WRITTEN SUBMISSIONS BY MR T.R ANDHYARUJINA, SENIOR ADVOCATE ON BEHALF OF THE APPELLANT

A-1 (Ms J. Jayalalitha) has committed offence under Section 169 IPC. A-1 is admittedly a public servant.

Principle underlying Section 169 IPC

Section 169 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 principle underlying Section 169 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.

The general law is 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 and duty. No public servant can buy property which is in his charge even if it does not cause loss to the public or he makes no gain.

(i) Section 52 of the Indian Trust Act, 1882 embodies this principle and enjoins that no trustee whose duty it is to sell trust property may directly or indirectly buy the same on his own account or as agent for a third person.

Pant, Prafulla C.: Commentary on Section 52 of the Indian Trust Act 5th Edn.

(ii) Halsbury on Trusts, Vol. 48, para 808 (at p. 33 of the paper-book) which states:

“[A] person who is a trustee for sale of, or has a power of sale over, trust property cannot effectively purchase it from himself, since he cannot at the same time occupy the two positions of vendor and purchaser; … Any such purchase is automatically voidable at the instance of any beneficiary no matter how honest and fair the purchase may be.”

(emphasis supplied)

(iii) Equity and Law of Trusts by Pettit on “Purchase by trustee of the trust property — self-dealing rule” (p. 38 of the paper-book).

(iv) Section 136 of the Transfer of Property Act, 1882 embodies the same law of fiduciary obligation in relation to an officer connected with any court of justice who is forbidden to buy any auctionable claim etc. See Mulla: Commentary on Transfer of Property Act on Section 136.

(v) Order 21 Rule 73 CPC, 1908 provides:

“73. No officer or other person having any duty to perform in connection with any sale shall, either directly, or indirectly, bid for, acquire or attempt to acquire any interest in the property sold.”

(vi) In Kanhaya Lal v. National Bank of India Ltd. AIR 1923 PC 114, the Privy Council stated that there should not be merging of two positions viz. that the interest of the seller to get the highest price and the buyer to get the lowest price in the same person.

In relation to the position of a Minister, the principle was stated by Prime Minister Asquith as “the first and most obvious proposition is that Ministers ought not to enter into any transaction whereby their private pecuniary interest might even conceivably come into conflict with their public duty”. (See Barnett Hilaire: Constitutional and Administrative Law.)

The words “legally bound” not to purchase in Section 169 must therefore be understood in the context of a fiduciary duty/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.

“Legally bound to”

The words “legally bound to” have a wide connotation by themselves. They refer to any legal 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. Wherever legally bound by law is required, it is so stated by IPC. Compare Section 187 IPC which states “whoever, being bound by law to render or furnish assistance to any public servant …” (emphasis supplied), and Section 191 “whoever, being legally bound by an oath or by an express provision of law to state the truth, or being bound by law to make a declaration …”.

(emphasis supplied)

Section 43 IPC contains a definition of a person being legally bound to do viz. “a person is said to be ‘legally bound to do’ whatever it is illegal in him to omit”.

All definitions are to be given cognate and grammatical variations. In its negative cognate and grammatical variation this definition will be “A person is stated to be legally bound not to do something whatever it is illegal in him to do.”

Section 32 IPC states “words which refer to acts done extend also to illegal omissions”. Section 43 also provides a definition of what is “illegal” viz. everything (a) which is an offence, (b) which is prohibited by law, and (c) which furnishes a ground for civil action.

In the present case the purchase of the Tansi Foundry property is an offence. It is prohibited by law to A-1. Such a purchase also furnishes ground for civil action against A-1.

Prohibited by law

A-1 was prohibited by the general law applicable to all persons occupying a fiduciary retention from purchasing property which belongs to the public. It must be obvious to a high official like a Chief Minister that he/she cannot purchase government property or property over which the Government has control when such an elementary obligation is imposed on smaller officials.

Apart from this, A-1 was also prohibited by Rule 2(b) of the order of the Government of Tamil Nadu issued in the name of the Governor being GO No. 1012 dated 28-5-1969.

Rule 2(b) of the GO states:

“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 that such property (sic).”

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 of India.

It is well settled that the “executive has 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”. See State of A.P v. Lavu Narendranath (1971) 1 SCC 607, (1971) 3 SCR 699, SCR at p. 709. In Indra Sawhney v. Union of India 1992 Supp (3) SCC 217, SCC at p. 558 it is said that 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. See also B.N Nagarajan v. State of Mysore (1966) 3 SCR 682 and Sant Ram Sharma v. State of Rajasthan (1968) 1 SCR 111, SCR at p. 119.

Rule 2(b) of GO No. 1012 had, therefore, the effect of law.

The order of the Governor bound A-1 not to purchase the property from the Government. This order was legally binding on all Ministers including the Chief Minister.

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. It was meant to be a binding rule of action, otherwise it would be an exercise in futility. Even if Rule 2(b) of the GO is not enforceable in courts (which is not admitted), it is binding on A-1 as a Chief Minister.

The question of enforcing Rule 2(b) of the GO by an order of the court does not arise in this case as in a prosecution under Section 169 IPC, what is to be established is that the public servant is legally bound not to purchase the property. However, it is submitted that such an obligation under the GO can be enforced in a court.

The binding character of a rule or law does not depend on its enforceability in court.

