offer of Jaya Publications in which J. Jayalalitha, A-1 and Sasikala, A-2 are

partners. Ex. P-13 is the offer of Aban Constructions and Ex. D-15 is the offer of

ENCOFED. Tamil Nadu Small Industries Development Corporation (SIDCO)

also submitted a tender. Jaya Publications offered to purchase the entire land

at the rate of Rs. 3.01 lakhs per ground. Aban Constructions offered to purchase

the landed property at the rate of Rs. 1,77,325/- per ground, but it offered to

purchase only 1.72 acres and not the entire property. ENCOFED offered to

purchase 2000 sq.mts of land at rate of Rs. 1,33,333 per ground while SIDCO

offered to purchase the land at Rs. 502/- per sq.mt.

All the offers were placed before the Sub-Committee for consideration and

it decided that A-3 who is the Chairman-cum-Managing Director, TANSI, should

negotiate with Jaya Publications since the offer of Jaya Publications was Rs.

1,82,13,150/- which is the highest of all the four bids and they should take up the

matter with the Board by a note in circulation for a decision regarding the

disposal of the property. Ex. P-30 are the Minutes of the meeting of the Sub-

Committee and the same were initiated by P.W. 8 and A-3. The Board

considered the matter and it was noticed that the value offered for the land by the

highest bidder was Rs. 1,62,93,150 which worked out to Rs. 3.01 lakhs and that

though it was much lower than Rs. 7.30 lakhs which was the guideline value for

Block No. 6 of Thiru.vi.ka.Industrial Estate, it was marginally higher than the

value fixed by the Collector under Ex.D-20 as the Collector had fixed the price

per ground for the property at Rs. 3 lakhs. The note further indicated that TANSI

had already decided to sell 2.52 acres of land of the same unit to Tamil Nadu

Sugar Federation at Rs. 3 lakhs per ground and, therefore, the price of Rs. 3.01

lakhs offered by Jaya Publications could be considered reasonable. It was also

taken into consideration that Rs. 19.20 lakhs was offered by the highest bidder

for the building and that heavy structures available at TANSI Foundry may be

useful for a heavy engineering workshop and for a buyer who does not intend to

put up a heavy engineering workshop, the value is only notional and at best is

only a scrap value. Therefore, members of the Board recommended to the

Government selling a portion of the land of about 2.98 acres at the rate of Rs.

1,350/- per sq.mt., that is, Rs. 3.01 lakhs per ground, and that the exact extent of

the land to be sold could be measured at the time of handing over and the exact

amount could be collected and the building measuring 2698 sq. mts. could be

sold at a cost of Rs. 19.20,200/-. The resolution was unanimously adopted and

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signed by the Managing Director and other seven Directors. A proposal was

sent to the Government on 30.12.1991 and the proposal of TANSI was examined

by the Government. There were certain notings made therein that the rate of 3

lakhs per ground was much lower than the guideline value of Rs. 7.30 lakhs per

ground as mentioned by Registration Department. Further, the file was marked

to 'Minister (Rural Industries)', 'Minister for Finance' and 'Chief Minister'. It is

stated that the markings to other Ministers were cancelled by the Minister (Rural

Industries). The Minister for Finance approved the proposal on 14.1.1992. By

G.O. Ms. No. 18 issued on 20.1.1992 the Government approved the sale of

TANSI Foundry property to Jaya Publications. Jaya Publications, in turn, was

informed of the decision of the Government by Ex. P-36 with which a draft sale

agreement for getting N.O.C. from the Income Tax Department, was enclosed.

An agreement for sale was entered into between TANSI and Jaya Publications

on 4.3.1992 and the said document was registered conditionally because the

value of the land and building was less than the market value and guideline

value. Board of Directors of TANSI took note of the fact that the actual extent of

land sold was 3.0786 acres when it was measured.

Under Section 47-A of the Indian Stamp Act (as in force in Tamil Nadu),

Sub-Registrar, Adayar, P.W.1, referred to the Special Deputy Collector (Stamps)

- A-5 - for fixing the market value of the TANSI Foundry land by his proceedings

Ex. P-3 as the value was less. By proceedings dated 7.12.1992, Ex.P.-6, he

fixed Rs. 3.00 lakhs per ground as the market value for the TANSI Foundry land.

In Writ Petition No. 472 of 1993 in the High Court of Madras relief is sought for

setting aside the sale deeds executed in favour of Jaya Publications and Sasi

Enterprises on the ground that the sale deeds are invalid documents and for

resumption of land by the Government. We are not concerned with this writ

petition in these proceedings.

A private complaint was lodged before the IX Metropolitan Magistrate

Court, Saidapet, seeking to punish J. Jayalalitha, respondent No. 1 herein, for

offence under Section 169 IPC for having purchased Government land in

violation of Code of Conduct for Ministers. In view of several complaints and on

the basis of media reports, the Government referred the matter to C.B.C.I.D. on

which a crime came to be registered in crime No. 17 of 1996 Ex. P-75 is the First

Information Report in the said crime. Investigation was taken up by P.W.27 and

two cases were registered as Special C.C. No. 4 of 1997 and Special C.C. No.

13 of 1997 against the respondents.

A-1 was charged under Section 120-B IPC, Section 13(2) read with

Section 13(1)(c) & 13(1)(d) of the Prevention of Corruption Act, and Sections

409, 169 and 420 read with Section 34 IPC. A-2 was charged under Section

120-B IPC, Sections 13(2) read with Section 13(1)(c) and (d) of the Prevention of

Corruption Act read with Section 109 IPC, under Sections 409 read with 109 IPC,

169 read with 109 IPC and 420 read with 34 IPC. A-3 was charged under

Section 120-B IPC, Section 13(2) read with 13(1)(d) of the Prevention of

Corruption Act, Section 119 IPC read with Section 13(2) read with 13(1)(d) of the

Prevention of Corruption Act, and under Sections 169 read with 109, 420 and

409 IPC. A- 4 and A-5 were charged under Section 120-B IPC, under Section

13(2) read with 13(1)(d) of the Prevention of Corruption Act, under Section 119

IPC read with Section 13(2) read with 13(1)(d) of the Prevention of Corruption

Act, and under Section 169 read with Section 109 IPC. A-6 was charged under

Section 120-B IPC, under Section 119 read with 13(2) read with 13(1)(d) of the

Prevention of Corruption Act and under Section 13(2) read with 13(1)(d) read

with 109 IPC.

