2003 (11) TMI 615 - SC - Indian Laws

Sale of land by TANSI - Conspiracy to sell the property at a lower price to confer pecuniary advantage - misconduct u/s 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act - Violation of Section 169 IPC by purchasing government property - criminal breach of trust - HELD THAT - 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. 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. 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. Criminal breach of trust - 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. 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 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. 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 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. In the result we dismiss these appeals and special leave petition subject to the observations made above.

Summary

Issues Involved:
1. Whether the sale of TANSI Foundry property to Jaya Publications was conducted at a fair market value.
2. Whether the accused conspired to sell the property at a lower price to confer pecuniary advantage.
3. Whether the actions of the accused constituted criminal misconduct u/s 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act.
4. Whether the accused violated Section 169 IPC by purchasing government property.
5. Whether the accused committed criminal breach of trust u/s 409 IPC.

Summary of Judgment:

1. Fair Market Value of TANSI Foundry Property:
The High Court found no evidence indicating that the guideline value had been fixed for the property in question. The prosecution failed to establish that the market value of the land sold was Rs. 7.32 lakhs or more. The properties were sold through a tender process after due publicity, and the highest bid was accepted. The High Court concluded that the price of Rs. 3 lakhs per ground was reasonable based on the evidence, and there was no wrongful loss or gain.

2. Conspiracy to Sell Property at a Lower Price:
The High Court held that the charge of conspiracy could not be established as the properties were not purchased at a price lower than the guideline or market value. There was no independent material to conclude that there was any conspiracy to commit the offenses charged.

3. Criminal Misconduct u/s 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act:
The High Court found that the properties were purchased through an open sales process held by TANSI, and the right to sell the properties was available with the Corporation. It was not established that the accused obtained any valuable thing or pecuniary advantage by abusing their position as public servants. The charge under Section 13(1)(d) was not established.

4. Violation of Section 169 IPC:
The High Court held that the Code of Conduct for Ministers, not having statutory force and not enforceable in a court of law, cannot be construed to impose a legal prohibition against the purchase of government property. The offense under Section 169 IPC was not established as there was no specific provision prohibiting the act to make it illegal.

5. Criminal Breach of Trust u/s 409 IPC:
The High Court found that the properties belonged to TANSI, a government company, and there was no entrustment of the properties creating a trust. The relationship between the accused and TANSI was not one of trustee and beneficiary. The ingredients of Section 409 IPC were not attracted, and the charge was not established.

Conclusion:
The Supreme Court upheld the High Court's judgment, acquitting all the accused of the charges. The appeals were dismissed, and the special leave petition was also dismissed. The Court emphasized the importance of high standards of probity in public life and condemned actions that give rise to suspicion of rules and procedures being bent for personal benefit.