Vidadala Harinadhababu v. N.T Ramarao AIR 1990 AP 20 (FB), AIR at p. 37, para 24 (FB) holds:

“We are sure 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. We reiterate that the binding nature of the said restrictions is entirely different from their enforceability by courts.”

(emphasis supplied)

See also at p. 51(iii) “The Code … is binding upon all Ministers.”

The fact that the government order is not statutory, is irrelevant. Even executive orders have a binding force of law. (See A.P v. Lavu (1971) 1 SCC 607, (1971) 3 SCR 699 and Indra Sawhney v. Union 1992 Supp (3) SCC 217.) Common law, law of torts, customary law and international law are non-statutory but have the force of law.

It is equally irrelevant that the State order does not contain a provision for ensuring observance of the Code. Sanction is not logically essential for a law. (See Salmond on Jurisprudence.)

The government order clearly binds all Ministers including the Chief Minister. Para 3 of the GO is a clear indication that the Chief Minister was also bound and was within the scope of the order.

(Para 3 of the GO was deleted much later in 1994 when the revision took place during the period when A-1 became the Chief Minister.) It would be inconceivable that other Ministers would be bound by the GO but not the Chief Minister who is the Head of the Council of Ministers and must set the standard.

In her statement under Section 313, A-1 does not deny her knowledge of the GO.

Para 2(b) of the government order is clear and unambiguous.

The use of the word “refrain” is the language appropriate for high dignitaries like Ministers and does not signify absence of prohibition. It does not necessarily mean to avoid doing or forbear. It also means to put a restraint or check on, to hold back or restrain a person from an action, to curb, check stay on action, to keep or desist from an action. See the Shorter Oxford Dictionary, p. 2524.

“Furnishes a ground for civil action” in Section 43

The words “civil action” mean an action in a court of law other than criminal.

The words were deliberately used in Section 43 to refer to any cause of action of a civil nature against a public servant.

With regard to these words, the Law Commissioners stated that:

“These appear wide words but we think it would be difficult to restrict them without the risk of excluding something which ought to be included. Generally, we apprehend it will be found unobjectionable to designate as illegal anything done or omitted to be done by a man for which he is liable to a civil action.” (See First Report of the Law Commission reported in the Gour: Penal Law of India..

The words “grounds for civil action”, would include any action by way of contract as well as civil wrongs i.e torts. (See Vallabhram Ganpatram v. Emperor AIR 1926 Bom 122, AIR at p. 126, B. Gangaiah v. D.P Gangadharan AIR 1961 Mys 178, AIR at p. 181 and A.S Socha Gowder, In Re AIR 1956 Mad 335.)

The ground for civil action is not confined to claims sounding only in damages. It would include any relief in civil action such as a declaration of illegality of the action of the public servant, injunction (prohibitory or mandatory) against the public servant, cancellation of the action and restoration or restitution by the public servant. Such civil action would lie against the Minister in a court of law even without recourse to GO No. 1012 of the Government prohibiting a Minister from purchasing property from the Government. Violation of para 2(b) of GO No. 1012 which is a binding rule would also be a ground for civil action against a Minister.

A civil action will lie against the Chief Minister because it is well settled that public servants and a fortiori a Chief Minister, are trustees of powers vested in them and are accountable for their actions including disposal of public property. See judgments of the Supreme Court in State of Karnataka v. Union of India (1977) 4 SCC 608, (1978) 2 SCR 1, SCR at p. 64, Shrilekha Vidyarthi v. State of U.P (1991) 1 SCC 212, SCC at p. 239, Special Courts Bill, 1978, In re (1979) 1 SCC 380, SCC at pp. 442, 447, V.C Shukla v. State (Delhi Admn.) (1980) 2 SCC 665, (1980) 3 SCR 500, SCR at pp. 525, 532 and 535, Vineet Narain v. Union of India (1998) 1 SCC 226, SCC at p. 268 and Ram & Shyam Co. v. State of Haryana (1985) 3 SCC 267, SCC at p. 277.

A civil action would therefore lie against a Minister who abuses his position in purchasing property from the Government or over which the Government has power of control or disposal.

The prohibition of arbitrary actions and unreasonableness would also apply to such an action of the Chief Minister's in public law by public law remedies. It is settled law that government property cannot be arbitrarily disposed of. A Minister's action in purchasing government property or of property over which the Government has the power of disposal would be unreasonable and arbitrary and would be liable to be struck down as unreasonable and arbitrary.

The court has cancelled the actions of Ministers in relation to public property over which they have powers of disposal.

In the first Common Cause case (1996) 6 SCC 530 fifteen allotments of petrol pump sites by the Minister Mr Satish Sharma were cancelled by the Court. This order of the Supreme Court has been affirmed even in the review judgment in Common Cause, A Registered Society v. Union of India (1999) 6 SCC 667 at para 115 as arbitrary and violating Article 14 as “a Minister is in a position of a trustee in respect of the public property under his charge”.

Likewise the order of Minister Ms Shiela Kaul, allotting shop sites in abuse of public duties, was cancelled by the Supreme Court in Shiv Sagar Tiwari v. Union of India (1996) 6 SCC 558 and (1996) 6 SCC 599.