The Trial Judge convicted A-1 under Section 120-B read with 13(2) read

with 13(1)(c) and (d) of the Prevention of Corruption Act. He also convicted A-1

under Sections 13(2) read with 13(1)C ) and 13(2) read with 13(1)(d) of the

Prevention of Corruption Act and under Section 409 IPC and for each charge, A-

1 was directed to suffer rigorous imprisonment for a period of three years and to

pay a fine of Rs. 10,000/- with the direction that in default of payment of fine, A-1

will suffer simple imprisonment for three months. Similarly, the trial Judge

convicted A-2 under Sections 120-B IPC read with 13(2) read with 13(1)(c ) and

(d) of the Prevention of Corruption Act, under Sections 13(2) read with 13(1)(c )

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of the Prevention of Corruption Act read with 109 IPC, under Sections 13(2) read

with 13(1)(d) of the Prevention of Corruption Act read with 109 IPC and under

Section 409 read with 109 IPC. A-3 to A-5 were convicted under Sections 120-B

IPC read with 13(2) read with 13(1)(c ) and (d) of the Prevention of Corruption

Act and under Sections 13(2) read with Section 13(1)(d) of the Prevention of

Corruption act and each of them was sentenced to suffer rigorous imprisonment

for a period of three years and to pay a fine of Rs. 10,000/- in default of which

each of them was directed to suffer simple imprisonment for three months for

each charge. A-6 was convicted under Sections 120-B IPC read with 13(2) read

with 13(1)(c ) and (d) of the Prevention of Corruption Act and he was sentenced

to suffer rigorous imprisonment for three years and to pay a fine of Rs. 10,000/-

with a default sentence of simple imprisonment for three months. The learned

trial Judge further directed that the sentences imposed upon the accused will run

concurrently. A-1 was acquitted of the charge framed under Section 420 IPC

and also the charge under Section 169 IPC. A-2 was acquitted of the charges

framed under Section 169 read with 109 IPC and 420 read with 34 IPC. A-3 was

acquitted under Sections 119 IPC read with 13(2) read with 13(1)(d) of the

Prevention of Corruption Act and under Sections 169 read with 109 IPC, 420 IPC

and 409 IPC. A-4 and A-5 were acquitted of the charges framed under Sections

119 IPC read with 13(2) read with 13(1)(d) of the Prevention of Corruption Act

and Sections 169 read with 109 IPC. A-4 is stated to have died subsequent to

the disposal of the appeal in the High Court and before these proceedings were

filed in this Court. A-6 was acquitted of the charges under Sections 119 IPC read

with 13(2) read with 13(1)(d) of the Prevention of Corruption Act and under

Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act and 109

IPC. The charge under Section 420 IPC was dropped in view of the concession

made on behalf of the State of Tamil Nadu in Criminal Appeal Nos. 395-397 of

2000 decided by this Court on 25.4.2002 and reported in 2000(4) SCC 444.

The accused preferred Crl. Appeal Nos. 972, 973, 974, 977, 981 and 987

of 2000 before the High Court. The High Court by a judgment pronounced on

4.12.2001 allowed Criminal Appeals by acquitting all the accused and dismissing

the State appeal.

Summary of the Findings of the High Court are as follows:

1. There is no evidence to indicate that the Guideline Value had been fixed in

respect of the property in question. In fact, the witnesses admitted that there

was no guideline value for this property.

2. The charge framed by the Trial Court is based on the Guideline Value and it

is not permissible to proceed on the basis of market value as the two

concepts are different and, therefore, the procedure adopted by the Trial

Court prejudices the accused. Prosecution has not established that market

value of the land sold to firms of respondents Nos. 1 and 2 is Rs. 7.32 lakhs

or more than the price fetched.

3. The properties were sold by tender process after due publicity in newspapers

and the highest bid has been accepted. Hence the price offered and

accepted cannot result in wrongful loss to one party and gain to another party

in the absence of any vitiating circumstances.

4. The Guideline Value not having been established acceptance of Rs.3 lakhs

per ground is reasonable on the basis of the evidence on record, particularly

in view of the offer accepted pursuant to the tender process. Thus there is no

wrongful loss to one party or gain to another party.

5. Price paid for small extents of land or additional stamp duty claimed on that

basis are paid without demur cannot form a test for fixing the market value of

the land in question.

6. The value mentioned in Ex. P.5 for the building or the super-structure ought to

have been taken into consideration by the Trial Court as the same contained

the necessary details and though it is stated that Exs.P.58 and P.59 were

prepared after ascertaining relevant details, no material was placed in support

of the same before the court and, therefore, it could not be said that the

properties had been purchased at a lesser value than what is just.

7. The sale effected by TANSI Enamelled Wires to M/s Sasi Enterprises is not

vitiated. The Sub-Committee rejected the offer of M/s R.R.Industries of

Rs.4.12 lakhs on the basis of guideline value. It is only much later the Sub-

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Committee realised from Ex.D-39, letter of the Sub-Registrar, that the subject

matter of sale therein is only of an extent of 240 sq. feet and is in respect of a

small shed. There are other reasons also to reject the offer of R.R.Industries.

8. The charge of conspiracy could not be established as the properties in

question were not purchased at a price lower than the Guideline or market

value nor is there any independent material to conclude that there is any

conspiracy to commit offences charged herein.

9. There is no link established to show that there is a conspiracy to sell the

properties at a lesser price so as to cause wrongful loss and wrongful gain to

enable A-1 and A-2 to obtain the same.

10. In view of the finding recorded that there was no Guideline Value and by

reason of the properties sold at Rs.3 lakhs per ground there was no pecuniary

advantage to M/s Jaya Publications, the charges under Section 13(2) read

with Sections 13(1)(c) and 13(1)(d) of the PA Act were not established.

11. In regard to A-3, the High Court held that the decision to offer the land in

question was that of the Board and not his individual decision and he followed

the decision of the Sub-Committee and, therefore, in view of the collective

decision taken by the Board or the Sub-Committee he cannot be held to be

guilty of any charge.

12. In regard to charge against A-4, none of the persons who endorsed the file

had been attributed with corrupt motive and, therefore, there was no evidence

worthy of consideration.

13. A-5, who was the Special Deputy Collector (Stamps), was only performing his

statutory duty and fixed the value of the properties in question at Rs.3 lakhs

per ground after notice to the concerned parties. Hence he cannot be held to

be guilty of any charge. Moreover, since A-5 was an appellate authority

under the statute, he cannot be held to conspire to fix the value at Rs.3 lakhs

per ground, though it may fetch much higher value in the market.

Against the decision of the High Court in the said appeals, the State

Government not having filed any petitions or appeals, a private party is permitted

to file these appeals by special leave. Dr. Subramaniam Swamy with permission

has filed a separate special leave petition and no leave is granted to him but he

has been allowed to address arguments only. We have not separately noticed

his arguments but considered the same in the course of our discussion.

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,

Madras. It could be seen from Ex.D-20 which is a letter written by the Collector to

the Commissioner of Land Administration to the effect that the maximum sale

value in the village in Block No.5 of Thiru.vi.ka.Industrial Estate was Rs. 3,12,613

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per ground based on the sale of a vacant land in S.No. 16/7 of Alandur village.

He recommended that the rate of Rs. 3 lakhs per ground could be fixed as the

value for the TANSI Foundry land. That assessment of the Collector was

accepted by the Commissioner of Land Administration as per Ex.P-61 who also

fixed Rs. 3 lakhs as value per ground for the TANSI Foundry land. The trial

Judge rejected the value of land indicated in Ex.D-20 and Ex. P-61 on the ground

that TANSI agreed to sell the land to Tamil Nadu Co-operative Sugar Federation

at that price in view of the condition that the Sugar Federation will put up 15000

sq.ft. of superstructure which would be sold to TANSI at the cost of construction,

without paying any amount for the land on which the superstructure was to be put

up. Therefore, he held that Ex D-20, which was accepted by the Commissioner

of Land Administration under Ex. P-61, could not be correct basis to say that Rs.