The decision in the review petition of Common Cause case (1999) 6 SCC 667 is not an authority for a proposition that a Minister does not have fiduciary obligations and is not accountable for his actions. The observations of the Supreme Court in para 166 relating to a Minister not assuming the role of a trustee, were said in the context of a trustee “in the real sense”, namely, a trust enforceable in a court of equity by a beneficiary for administration of trust property relying upon the decision in Tito v. Waddell (1977) 3 All ER 129. The observations of the Court were made in the context of the offence of criminal breach of trust in Section 405 IPC. None of the earlier judgments of the Supreme Court relating to the fiduciary obligation of a public servant cited in this note were referred to and therefore, the Court could not have been intended to take a different view in Common Cause review.

Purchase of Tansi Foundry property by A-1 is from the Government

For the purposes of the offence under Section 169 read with Section 43 IPC, the question is not whether Tansi Foundry property 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 government order 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. PW 3 has stated that the Department of Industries was under her control during the period 24-6-1991 to 13-5-1993 as also the evidence of the Secretary of the Industries Department, Latika Padalkar.

(i) The Memorandum of Association and various Articles of Tansi clearly show that Tansi was a government company under the Companies Act and was a wholly owned and controlled government company and was an instrumentality and agent of the Government.

In regard to disposal of property of Tansi, Article 77-A(4) forbids Tansi from disposing of lands transferred to the Company by the Government without previous approval of the Government.

Tansi Foundry was originally a unit of the Government of Tamil Nadu and the unit was later transferred to Tansi Company.

GO No. 832 of 30-9-1985, the resolution of the Government of 14-10-1991 of the Industries Department, and GO No. 18 of 20-1-1992 show that in the disposal of Tansi property, prior approval of the Government in the Industries Department was necessary and was taken. The sale agreement in the present case and sale deed to A-1 and A-2 recites the government approvals as per GO of 20-1-1992 and GO No. 832 of 30-9-1985. A-2 in her application to Indian Bank, says “that the property is purchased from the Government …”.

(ii) A catena of decisions of this Hon'ble Court have held that a government company like Tansi is controlled by the Government and is nothing but the voice and arm of the Government and the true owner of the Company is the State. See in this connection the following cases:

(a) Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi (1975) 1 SCC 421, (1975) 3 SCR 619, SCR at pp. 637, 654.

(At p. 641, G. Ray, C.J states: Liability to taxation under Article 289 of the Constitution will not detract from the Corporation being an authority within the meaning of Article 12.)

(b) Ajay Hasia (1981) 1 SCC 722.

The Court observed:

“In such cases ‘the true owner is the State, the real operator is the State and the effective controllorate is the State …’. It is really the Government which acts through the instrumentality or agency of the corporation and the juristic veil of corporate personality worn for the purpose of convenience of management and administration cannot be allowed to obliterate the true nature of the reality behind which is the Government.”

At p. 739, para 15 the Court noted:

“The control of the State and the Central Governments is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the Governments. … and by reason of the provision for approval, the Central Government also, have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Governments….” (p. 740)

(emphasis supplied)

These principles are reiterated in the recent decision of a Constitution Bench in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology (2002) 5 SCC 111, SCC at p. 129.

In Mysore Paper Mills (2002) 2 SCC 167, SCC at pp. 178-79, para 12 the Court held that features similar to that of Tansi showed the deep and pervasive control of the Company and that the Company was nothing but an instrumentality and agency of the State Government and physical form of the Company was only a cloak or cover for the Government.

It is only a consequence of such bodies being controlled by the Government and being the alter ego of the Government that they are considered “the State” for the purpose of Article 12 of the Constitution.

A-1 was therefore purchasing Tansi Foundry land from the Government which was prohibited in terms of Rule 2(b) of the GO.

A-1 was also purchasing property whose disposal was completely under control of the Government. In such a situation there was a direct conflict between her duty as a public servant and her private interest as a purchaser. For such a transaction was also illegal as it would be clearly a ground for civil action under Section 43 IPC.

If the Chief Minister could not legally purchase government property under Section 169 read with Section 43 IPC, it is inconceivable that she could purchase Tansi Foundry land merely because behind a corporate veil it was owned by a government company which was fully owned and controlled by the Government including in its disposal by the Government. The corporate personality will not be allowed to be used for fraud or improper conduct or to evade an existing obligation or to protect crime.

See DDA v. Skipper Construction Co. (P) Ltd. (1996) 4 SCC 622, SCC at pp. 638 to 639. Palmer: Company Law, 24th Edn., at p. 216, paras 18-23.

WRITTEN SUBMISSIONS BY MR K.K VENUGOPAL, SENIOR ADVOCATE ON BEHALF OF RESPONDENT 1

(I) Charge 5 (paragraphs 81 to 106 of the impugned order)

The offence under Section 169 of the Indian Penal Code

1. The charge alleges that the first accused in contravention of “the rules that a public servant should not purchase the property of the Government and also in contravention of the Code of Conduct regarding the Ministers, had purchased the land … and building … belonging to TANSI Foundry, a government company … and thereby committed an offence punishable under Section 169 IPC”.

What is not alleged in the charge are the following significant aspects:

(a) that the property purchased is of the Government. Property of the Government is mentioned only in regard to contravention of the rules, which rules were never produced and no such rules exist, while in regard to contravention of the Code of Conduct, it is the purchase of property belonging to “TANSI Foundry, a government company” alone is alleged;

(b) that the property purchased, even though of a government company is in law the property of the Government;

(c) that Section 43 IPC is being invoked even though the phrase “legally bound not to” is not defined in Section 43;

(d) that Section 43 is being invoked for attracting the definition of “illegal” as furnishing grounds for civil action;

(e) that the purchase of the property was knowingly and wilfully done in contravention of the rules of the Code of Conduct so that mens rea is attracted.