3 lakhs per ground was the market value of the property of TANSI Foundry.

However, Tamil Nadu Co-operative Sugar Federation purchased the entire

property without putting up a superstructure at the rate of Rs. 3 lakhs per ground.

It cannot also be said that Sugar Federation is a Government organisation and,

therefore, the land was sold to it by TANSI at a commercial rate. It was a

Federation formed by several co-operative societies which were registered under

the Tamil Nadu Co-operative Societies Act and it could not be treated as a

Government Organisation. Therefore, sale of 2.52 acres of land of TANSI

Foundry to the Sugar Federation was a sale to a private party and the price of

Rs. 3 lakhs per ground offered by the Sugar Federation could be taken into

consideration for reflecting the market value of the property in question. Ex. D-20

and Ex. P-61 in connection with that sale indicating that the value of Rs. 3 lakhs

per ground fixed by the Collector, Madras and Commissioner of Land

Administration could be relied upon.

While on this point the High Court referred to the fact that in Ex.D.20, the

Collector stated that the market value of the land in Block No.4 works out to

Rs.1,68,649 per ground and the disputed property which is situate in Block No.5

is only 180 meters from that land. The Collector, however, took into account the

sale under Ex.P.60, according to which the sale price per ground is Rs.3,12,613.

The High Court then adverted to the argument of the learned Public Prosecutor

that Ex.P.60 should be eschewed from consideration on the ground that it lies

within the jurisdiction of a different revenue district and observed that if Ex.P.60 is

to be ignored, the market value of the disputed property would only be

Rs.1,68,649 and not even Rs.3,00,000.

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.

Now we shall examine whether Ex. P-8, P-57, P-70 and P-71could be

considered to assess the market value of the disputed property as Rs. 7.32

lakhs per ground. Each of these documents was accompanied by Form 1-A

wherein the parties acquiesced in the claim for payment of excess stamp duty.

The land comprised in Exs. P-70 and P-71 are small in extent and they could not

be taken into consideration to be safe guide to find value of the land sold by

TANSI to Jaya Publications because it will be 53 times higher than the extent of

land conveyed under those documents. In fact, PW.1 admitted that they are not

comparable sales. The sale deed executed on 22.9.1991 [Ex.P.8] by Idayam

Publications in favour of Jaya Publications had shown the value of the land at Rs.

4,78,488/- per ground. It was in respect of a small extent situate in block No.6 of

Adyar Village. The said sale deed did not show that the value was Rs. 7.32

lakhs per ground and when the Sub-Registrar wanted to collect additional stamp

duty, it was paid without any demur and from this fact, it could not be inferred that

the value of TANSI Foundry land was Rs. 7.32 lakhs per ground. Therefore,

there is no justification in taking the sale consideration mentioned in Ex. P-8

which was only Rs. 4 lakhs and odd per ground and putting it against the

accused by stating that the market value of the property in question is Rs. 7.32

lakhs per ground. Ex. P-8 cannot offer a true index to assess the market value of

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TANSI Foundry land at Rs. 7.32 lakhs per ground. As regards P.57, which was a

sale deed in favour of Jaya Publications in respect of 5658 sq.ft. situate in block

No.6 of Adyar Village, the sale price mentioned therein is Rs.76,344/- only per

ground. But, the Sub-Registrar fixed the value for the purpose of stamp duty at

Rs.6 lakhs and the stamp duty was paid accordingly. Hence, it stands on the

same footing as Ex.P-8.

It is strongly contended that the recommendation of Rs.3 lakhs per ground

in respect of a transaction to be entered into with Tamil Nadu Sugar Cooperative

Federation is stated not to offer a good guide for fixing the value of the properties

in the present case. The High Court took note of the fact that Tamil Nadu Sugar

Cooperative Federation is not a Governmental organisation to which a

concession has been shown on that basis. It is to be noticed that the Trial Court

relied upon four documents, viz., Exs. P-8, P-57, P-70 and P-71, to show that the

market value of the land in question is Rs.7.32 lakhs per ground. Each of these

documents was accompanied by Form No.1A wherein the parties acquiesced in

the claim for the payment of excess stamp duty. It is correctly assessed by the

High Court that the price ranged between Rs.76,344 to Rs.4,78,484/- per ground.

Indeed, Exs.P-70 and P-71 indicated that Rs. 8 lakhs per ground would be the

value but those documents involve transfer of a running business. The High

Court also gave importance to the history of the efforts on the part of TANSI to

bring the properties to sale and its failure to obtain the reasonable price at the

earlier floated tenders. The properties, therefore, became a dead investment

and interest was being paid by TANSI on loans borrowed from the banks. At the

time of the present transaction, the borrowings extended to Rs.1.87 crores and

had to pay Rs.18 lakhs of interest per annum and, therefore, it was not possible

to contend that bringing the properties in question for sale was imprudent nor it

could be demonstrated that the advertisement did not give sufficient particulars

or that the tender forms were not made freely available or that anyone of the

bidders was pressurized into not bidding or bidding for a lower amount or that a

cartel had been formed or that the bidding in open tender was vitiated in any

manner whatsoever. In such cases the courts have always held that the best

price obtained through open tender is an index of the market value of the

property. The Collector of Madras and the Commissioner of Land Reforms

looked into the matter and held that an amount of Rs.3 lakhs per ground is the

market value of the land in question. Contrary to what is stated by the

prosecution, the valuation in Ex.D-20 was not made on the basis of sale being to

a Government Corporation but on the basis of the independent data relating to

sales of land in the neighbouring blocks. The effort of the prosecution to show

that the actual sale when made to the Tamil Nadu Sugar Cooperative Federation

was at a far higher price than Rs.3 lakhs per ground since 15000 sq. ft of built

area was to be given at a cost to TANSI without the plinth area being valued.

This exclusion of the plinth area has not been established and, on the other

hand, the TANSI Board had passed a resolution not to go in for office space due

to financial constraints but the price per ground was not altered in any manner.

The High Court has gone into this aspect in detail, citing the relevant documents.

Therefore, the price offered by the respondents and accepted by TANSI cannot

be termed to be not a fair price in regard to the properties in question going by

the state of evidence on record. If the value of the properties is determined, as

stated above, the view taken by the High Court in respect of the various charges

under Sections 13(1)(c), (d), 13(2) of the Prevention of Corruption Act and under

Sections 409 and 120-B IPC would stand to reason.

The argument of Sri Andhyarujina and Shri Natarajan is that officers had

proceeded initially on the basis that the land in question had a Guideline Value of

Rs.7.32 lakhs per ground and hence the same constituted a benchmark. The

High Court has gone on to examine the case as if it is a valuation court and did

not examine the matter in the perspective in which charges are framed against

the accused. This argument ignores that the gist of the charge is causing

wrongful loss or gain in the sale of the land which could be only on the basis of

its market value and not on assumed figures or notional value. Thus, the finding

of the High Court that the prosecution has not succeeded in establishing that the

market value of TANSI Foundry land sold to Jaya Publications as Rs. 7.32 lakhs

per ground cannot at all be said to be a perverse finding.