It is not disputed that Section 169 by itself is incomplete for creating an offence and requires some other “law” which prohibits the purchase of property to make the act an offence. A series of such provisions are found in the following Acts:

(i) Section 481 of the Code of Criminal Procedure;

(ii) Section 189 of the Railways Act, 1989;

(iii) Section 19 of the Cattle Trespass Act, 1871; and

(iv) Section 136 of the Transfer of Property Act.

2. No such law has been pointed out, though it is argued that the Code of Conduct is a law. The questions therefore which will have to be answered by the prosecution will be:

(a) that the Code of Conduct is a law for the purpose of Section 169;

(b) that in fact the Code of Conduct, assuming it to be a law, prohibits the purchase of the property of an undertaking of the Government; and

(c) that TANSI Foundry owned by a government company, is property owned by the Government of Tamil Nadu.

3. The title of Section 169 deals with a public servant “unlawfully” buying or bidding for property and the ingredients require that a public servant should, in that capacity, be “legally bound not to” purchase or bid for certain property. Thus, the words “unlawfully” and “legally” both convey violation of the requirement of law; such “law” should be a statute or statutory rules or regulations. The Code of Conduct, admittedly, is not statutory in character. Dealing with Section 168 it has been held in Narayan v. Emperor (1910) 11 Cri LJ 613 that:

“[T]he section is in a way incomplete without the assistance of some other enactment or rule of law which imposes the legal prohibition required as the second of the above elements:….” (Cri LJ p. 615)

4. The Code of Conduct consists not of a single document but of a series of documents. The understanding of the authors is found in a letter dated 10-6-1969 by the Home Ministry, Government of India, wherein in paragraph 2 the Code is referred to as “guidelines” and “conventions” and in paragraph 4 as “conventions” and again as “policy”. The guidelines, conventions or policy are the antithesis of a statute and statutory rule. A similar code including the Code of Conduct for Ministers has been held to be non-statutory in character and non-enforceable by a court of law.

Vidadala Harinadhababu v. N.T Ramarao AIR 1990 AP 20 (FB):

“21. 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 the 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.”

SCC at paras 10, 13-17, Bijoe Emmanuel v. State of Kerala (1986) 3 SCC 615:

“13. The Kerala Education Authorities rely upon two circulars of September 1961 and February 1970 issued by the Director of Public Instruction, Kerala. The first of these circulars is said to be a code of conduct for teachers and pupils and stresses the importance of moral spiritual values.

14. Apart from the fact that the circulars have no legal sanction behind them in the sense that they are not issued under the authority of any statute, we also notice that the circulars do not oblige each and every pupil to join in the singing even….”

5. It is submitted that these judgments set out the true position in law, namely, that a Code of Conduct is not enforceable and no public interest petition will lie for enforcing the same, in which event it can scarcely be a basis for creating an offence.

6. The enormity of the result of such an argument being accepted would be that a public servant would be guilty of an offence under Section 169 if there is any contravention arising out of a vast plethora of administrative instructions, so that the requirement that criminal law should have certainty and definiteness is rendered otiose.

SCR at pp. 421 & 424, W.H King v. Republic of India 1952 SCR 418:

“As the statute creates an offence and imposes a penalty of fine and imprisonment, the words of the section must be strictly construed in favour of the subject. We are not concerned so much with what might possibly have been intended as with what has been actually said in and by the language employed.”

SCR at p. 166, Tolaram Relumal v. State of Bombay (1955) 1 SCR 158:

“If the legislature intended to punish persons receiving pugree on merely executory contracts, it should have made its intention clear by use of clear and unambiguous language.”

State of Bihar v. Bhagirath Sharma (1973) 2 SCC 257:

“According to the fundamental principle of our criminal jurisprudence, which reflects fair play, the dealer must know with reasonable certainty and must have a fair warning as to what his obligation is and what act of commission or omission on his part would constitute a criminal offence before he can be called upon to answer a charge and be liable to be convicted in a criminal court for any violation of a legal mandate.”

Further see SCC at p. 574, para 15, State of W.B v. Swapan Kumar Guha (1982) 1 SCC 561, SCC at pp. 566-67, paras 17-18, Bijaya Kumar Agarwala v. State of Orissa (1996) 5 SCC 1, SCC at p. 706, para 8, J.K (Bombay) Ltd. v. Bharti Matha Mishra (2001) 2 SCC 700 and R. v. Sillem.

7. Article 162 of the Constitution cannot elevate the Code of Conduct to the status of a statute or statutory rules. By its very terms Article 162 of the Constitution declares that the executive power of a State shall extend to the matters with respect to which the legislature of the State has power to make laws, thereby bringing out the distinction between laws and executive instructions issued under Article 162. These instructions are not law.

(i) SCR at pp. 641 H-643 G, G.J Fernandez v. State of Mysore (1967) 3 SCR 636.

(ii) SCR at pp. 338-39, 350-51, Kharak Singh v. State of U.P (1964) 1 SCR 332

(iii) SCR at p. 459 F, State of M.P v. Thakur Bharat Singh (1967) 2 SCR 454:

“All executive action which operates to the prejudice of any person must have the authority of law to support it….”