We may now proceed to consider the valuation of superstructure. Exhibit

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P-5 showed that the building was worth Rs.18,22,654/- which is less than the

value offered by M/s Jaya Publications. This amount of Rs.18,22,654/- was

assessed by one Sivaraman at the instance of PW-1 after the sale was effected.

The assessment of Sivaraman under Exhibit P-5 was not impeached. On the

contrary, the prosecution placed reliance upon the same and adverting to the

evidence of PW-19, the Design Engineer, and Ex.P-59 approved by the Chief

Engineer wanted to contend that the value of the building is Rs.53,12,354/-.

PW-19, the Design Engineer, assessed it at Rs.4,64,75,036/- as could be seen

from Ex.P-58. Subsequently, the same was modified by the Chief Engineer by

bringing it down to Rs.53,12,354/-. There is a big difference of amount of more

than 4 crores between the value assessed by the PW-19, the Design Engineer

and the value fixed by the Chief Engineer. They did not contain any details as to

how the value had been finally arrived at Rs.53,12,354/- of the building. In Ex.P-

58, the value of the structural columns were shown at Rs.54,32,130/- but in Ex.

P-59, it was shown as 39 lakhs, and no evidence was adduced before the Court

to show that how these figures were arrived at, although, it is stated that the

witnesses had taken about 40-50 pages of note. If that was so, the same should

have been produced by the prosecution and in the absence of production of

those notes, forming part of evidence is difficult to accept that the value

mentioned in Exs. P-58 and P-59 was the correct value for the building. Ex.P.5

shows calculation and indicated that as to how the value for the building was

arrived at which is a document offered by the prosecution in evidence.

The guideline value has relevance only in the context of Section 47-A of

the Indian Stamp Act (as amended by TN Act 24 of 1967) which provides for

dealing with instruments of conveyance which are undervalued. The guideline

value is a rate fixed by authorities under the Stamp Act for purposes of

determining the true market value of the property disclosed in an instrument

requiring payment of stamp duty. Thus the guideline value fixed is not final but

only a prima facie rate prevailing in an area. It is open to the registering authority

as well as the person seeking registration to prove the actual market value of

property. The authorities cannot regard the guideline valuation as the last word

on the subject of market value. This position is made clear in the explanation to

Rule 3 of Prevention of Undervaluation of Instruments Rules. The said

explanation reads as follows :-

"Explanation.-the "Guidelines Register" supplied to the officers is

intended merely to assist them to ascertain prima facie, whether the

market value has been truly set forth in the instruments. The entries

made therein regarding the value of properties cannot be a substitute for

market price. Such entries will not foreclose the enquiry of the Collector

under section 47-A of the Act or fetter the discretion of the authorities

concerned to satisfy themselves on the reasonableness or otherwise of

the value expressed in the documents."

This explanation also will have to be read in conjunction with explanation

to Section 47-A of the Indian Stamp Act (as amended by TN Act 24 of 1967)

which reads :-

"Explanation.- For the purpose of this Act, market value of any property

shall be estimated to be the price which, in the opinion of the Collector or

the Chief Controlling Revenue Authority or the High Court, as the case

may be, such property would have fetched or would fetch, if sold in the

open market on the date of execution of the instrument of conveyance,

exchange gift, release of benami right or settlement."

This scheme of the enactment and Rules contemplate that guideline value

will only afford a prima facie basis to ascertain the true or correct market value

undue emphasis on the guideline value without reference to the setting in which it

is to be viewed will obscure the issue for consideration. It is clear, therefore, that

guideline value is not sacrosanct as urged on behalf of the appellants, but only a

factor to be taken note of if at all available in respect of an area in which the

property transferred lies. In any event, therefore, if for the purpose of Stamp

Act guideline value alone is not a factor to determine the value of property, its

worth will not be any higher in the context of assessing the true market value of

properties in question to ascertain whether the transaction has resulted in any

offence so as to give a pecuniary advantage to one party or the other.

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In ascertaining the true value, the High Court has taken note of several

features. Firstly, the price has been offered by the firm of A-1 and A-2 in a tender

process pursuant to an advertisement issued in a newspaper. A tender process

by the TANSI not being shown to be or demonstrated to be vitiated is a

transparent and good piece of evidence to indicate the real price of the properties

in question. That line adopted by the High Court cannot be faulted with at all.

Secondly, the adoption of Rs.7.32 lakhs per ground as Guideline Value will have

to be in terms of Tamil Nadu Stamp Act and not de hors the same. In the view

we have expressed as to the nature of guideline value the finding recorded by

the High Court that no Guideline Value has been fixed in respect of the

properties in question need not be further examined. The next basis upon which

the High Court proceeded to fix market value is the price of Rs. 3 lakhs per

ground in respect of land sold to Tamil Nadu Sugar Corporation Federation. The

said land forms part of the land out of which a portion is sold to the firms of

respondents. The contention of the prosecution that this is not a comparable

transaction has been rejected by the High Court for valid reasons. The approach

of the High Court cannot be said to be irrelevant or perverse.

Argument regarding the extent of land that was sold to the firms of

Respondents Nos. 1 and 2 is raised. It was pointed out that an extra piece of

land of 9 cents or so [about 1/10th of an acre] over and above the approximate

extent mentioned in the advertisement was sold to the firm of respondents. We

do not think that this aspect assumes any significance especially in view of the

fact that one of the terms in the advertisement itself stipulates that the actual

area to be sold will be according to measurement. Thus the view taken by the

High Court in this regard is perfectly in order and calls for no interference.

The contention that there was enough material on record to show that A-1

had knowledge of the purchase of the TANSI Foundry land and A-1 had signed

several documents in relation thereto need not be examined because even

proceeding on the basis on which the learned counsel contended would not carry

the matter any further. The stand of respondents Nos. 1 and 2 is not that the

firms of which they are partners have not purchased the properties in question,

but only that respondent No. 1 has not signed some of the documents leading to

sale of the properties in question. There is overwhelming evidence on record to

indicate that accused No. 1 has signed the documents in question, but the denial

of respondent No. 1 appears to be too naove to be accepted in a court of law.

May be respondent No. 1 might have tried to be unduly cautious without fully

understanding the implications in law. Fact remains that properties in question

have been sold to firms of which respondents Nos. 1 and 2 are partners. That

fact in the case not being in dispute, it is unnecessary to dilate on this aspect

any more.

Insofar as the offence under Section 120B is concerned, it is not clear

from the arguments made by the learned counsel on behalf of the appellants in

what manner the conspiracy is sought to be established. How there have been

meeting of the minds of different accused at different stages and what the

common design has been, is not clear. Even if we assume for the purpose of

argument that some of the officers of the Government were circumspect in their

attitude having come to the conclusion that A-1 was interested in purchase of the

properties and have put their seal to such act either tacitly or over zealously by

being too expressive of the same, we cannot hold that there was a conspiracy

amongst various persons.

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

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and thereafter came to the conclusion that the price was Rs. 3 lakhs per ground.

One of the contentions raised on behalf of the State in the case was that the note

file - Ex.P-48 - prepared at the Secretariat was not circulated to A-1 and it was a

deliberate omission on the part of A-4 and, therefore, it would be inferred that

there was a conspiracy in the matter. It was also indicated that G.O. Ms. No.

836 of 1991 - Ex.P-53 - directed that the Board of Management should exercise

proper scrutiny in the approval of all tenders and purchase contracts and that

prior approval of the Government should be obtained in respect of all tenders for

works, equipments, etc. and all purchases whether by open tender or by limited

tender enquiries, etc. where the value of the contract exceeds Rs. 1 crore.

Therefore, the said note file should have been circulated to A-1 for approval and

not circulating the said note file to A-1, offence of conspiracy could be held to

have been made out. The learned Judge held that G.O. Ms. No. 836 of 1991

had to be read in its entirety and if it is so read, it would show that it would be

applicable only in respect of financial outgo by means of tender for works or for

purchase of equipments and all purchases as noted in different paragraphs

thereof and this G.O. was issued only as a financial discipline measure and to

monitor the expenditure above Rs. 1crore and the word 'tender' used in the said

G.O. did not mean that the sale of land by TANSI will also come within the ambit

of the said G.O. since it was clear from the word 'contracts' used in the said

paragraphs that the G.O. was applicable to the tenders for works, equipments,

etc. if it is for purchase and not for sale of property. Inasmuch as in the markings

in the note file there was reference to 'Minister (Rural Industries)', 'Minister

(Finance)' and 'Chief Minister' and according to the prosecution, it was scored

off by PW-14 at the instance of A-4, the prosecution wanted to draw support from

this fact. In fact, PW-14 admitted that when she put up her note, she only stated

that it had to be circulated to A-4 and PW 11 wanted the file to be circulated to

Minister (Rural Industries), Minister (Finance) and Chief Minister and PW 14 did

not make such a note and, therefore, by merely finding the letters "M(RI)",

"M(F)" and "CM" and their scoring off, we cannot come to the conclusion that

they were first entered and later scored off at the instance of A-4. It was,

therefore, not possible to hold that there was conspiracy among the accused on

that account.

An argument was put forth that A-5 did not follow the procedure

contemplated under the Tamil Nadu Stamp (Prevention of Under-valuation of

Instruments) Rules, 1968 since he did not wait for 21 days for the parties to

submit their representations before he passed the final order under Rule 7 of the

said Rules and A-5 ought to have waited for 21 days as contemplated under Rule

4 of the said Rules and thereafter he should have passed a provisional order

under Rule 6 and then final order under Rule 7. The objections of Jaya

Publications were received on 3.12.1992. There is no rule that A-5 should wait

for 21 days since the period of 21 days as contemplated under Rule 4 of the said

Rules was only the upper limit for filing of objections. A-5 inspected the property

on 4.12.1992 and then assessed the value of the property by passing the final

order on 7.12.1992. The question of passing of a provisional order would have

arisen in the event of A-5 coming to the conclusion that market value was more

than the value mentioned in the sale deed so as to call upon the parties to submit

their objections, if any, to determine the market value. If A-5 came to the

conclusion that the market value of the property was as indicated in the sale

deed, then there was no necessity for A-5 to pass a provisional order at all and

call for objections. Hence this conduct on his part could not indicate that there

was a conspiracy.

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 lesser 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.

Section 13(1)(d) of the Act states as follows :-

"A public servant is said to commit the offence of criminal

misconduct, if he

(i) by corrupt or illegal means, obtains for himself or for any

other person any valuable thing or pecuniary advantage; or

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(ii) by absuing his position as a public servant, obtains for

himself or for any other person any valuable thing or

pecuniary advantage; or

(iii) while holding office as a public servant, obtains for any

person any valuable thing or pecuniary advantage without

any public interest."

To attract provisions of Section 13(1)(d) of the Prevention of Corruption

Act, public servant obtains for himself or any other person any valuable thing or

pecuniary advantage

(i) by corrupt or illegal means, or

(ii) by abusing his position as public servant, or

(iii) without any public interest.

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.

Offence under Section 13(1)(c) of the Prevention of the Corruption Act

would arise if any public servant dishonestly or fraudulently misappropriated or

otherwise converted for his own use any property entrusted to him or under his

control as a public servant or allowed any other person to do so . In the present

case, it cannot be said that the accused acted dishonestly because there was no

wrongful gain or wrongful loss and hence it cannot be said that they acted

fraudulently. It cannot also be said that the accused has converted the property

of TANSI inasmuch as property was sold pursuant to a transparent tender

process which is not shown to be vitiated in any manner. The property in

question belonged to TANSI a Government Company and it was neither trust

property nor was it entrusted to or under the control of the Chief Minister or any

Minister. Hence, Section 13(1)(c) of the Prevention of Corruption Act is not

attracted to the facts of the case.

The only evidence against A-6 is that he spoke about the disposal of file

relating to sale of land in question to be expedited. This fact is spoken to by

PW-12. PW 12 stated in her evidence that she voluntarily appeared before the

Magistrate and gave a statement without being sponsored by the Investigating

Officer though PW 23, Investigating Officer stated that he gave a requisition for

recording her statement. A-6 did not participate in the meeting held on

14.10.1991 nor did he participate in the meeting held on 6.11.1991. The High

Court did not accept the evidence of PW-12. This evidence does not in any

manner advance the case of the prosecution to establish that A-6 has committed

any offence.

Regarding the charge against A3, who was the Chairman-cum-Managing

Director of TANSI from 1.8.1991 to 10.7.1992, we have to bear in mind certain

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facts. The decision to accept the offer of Jaya Publications was that of the Board

and not of A-3 alone. PW 8 the General Manager and Company Secretary of

TANSI admitted that all the decisions were taken by the Sub-Committee and no

decision was taken independently by any individual and A-3 followed the decision

of the Sub-Committee, which was approved by the Board. Therefore, there was

no evidence to show that A-3 acted against the decision to favour Jaya

Publications. The sale of land to Jaya Publications is a collective decision of the

Board and not of any individual, the price on which the land was to be sold and

the price on which the buildings were to be sold were decided by the Board of

Directors to which the Government gave approval and thus there was no

independent assignment to A-3 in deciding the matter nor did he suppress any

document by not placing them before the Board of Directors.

A-5, Special Deputy Collector (Stamps), only performed statutory duty in

fixing the value of the property in question at Rs. 3 lakhs per ground after notice

to the concerned parties. The matter was statutorily referred to A-5 for fixing the

market value of the property and thereafter A-5 fixed the market value of the

property after taking into consideration the relevant factors. A-5 took into

account the fact that in the vast extent of about 2 to 3 sq.kms. the land

purchased by Jaya Publications was 3/4 km. away from Grand South Trunk road

and King Institute was at the eastern boundary of the land in the industrial estate

and the land value was only Rs. 3 lakhs per ground in the front portion and about

Rs. 2 lakhs per ground in the extreme north because of the threat of inundation

of river Adayar during flood season. Ex. P-6 shows that A-5 had taken into

consideration several verdicts of the Madras High Court which say that the

guideline was not final and it was only a preliminary exercise to find out the real

market value of a particular property and he also compared the other sales and

then arrived at the value. He referred to Ex. D-10 which is a sale deed by which

an extent of 6695 sq.ft. of land in Block No. 6 at Adayar village was sold on

12.10.1990. The vendor is Paramount Pollution Control Limited. The value per

ground is shown to be Rs. 99,984/-. The question of valuation was referred

under Section 47-A of the Stamp Act and A-5 fixed the value of the property at

Rs. 2,17,008/- per ground. Another document No. 1442 of 1991, which was

referred under Section 47-A of the Stamp Act, was sale by Wazir Begum to

Capro Industries and through this transaction an extent of 5393 sq.ft. of land was

sold which is about two ground. The executant in the deed had shown the value

of land per ground as Rs. 1,89,120/- and A-5 fixed the value at Rs. 3 lakhs per

ground but in the course of his proceedings - Ex. P-6 - had referred to this

document but only made a factual error in stating that the property was sold to

SIDCO. Ex.P-68 is a deed registered on 31.5.1991 by which an extent of 5538.5

sq.ft. of land was transferred. The executant had valued the land at Rs.