“Counsel for the State however strongly relied upon the observations of Mukherjee, C.J in Rai Sahib Ram Jawaya Kapur case AIR 1955 SC 549:

***

These observations must be read in the light of the facts of the case. The executive action which was upheld in that case was, it is true, not supported by legislation, but it did not operate to the prejudice of any citizen.” (SCR pp. 460 H-461 C)

8. The judgments given in the area of service laws or admission to educational institutions, where rights are claimed by third parties under such administrative instructions will have no application to a case where a crime is founded, not on law but on executive instructions, which is sought to be treated as law for the purpose of finding a person guilty of an offence. In State of A.P v. Lavu Narendranath (1971) 1 SCC 607 it was expressly held that the government order prescribing entrance examination did not infringe the rights of candidates and that Article 21 was not violated. The situation would be totally different where executive instructions are made the foundation for penal offences.

9. Even assuming for the sake of argument that the Code of Conduct is a law, it contains no prohibition against the purchase of the property in question, namely, TANSI Foundry owned by Tamil Nadu Small Scale Industries Corporation.

Rule 2(b) states that the Ministers 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”. It is only an owner who can sell the property and the Government, therefore, can sell only the property owned by it. The property, admittedly, is not the property of the Government but the property of a public corporation, which under Article 3, is a private company. (P. 49, Vol. II, clause 3, which reads “The company is a private company”.)

Western Coalfields Ltd. v. Special Area Development Authority (1982) 1 SCC 125, Electronics Corpn. of India v. Secy., Revenue Deptt. (1999) 4 SCC 458 and Food Corpn. of India v. Municipal Committee, Jalalabad (1999) 6 SCC 74.

10. The question of lifting the veil of incorporation will not arise for the reason that clause 1(c) at p. 8 of Vol. II deals with a business concern which supplies goods or services “to the Government or to undertakings of the Government”. Similarly clause 2(d) reads that the “Ministers shall ensure that the members of their family do not start or participate in any business concerns engaged in supplying goods or services ‘to the Government or to undertakings under the Government’”. As the Code consciously distinguishes Government from undertakings of the Government, it would not be permissible for the appellant to urge that the veil of incorporation of an undertaking of the Government should be lifted, in which event what would be seen is “the Government”. This argument would render the conscious use of “Government” alone in clause 2(b), while using the phrase “undertaking of the Government” or “undertaking under the Government” in addition to “Government” in clause 1(c) and clause 2(d), wholly a surplusage.

11. In any event, the veil can be lifted in case of an offence by a company or its promoters or its shareholders or its directors for punishing such persons. No case exists where the veil is lifted to punish a third party, who is outside the company and not its shareholder, director or promoter. In dealing with criminal offences, the appellant is not entitled to invoke the principle of lifting the veil of incorporation against a third party, who on reading the Code of Conduct would note the clear distinction in the Code between the Government on the one hand and the government undertaking on the other. When on a clear wording of the provision no offence is made out, no person can be held liable by lifting the veil and creating a fiction.

D.R Gurushantappa v. Abdul Khuddus Anwar (1969) 1 SCC 466:

“[F]or purposes of determining disqualification for candidature to a legislature, it would not be appropriate to attempt to lift the veil and equate a company with the Government merely because the share capital of the company is contributed by the Government.”

Mohd. Hadi Raja v. State of Bihar (1998) 5 SCC 91, Carrasco Investment Ltd. v. Special Director, Enforcement Directorate (1991) 2 Comp LJ 339 (Del), State of Punjab v. Raja Ram (1981) 2 SCC 66 and Subhra Mukherjee v. Bharat Coking Coal Ltd. (2000) 3 SCC 312

12. The words used in the Code are “Ministers shall refrain….” The normal meaning of the word “refrain” as ordinarily understood is “to avoid”. This is different from a prohibition, which alone could attract Section 169 IPC. Further, “Government” in clause 2(b) is used twice, the second referring to the eminent domain power of the Government to acquire private property. In such a case “Government” in the same clause can mean only “Government” and not an undertaking owned by the Government.

13. The Code of Conduct, whether statutory or not, is only intended for the internal self-discipline for the Council of Ministers. As such, it cannot be treated as a prohibition in any other law for the purpose of attracting the provisions of Section 169 IPC.

14. Even if the veil were to be lifted, an anomalous situation would arise as the property, if held to be property of the Government, would then require the sale to be executed in the name of the Governor under Article 299 as otherwise it would be void.

15. Definitions are terms of art. If a word or a phrase is defined, the meaning given will have to be substituted in place of that word unless the context is to the contrary. If a particular word is not defined, then the meaning given for a similar concept or a similar phrase cannot be used as a substitute. The Indian Penal Code defines in Section 43 the words and phrases “illegal” and “legally bound to do”. The words “legally bound” are not defined. The phrase “legally bound to do” is different from the words “legally bound” by itself. Section 169 uses the phrase “and being legally bound as such public servant, not to purchase or bid for certain property”. (emphasis supplied) The words “legally bound as such public servant, not to”, not having been defined, it is not permissible to adopt the extended meaning of the words “legally bound to do” or “illegal” found in Section 43 to include also “everything … which furnishes ground for a civil action”. The charge nowhere mentions grounds for “civil action” and in any event in regard to a criminal offence the scope of the offence cannot be enlarged by a reference to an opposite concept found in one of the definitions in the Code. This would be stretching the criminal law to an extent where the certainty that such law requires is no more there and persons who are responsible for an act or omission which is not an offence will find themselves criminally prosecuted and sentenced. It is submitted that it would be violating the basic principles 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.