2,07,984/- per ground and on being referred under Section 47-A of the Stamp

Act, A-5 fixed the value of the land at Rs. 2,78,184/- per ground. These three

sale deeds related to the sale of property falling within Block No. 6 of Adayar

village and the properties covered by the said documents were smaller in extent.

Since the maximum extent being 2.78 acres which was conveyed under Ex.D-10

and even for that property A-5 had fixed Rs. 2,17,008/- as value per ground and,

therefore, he held that the value fixed by A-5 at Rs. 3 lakhs per ground for the

property in dispute could not be stated to be an under valuation.

In answer to the contention that Exs. P-8, P-57, P-70 and P-71 were not

taken into consideration by A-5 when he fixed the value for disputed property at

Rs. 3 lakhs per ground, it could be seen that the lands comprised in these

documents were not comparable and did not reflect the true value of the property

in dispute. By letter - Ex. D-20, the Collector had fixed the value of the property,

Ex. P-61 - the Commissioner of Land Administration fixed the value of the

disputed land at Rs. 3 lakhs per ground. In Ex. D-21, PW 1 himself admitted that

Exs. P-70, 71 and 8 were not the comparable sales and further it was seen from

the evidence that the land conveyed under Ex. P-8 was close to 100 feet road

and the extent was also smaller as is in the case of Ex. P-57. Ex. P-4 is a letter

addressed by way of answer to his subordinate setting out the guidelines. A-5

fixed the market value of the property covered under Ex. P-68 at Rs. 2,78,184/-

per ground and not at Rs. 6 lakhs though the property was situate within Block

No. 6 of Adayar village. Ex. P-68 was referred under Section 47-A of the Stamp

Act and A-5 was not bound by the guidelines while assessing the value of the

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property and that he need not even accept the value mentioned in Ex. P-8, P-57,

P-70 and P-71 as the properties conveyed under the said sale deeds were

smaller in extent.

The trial Judge proceeded on the basis that A-5 committed an error in

taking into consideration the sale to SIDCO for fixing the market value of the

property in dispute though, in fact, document No. 1442 of 1991 was not the sale

to SIDCO. But these documents have not been put to A-5 and he had no

opportunity of explaining the circumstances under which these documents had

come into existence and, therefore, the trial Judge was not justified to test his

veracity with reference to those documents. Therefore, A-5 cannot be attributed

with any misconduct.

As regards the charge under Section 169 IPC, the findings of the Trial

Court are affirmed by the High Court.

The property in question is not owned by the Government but a public

sector undertaking and under the Articles of Association, prior approval of the

Government is needed before sale of any immovable property by it. The High

Court has considered that in the context of Section 169 IPC, such obligation

cannot convert property as belonging to or owned by the Government. It was

also held that the Code of Conduct cannot be construed to spell out a legal

prohibition.

On behalf of the appellants, it is urged that A-1 had purchased the TANSI

Foundry land as a public servant and she was legally bound not to bid for

purchase for this property and thereby she had abused her position as a public

servant to obtain for herself and A-2 the valuable property TANSI Foundry and

also a pecuniary advantage of Rs.3.5 crores. There cannot be serious dispute

that A-1 was a public servant at the relevant time. According to the prosecution

Section 169 IPC embodies a prohibition on a public servant not to purchase or

bid for certain property being legally bound as such a public servant not to

purchase or bid for that property. The emphasis laid is that the principle

underlying under Section 169 IPC is that a public servant is in fiduciary obligation

in relation to property which is in his charge or over which he could have control

and he should not put himself in a position of conflict of interest between his

public duty in relation to that property and his private interest in purchasing that

property and the general law in this regard being that persons in fiduciary

position are not to derive advantage from their position and they should not place

themselves in a position where there would be a conflict of interest in duty,

whether such transaction would result in a loss to public or not. In this context,

the provisions of Section 52 of the Indian Trust Act, 1882, Section 136 of the

Transfer of Property Act, 1882 and Order XXI, Rule 73 CPC are brought to our

notice and reliance was also placed on the decision of the Privy Council in (Seth)

Kanhaya Lal, since deceased (Now represented by Seth Hanuman Prasad &

Ors.) Vs. National Bank of India Ltd. New Delhi, AIR 1923 PC 114, wherein it

was observed that there should not be merging of two positions, namely, that the

interest of the seller to get the highest price and the buyer to get the lowest price

in the same person. In such an event, there will definitely be a conflict. Applying

the same principles, even in relation to the position of Ministers, Ministers ought

not to enter into any transaction whereby their private pecuniary interest might

even conceivably come into conflict with their public duty. It is urged that the

expression "legally bound not to purchase' in Section 169 IPC must, therefore, be

understood in the context of a fiduciary duty or obligation of a public servant not

to purchase or bid for property from the Government or in respect of which he or

she is in-charge or control. It is further urged that the expression "legally bound

to" must be given a wide connotation so as to cast an obligation on a public

servant arising in any legal way, viz., by law in the sense of statute law, by

contract or bond, by an order of a competent authority having the force of law, or

by an order of court, or by any fiduciary obligation imposed on a public servant by

the law of trusts or otherwise. The words "legally bound" do not necessarily only

mean the law made by the legislature or statutory law. Section 43 IPC contains a

definition of a person being legally bound to do, that is, a person is stated to be

legally bound to do whatever it is illegal in him to omit. The submission is that

this definition will have to be given a proper meaning by reference to cognate and

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grammatical variations and a person is stated to be legally bound not to do

something whatever it is illegal in him to do. The said provision also provides for

a definition of what is "illegal", that is, everything which is an offence or which is

prohibited by law or which furnishes a ground for civil action. In the present

case, purchase of the TANSI Foundry land was prohibited by law to A-1 and,

therefore, contended that a high official like a Chief Minister cannot purchase

Government property or property over which the Government has control when

such an elementary obligation is imposed on smaller officials. It is submitted that

Rule 2(b) of the G.O.No.1012 issued by the Tamil Nadu Government states that

after taking office and so long as he remains in office a Minister shall refrain from

buying from, or selling to, the Government any immovable property. This order

of the Government has been issued in exercise of the executive power of the

State vested in the Governor under Article 154 read with Article 162 of the

Constitution and the executive have power to make any regulation which would

have the effect of a law so long as it does not contravene any legislation already

covering the field and such executive orders having been made under Article 73

of the Constitution have for their operation an equal efficacy as an Act of

Parliament or the rules made by the President under Article 309 of the

Constitution. The order of the Governor bound A-1 not to purchase property from

the Government. The contention is that Rule 2(b) of the GO is not a rule of moral

instruction or guidance to be observed or not observed as the Minister deems fit

or not and it was meant to be a binding rule of action and in this context,

reference was made to the decision in Vidadala Harinadhababu & etc. Vs. N.T.