The phrase “legally bound to do” has been defined for the reason that the following sections of the Indian Penal Code use the very same phrase as a term of art. Sections 174, 175, 176, 177, 179, 181, 191, 202, 221, 222, 223 and 225-A.

Wherever the Code wanted the opposite concept also to be attracted, it would define both the positive and the negative or the opposite phrases. For example, Section 23 defines wrongful loss and wrongful gain and similarly gaining wrongfully and losing wrongfully are defined. Section 33 defines “act” and “omission” separately.

16. The alleged violation of the Code of Conduct, assuming it to be a law, and assuming it to have been violated, will yet not furnish grounds in the alternative for civil action. The well-considered judgment of the Full Bench of the Andhra Pradesh High Court in N.T Rama Rao case AIR 1990 AP 20 (FB) holds that even a public interest litigation by way of a writ petition will not lie for transgression of the Code of Conduct for Ministers nor will a mandamus issue in such a case. If the Code of Conduct is therefore not enforceable, it would also not furnish grounds for a civil action.

17. The Code of Conduct is in the nature of internal guidelines for governing the code of Ministers and does not give a right to a third party so that no ground for a civil action by a third party would arise. No tort is involved and he can complain neither of breach of contract nor can he file a suit for damages.

18. In the present case, the findings of the High Court, which it is submitted, with respect, should be upheld, categorically holds, after elaborate discussion, that no loss whatsoever has been caused to the Government. If that be so, no ground for civil action will lie.

19. On the other hand, the large number of attempts by TANSI to sell the property and the fact that no evidence has been let in to show that the process of sale has been vitiated in any manner would establish that the sale by open tender was in public interest as a result of which no ground for civil action would arise whatever approach to the question is adopted.

20. As already submitted, the respondent is sought to be convicted for a criminal offence. The offence comes into being where a public servant is prohibited by law from purchasing “certain property”. The example of a large number of statutes which prohibit such purchase by named persons has already been set out. In the present case, if the property is to be certain, one should find it described with precision in a law. What is referred to in clause 2(b) is purchase of a property from the Government and not from an undertaking of the Government which is separately mentioned in other clauses. If the properties of an undertaking of the Government are also to be covered then the words “certain” which qualify property would become meaningless.

21. The entire approach of the prosecution by relying on the concept of the instrumentality of the State or of the Government is wholly misconceived. The concept of instrumentality of the State has been evolved for the purpose of making public corporations, which if instrumentalities, are accountable for violation of fundamental rights. That is the reason why Article 12 of the Constitution restricts the definition of “State” for the purposes of Part III of the Constitution and for no other purpose. The extension of the instrumentality concept to the present case to render an act a criminal offence, which is otherwise, not so, is wholly misconceived.

The Judgment of the Court was delivered by

S. Rajendra Babu, J.— These two sets of criminal appeals arise out of two criminal cases filed against Respondents 1 to 6 and the fallout 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 the 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, the 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 ten 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.

2. 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/Boards without the previous written approval of the Government. A Code of Conduct for Ministers was brought into force by GOMs No. 1350 on 16-6-1968 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 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 30-9-1985 the Government decided that eight units mentioned in GOMs No. 832 can never be made viable, whatever measures 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 GO. Therefore, the Government decided that TANSI should close down the eight units and explore the possibility of disposing the properties by inviting offers through advertisements in newspapers.

3. In pursuance of the GO, Ext. P-21, TANSI Foundry unit was officially closed as per Ext. P-33. Out of the total extent of 5.535 acres of land and 3267 sq m of buildings in TANSI Foundry, an extent of 0.545 acres of land and 569 sq m 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 1, and Sasikala, Accused 2, were partners, purchased land adjacent to the TANSI property in dispute from Hitex Equipment Company vide sale deed, Ext. P-57, at the assessed market value of Rs 6 lakhs per ground which is at par with the guideline value of the 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 1, became the Chief Minister. On 29-9-1991 Jaya Publications again purchased another adjacent land from Idhayam Publications vide sale deed (Ext. 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 Wires units adjacent to TANSI Foundry in Thiru.Vi.Ka Industrial Estate. Pursuant to this advertisement R.R Industries and two other companies submitted tenders for purchase. Ext. P-22 is the quotation given by R.R Industries. The price of one square metre of land had been mentioned in that quotation as Rs 1850, which works out to Rs 4.12 lakhs per ground.

4. On 14-10-1991 a meeting was held under the Chairmanship of the Chief Minister J. Jayalalitha for the review of the performance of TANSI and A-4 Minister for Rural Industries, A-3 Chairman-cum-Managing Director of TANSI, PW 11 Chief Secretary, PW 14 Secretary, Industries Department and PW 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 units which are defunct and TANSI Foundry unit was identified as a defunct unit and the estimated sale price was fixed at Rs 1.5 crores, 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 the 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 the Administrative Department may follow circuit procedures to circulate the file to Ministers concerned, Minister for Finance and Chief Minister.