Ramarao, Chief Minister, State of Andhra Pradesh, Hyderabad & Ors. AIR

1990 AP 20, the Full Bench of the Andhra Pradesh High Court observed that no

minister would claim or would have the temerity to claim that he is not bound by

restrictions contained in the Code of Conduct and the mere fact that the

Government order is not statutory is irrelevant and even executive orders have a

binding force in law and it could not be spelt out that sanction is not logically

essential for a law and, therefore, the Chief Minister was also bound and was

within the scope of the order. For this purpose, it was also submitted that the

question is not whether TANSI Foundry land was technically the property of the

Government but of a Government company, but whether A-1 was purchasing it

from Government within the prohibition of Rule 2(b) of the GO and whether A-1

was purchasing property which was completely under the charge and control of

the Government. In this case, A-1 was the Chief Minister and the Minister for

Industries at the relevant time and she was in charge of the said Department

from 24.6.1991 to 13.5.1993. Article 77A(4) of the Articles of Association of

TANSI forbids TANSI from disposing of lands transferred to the company by the

Government without previous approval of the Government. Inasmuch as the

Government's approval had to be given the Government had necessary control

over the said properties and such properties fall within the concept of the G.O.

which prohibited in terms of Rule 2(b) of GO from purchasing the property whose

disposal was completely under the control of the Government. Even otherwise,

he submitted that in a case of this nature it is necessary to lift the veil of the

corporate personality of TANSI and find out that the property really belonged to

the Government and TANSI was another emanation thereof and corporate

personality cannot be used to commit fraud or improper conduct or to evade an

existing obligation or to protect crime. In this context, heavy reliance is placed on

the Code of Conduct.

We may now advert to the contentions of the learned senior counsel

appearing for the 1st Respondent:

The arguments of the learned counsel for the appellant goes beyond the

scope of the charge, that the phrase "legally bound not to" has not been defined

in the IPC but what is defined in Section 43 is the opposite concept i.e. "legally

bound to do", that in order to attract Section 169 there must be a prohibition

under the statute or statutory rules or regulations and there is no such law in the

present case. The Code of Conduct is not statutory and cannot be enforced by

the Court. It is more in the nature of internal guidelines meant for governing the

conduct of Ministers and does not give a right to third party to maintain a civil

action, much less, the violation thereof attracts any penal provision. The

enormity of the result of the appellant's argument being accepted would be that a

public servant would be guilty of an offence under Section 169 if there is any

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contravention arising out of a plethora of administrative instructions. Article 162

of the Constitution cannot elevate the Code of Conduct to the status of statute or

statutory rules, even assuming that the State can legislate on the topic. In any

case, it is contended, Code of Conduct contains no prohibition against the

purchase of the property in question which is owned by the Government

Corporation, namely, Tamil Nadu Small Scale Industries Corporation. A

distinction is maintained in the Code itself between the property of the

Government and the property of the Government undertakings. The property of

a Government Company, which has a distinct legal identity, cannot be equated to

the property of the Government though the Government may have control over

the Corporation. The prohibition must be clear and unambiguous to give rise to

the offence. The theory of lifting the veil of the Company cannot be invoked while

dealing with the criminal offences alleged to have been committed by a third

party. While elaborating the point that the definition of "legally bound to do"

cannot be imported, attention is drawn to Sections 175, 176, 177, 179, 181, 191,

202, 221, 222, 223 and 225 A IPC wherein that expression occurs. The learned

counsel, therefore, submits that the said definition is relevant only while

construing those Sections and what is contemplated in the above Sections is

that the act which a person is legally bound to do but if he omits to do that

particular act, an offence is made out, but, Section 169 only recognizes an act

as an offence if a public servant being legally bound not to purchase or bid,

purchases or bids for the property. Finally, it is contended that it would be

violating the basic principle of criminal law to convict a person for an act which

may furnish grounds for civil action but which, otherwise, is not prohibited by law.

In any case, it is submitted, the Code of Conduct being unenforceable in a court

no civil action would lie and no such civil action has been spelt out anywhere in

the charge or in the course of trial.

These contentions, by and large, were accepted by the High Court.

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.

On a plain reading of the Section and seeking the assurance from the

marginal heading as well, it is fairly clear that prohibition should flow from a law.

Such law in the context of Section 169 IPC should mean that the law as ordinarily

understood, that is to say, an enacted law or a rule or regulation framed under

such law but not an executive order which confers no rights on anybody nor sets

down legally enforceable obligations. The rules and administrative instructions

governing the public servants holding the civil post have undisputedly no

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application in this case. The law, which is pointed out, is the Code of Conduct for

Ministers issued in G.O.Ms.No. 1350, dated 26.7.1968 by the Government of

Tamilnadu in the name of Governor. Para 2(b) thereof enjoins that a Minister, so

long as he remains in office, shall "refrain from buying from or selling to the

Government, any immovable property except where such property is

compulsorily acquired by the Government in usual course".

A perusal of the Code would indicate that they lay down guidelines or

norms of conduct which the Minister must observe. The rules also prescribe the

authority who should ensure compliance with the Code and to whom various

statements have to be furnished. The procedure to be followed is left to the

discretion of that authority in case of breach of the Code. That authority is the

Chief Minister.

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. A Code of Conduct

prescribed by the Government under certain notification by itself cannot be

elevated to the level of law as has been rightly held by the Andhra Pradesh High

Court in the case of Vidadala Harinadhababu vs. N.T. Ramarao, [AIR 1990

A.P. 20]. Although there are certain strong expressions used in the course of the

said decision to the effect that "no minister or Chief Minister can have the

temerity to act contrary to such a Code" and it is binding on the Minister, still it

cannot be elevated to the level of prohibition under law. Following observations

made by a full Bench of the A.P. High Court in V. Harinathababu's case are

quite apposite.

"The Codes of Conduct issued by the Union Government and the

State Government are not statutory in nature. They lay down rules

of conduct which the Ministers must observe. They are in the

nature of guidelines. They also prescribe the authority who should

ensure compliance with the said Code; it is to him that the

statements contemplated by paragraphs 1(a), 2(a) and 2(e) have to

be furnished. Even the procedure to be followed in the case of an

alleged or suspected breach of the Code is also left to the

discretion of such authority. Having regard to the facts and

circumstances of the Code, the 'authority' shall evolve the

appropriate procedure. Evidently, the nature of action to be taken

on such enquiry is also left to him. Not being statutory, Courts will

not enforce them."

At paragraph 50, it was further observed-

"(i) There is no provision in the Constitution, nor is there any

provision of law which regulates the conduct of a Minister-which

expression includes Chief Minister and Prime Minister. There is

also no constitutional or statutory provision prohibiting a Minister

from engaging himself in any profession, occupation, or business,

whether actively for gain or otherwise.