5. 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 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 (PW 1) intimating that they want to dispose of land in Thiru.Vi.Ka Industrial Estate and requesting to furnish the guideline price of the lands situate in Block No. 5 at Alandur. Sub-Registrar, Adayar replied (Ext. D-39) that there was no guideline value for Surveys Nos. 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 square feet was Rs 305, which worked out to Rs 7.32 lakhs per ground. It is important to note that Blocks 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 TANSI office and they were opened in the presence of all, on the same day. Ext. P-29 is the offer of Jaya Publications in which J. Jayalalitha, A-1 and Sasikala, A-2 are partners. Ext. P-13 is the offer of Aban Constructions and Ext. 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 m of land at the rate of Rs 1,33,333 per ground while SIDCO offered to purchase the land at Rs 502 per sq m.

6. 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. Ext. P-30 is the minutes of the meeting of the Sub-Committee and the same were initiated by PW 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 Ext. 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 1350 per sq m, 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 m could be sold at a cost of Rs 19,20,200. The resolution was unanimously adopted and 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 Rs 3 lakhs per ground was much lower than the guideline value of Rs 7.30 lakhs per ground as mentioned by the 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 GOMs 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 Ext. P-36 with which a draft sale agreement for getting NOC 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 the guideline value. The 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.

7. Under Section 47-A of the Indian Stamp Act (as in force in Tamil Nadu), Sub-Registrar, Adayar, PW 1, referred to the Special Deputy Collector (Stamps), A-5 for fixing the market value of the TANSI Foundry land by his proceedings Ext. P-3, as the value was less. By proceedings dated 7-12-1992, Ext. 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.

8. A private complaint was lodged before the IXth Metropolitan Magistrate Court, Saidapet, seeking to punish J. Jayalalitha, Respondent 1 herein, for offence under Section 169 IPC for having purchased government land in violation of the Code of Conduct for Ministers. In view of several complaints and on the basis of media reports, the Government referred the matter to CBCID on which a crime came to be registered in Crime No. 17 of 1996. Ext. P-75 is the first information report in the said crime. Investigation was taken up by PW 27 and two cases were registered as Special CC No. 4 of 1997 and Special CC No. 13 of 1997 against the respondents.

9. A-1 was charged under Section 120-B IPC, Section 13(2) read with Sections 13(1)(c) and 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, Section 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act read with Section 109 IPC, under Section 409 read with Section 109 IPC, Section 169 read with Section 109 IPC and Section 420 read with Section 34 IPC. A-3 was charged under Section 120-B IPC, Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, Section 119 IPC read with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and under Section 169 read with Sections 109, 420 and 409 IPC. A-4 and A-5 were charged under Section 120-B IPC, under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, under Section 119 IPC read with Section 13(2) read with Section 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 Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and under Section 13(2) read with Section 13(1)(d) read with Section 109 IPC.

10. The trial Judge convicted A-1 under Section 120-B read with Section 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act. He also convicted A-1 under Section 13(2) read with Sections 13(1)(c) and 13(2) read with Section 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 Section 120-B IPC read with Section 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act, under Section 13(2) read with Section 13(1)(c) of the Prevention of Corruption Act read with Section 109 IPC, under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act read with Section 109 IPC and under Section 409 read with Section 109 IPC. A-3 to A-5 were convicted under Section 120-B IPC read with Section 13(2) read with Sections 13(1)(c) and (d) of the Prevention of Corruption Act and under Section 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 Section 120-B IPC read with Section 13(2) read with Sections 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 Section 109 IPC and Section 420 read with Section 34 IPC. A-3 was acquitted under Section 119 IPC read with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and under Section 169 read with Sections 109, 420 and 409 IPC. A-4 and A-5 were acquitted of the charges framed under Section 119 IPC read with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and Section 169 read with Section 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 Section 119 IPC read with Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act and Section 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 Appeals Nos. 395-97 of 2000 decided by this Court on 25-4-2000 and reported in State of T.N v. Selvi J. Jayalalitha (2000) 9 SCC 444.

11. The accused preferred Crl. Appeals 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.

12. 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 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 Ext. P-5 for the building or the superstructure ought to have been taken into consideration by the trial court as the same contained the necessary details and though it is stated that Exts. P-58 and P-59 were prepared after ascertaining the 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-Committee realised from Ext. 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 PC 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 the 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 parties concerned. 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.

13. 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.

14. 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 A-1 and A-2 which resulted in wrongful loss to the government company and wrongful gain to A-1 and A-2.

15. 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 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 Cooperative Sugar Federation, the value of a ground was fixed at Rs 3 lakhs by the Collector, Madras. It could be seen from Ext. 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 per ground based on the sale of a vacant land in Sy. 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 Ext. 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 Ext. D-20 and Ext. P-61 on the ground that TANSI agreed to sell the land to Tamil Nadu Cooperative Sugar Federation at that price in view of the condition that the Sugar Federation will put up 15,000 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 Ext. D-20, which was accepted by the Commissioner of Land Administration under Ext. 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 Cooperative 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 cooperative societies which were registered under the Tamil Nadu Cooperative 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. Ext. D-20 and Ext. 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.

16. While on this point the High Court referred to the fact that in Ext. 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 metres from that land. The Collector, however, took into account the sale under Ext. 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 Ext. 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 Ext. 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.

17. 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 Exts. 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 undersold and thus there was loss to TANSI. The view taken by the High Court appears to us to be a reasonably possible view.