(ii) The Code of Conduct issued by the Union Government-and by

the State Government-is of great significance and sanctity, though

it is not statutory. It fills a great void. The Code is evolved with an

eye upon good Government and clean administration, not only in

action but also in appearance. It is binding upon all Ministers. It

prescribes the authority who shall ensure observance thereof. The

procedure to be followed by him and the action to be taken thereon

is also left to him. Similar rules have also been evolved in United

kingdom. However, for the reasons given hereinbefore, the

petitioners cannot seek to enforce the Code through the Court."

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Even if the Government order is traced to have been issued under executive

power of the State under Article 162, such a Code will not be enforceable when

the language used is not in mandatory terms and they are intended to be mere

guidelines or instructions to the concerned persons in authority. Therefore, as

long as such a Code of Conduct is not enforceable in any court of law and does

not even provide what action could possibly be taken in case of breach by the

Chief Minister, the prohibition contained therein is only having ethical or moral

effect and any breach thereof cannot be treated to be unlawful or even illegal

within the meaning of Section 43 IPC. To constitute a ground for civil action

under Section 43, there must be a right in a party which can be enforced. It may

be a breach of contract or a claim for damages or some such similar right

accruing under any law. 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.

In the view we have taken, it is not necessary to consider the further

questions debated at the bar, namely, whether the prohibition extends to the

property of Government Undertaking as well, whether the State can legislate in

respect of the conduct of Ministers and whether the expression 'legally bound not

to purchase' should be necessarily construed in the light of the definition of

'legally bound to do'. But, we would like to observe one thing-whether or not the

word 'Government' in para 2(b) of the Code of Conduct includes Government

Company or Undertaking, the spirit and intention behind the Code of Conduct set

out in para 2(b) is apparently not to maintain any such distinction. Whether

appropriate language has been employed to give effect to such intention is a

different matter.

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.

The next charge we have to deal with is one arising under Section 409

IPC. Criminal breach of trust has been defined under Section 405 IPC. For the

offence of criminal breach of trust by a public servant the punishment is provided

under Section 409 IPC. The properties in question belongs to TANSI, a

corporation which is a separate and distinct entity from the Government and the

properties are held by it as owner and has complete control over the same

except when the said properties are to be alienated, approval of the Government

has to be obtained as provided under the Articles of Association of the said

Corporation. In a case of this nature, where there is no dominion over the

properties by a Chief Minister or a Minister it cannot be treated as entrustment of

the properties creating a trust which is an obligation annexed to the ownership of

the properties and arises out of the confidence reposed and accepted by the

owner. Indeed there is no material in the whole case to come to the conclusion

that any such trust has been or deemed to have been created in respect of the

said properties and that the relationship between A-1 and TANSI is one of trustee

and beneficiary. Therefore, the ingredients of Section 409 IPC are not attracted

to the present case at all. There is absolutely no entrustment of the properties in

any manner, which allows a dominion over it except approving or disapproving,

an act on the part of the Corporation either to sell or to alienate the properties. It

cannot be said that a public servant who holds a particular port folio and has an

element of supervisory control in certain matters, has a dominion over the

property so as to exercise any legal incidents attached to the right of ownership.

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Therefore, there was no entrustment of the said properties and it cannot be said

that A-1 had dominion over the said properties either as the Chief Minister or as

the Minister of Industries and in any case, the evidence does not establish the

ingredient of dishonest disposal or conversion of property for personal use .

Thus the charge under the aforesaid section is also not established as rightly

held by the High Court.

Though learned counsel wanted us to re-appreciate the evidence with

reference to the files of the Government and other material on record, we refrain

from doing so but have only broadly looked at facts adduced in evidence so as to

judge whether in a proceeding under Article 136 of the Constitution we should

interfere with the order of acquittal. For the reasons stated above, we think that

none of the offences charged against the accused are established. There is no

ground to interfere with the order under appeal. Hence, these appeals are liable

to be dismissed.

Before we part with the matter, it is necessary to notice certain aspects of

the matter.

Crime is applied to those acts, which are against social order and are

worthy of serious condemnation. Garafalo, an eminent criminologist, defined

'crime' in terms of immoral and anti-social acts. He says that "crime is an

immoral and harmful act that is regarded as criminal by public opinion because it

is an injury to so much of the moral sense as is possessed by a community - a

measure which is indispensable for the adaptation of the individual to society."

The authors of the Indian Penal Code stated that :-

"....We cannot admit that a Penal Code is by any means to be considered

as a body of ethics, that the legislature ought to punish acts merely

because those acts are immoral, or that, because an act is not punished

at all, it follows that the legislature considers that act as innocent. Many

things which are not punishable are morally worse than many things

which are punishable. The man who treats a generous benefactor with

gross ingratitude and insolence deserves more severe reprehension than

the man who aims a blow in passion, or breaks a window in a frolic; yet

we have punishment for assault and mischief, and none for ingratitude.

The rich man who refuses a mouthful of rice to save a fellow-creature

from death may be a far worse man than the starving wretch who

snatches and devours the rice; yet we punish the latter for theft, and we

do not punish the former for hard-heartedness."

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.

Officers even holding small posts like a Railway Property Keeper or a

Cattle Pound Keeper or a Process Nazir who is put in charge of the sale of

properties in a court auction cannot purchase the properties over which they

have control. In the present case, in view of the fact that Government headed

by the 1st Respondent has to give permission in respect of the sale of property of

these two companies, it certainly exercises powers over the same and thus

there is conflict of interest. Where there is conflict of interest law has always

avoided such sales being effected in favour of those who can jeopardise the fair

outcome of the transaction. 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

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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.

Report leading to IPC makes it clear that criminal law merely prescribes

the minimum standards of behaviour, while in public life, those who hold high

offices should not take shelter under the umbrella of criminal law but stand by

high probity. Further, criminal law is meant to deal with criminals ordinarily, while

Code of Conduct is observed as gentlemen's agreement. Persons in public life,

who are gentlemen, follow such Code instead of taking escape routes by

resorting to technical pleas as arise in criminal cases. 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. Such standards of behaviour were scrupulously observed in the

earlier days after independence, but those values how now dwindled and

instances of persons holding high elective offices indulging in self-

aggrandisement by utilising Government property or in distribution of the

largesse of the Government to their own favourties or for certain quid pro quo are

on the increase. We have to strongly condemn such actions. Good ethical

behaviour on the part of those who are in power is the hallmark of a good

administration and people in public life must perform their duties in a spirit of

public service rather than by assuming power to indulge in callous cupidity

regardless of self imposed discipline. Irrespective of the fact whether we reach

the conclusion that A-1 is guilty of the offences with which she is charged or not,

she must atone for the same by answering her conscience in the light of what we

have stated not only by returning the property to TANSI unconditionally but also

ponder over whether she had done the right thing in breaching the spirit of the

Code of Conduct and giving rise to suspicion that rules and procedures were

bent to acquire the public property for personal benefit, though trite to say that

suspicion however strong cannot take place of legal proof in a criminal case and

take steps to expiate herself.

In the result, we dismiss these appeals and special leave petition, subject

to the observations made above.