18. Now we shall examine whether Exts. P-8, P-57, P-70 and P-71 could 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 Exts. 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 (Ext. P-8) by Idhayam 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 Adayar 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 the TANSI Foundry land was Rs 7.32 lakhs per ground. Therefore, there is no justification in taking the sale consideration mentioned in Ext. 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. Ext. P-8 cannot offer a true index to assess the market value of the TANSI Foundry land at Rs 7.32 lakhs per ground. As regards Ext. P-57, which was a sale deed in favour of Jaya Publications in respect of 5658 sq ft situate in Block No. 6 of Adayar 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 Ext. P-8.

19. 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 Cooperative Sugar 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 Cooperative Sugar 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. Exts. 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 1-A 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, Exts. 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 could it be demonstrated that the advertisement did not give sufficient particulars or that the tender forms were not made freely available or that any one 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 Ext. D-20 was not made on the basis of sale 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 Tamil Nadu Cooperative Sugar Federation was at a far higher price than Rs 3 lakhs per ground since 15,000 sq ft of built-up 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.

20. The argument of Shri 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 at Rs 7.32 lakhs per ground, cannot at all be said to be a perverse finding.

21. We may now proceed to consider the valuation of superstructure. Exhibit 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 Ext. 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 Ext. 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 Rs 4 crores between the value assessed by 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 Ext. P-58, the value of the structural columns was shown as Rs 54,32,130 but in Ext. P-59, it was shown as Rs 39 lakhs, and no evidence was adduced before the Court to show how these figures were arrived at, although, it is stated that the witnesses had taken about 40-50 pages of notes. 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 it is difficult to accept that the value mentioned in Exts. P-58 and P-59 was the correct value for the building. Ext. P-5 shows calculation and indicated as to how the value for the building was arrived at, which is a document offered by the prosecution in evidence.

22. The guideline value has relevance only in the context of Section 47-A of the Indian Stamp Act (as amended by T.N 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 the Tamil Nadu Stamp (Prevention of Undervaluation of Instruments) Rules, 1968. 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.”

23. This Explanation also will have to be read in conjunction with Explanation to Section 47-A of the Indian Stamp Act (as amended by T.N 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.”

24. This scheme of the enactment and the 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 the 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.

25. 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 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 the Tamil Nadu Stamp Act and not dehors 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 the market value is the price of Rs 3 lakhs per ground in respect of land sold to Tamil Nadu Sugar Cooperative Federation. The said land forms part of the land out of which a portion is sold to the firms of the 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.

26. Argument regarding the extent of land that was sold to the firms of Respondents 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 the 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.

27. 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 1 and 2 is not that the firms of which they are partners have not purchased the properties in question, but only that Respondent 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 1 has signed the documents in question, but the denial of Respondent 1 appears to be too naive to be accepted in a court of law. Maybe, Respondent 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 1 and 2 are partners. That fact in the case not being in dispute, it is unnecessary to dilate on this aspect any more.

28. Insofar as the offence under Section 120-B 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 has been meeting of 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 overzealously by being too expressive of the same, we cannot hold that there was a conspiracy amongst various persons.

29. 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 the 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 the other two persons 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, Ext. 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 could be inferred that there was a conspiracy in the matter. It was also indicated that GOMs No. 836 of 1991, Ext. 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 GOMs 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 GO was issued only as a financial-discipline measure and to monitor the expenditure above Rs 1 crore and the word “tender” used in the said GO did not mean that the sale of land by TANSI will also come within the ambit of the said GO since it was clear from the word “contracts” used in the said paragraphs that the GO was applicable to the tenders for works, equipments etc. if it is for purchase and not for sale of property. Inasmuch as the markings in the note file are concerned 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 the 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.

30. An argument was put forth that A-5 did not follow the procedure contemplated under the Tamil Nadu Stamp (Prevention of Undervaluation 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.

31. 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 was 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.

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

“13. (1) A public servant is said to commit the offence of criminal misconduct,

(d) if he,—

(i) by corrupt or illegal means, obtains for himself or for any other person any valuable thing or pecuniary advantage; or

(ii) by abusing 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;”

33. To attract provisions of Section 13(1)(d) of the Prevention of Corruption Act, public servant should obtain 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 a public servant, or

(iii) without any public interest.

34. 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 a 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 the 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 valuable consideration which does not fall below the 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.

35. Offence under Section 13(1)(c) of the Prevention of 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 a 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.

36. The only evidence against A-6 is that he spoke about the disposal of file relating to sale of the 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.

37. Regarding the charge against A-3, who was the Chairman-cum-Managing Director of TANSI from 1-8-1991 to 10-7-1992, we have to bear in mind certain 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.

38. 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 parties concerned. 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 km 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. Ext. 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 Ext. 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 grounds. 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, Ext. P-6, had referred to this document but only made a factual error in stating that the property was sold to SIDCO. Ext. 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 Ext. D-10 and even for that property A-5 had fixed Rs 2,17,008 as the 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 undervaluation.

39. In answer to the contention that Exts. P-8, P-57, P-70 and P-71 were not taken into consideration by A-5 when he fixed the value for the 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, Ext. D-20, the Collector had fixed the value of the property, Ext. P-61, the Commissioner of Land Administration fixed the value of the disputed land at Rs 3 lakhs per ground. In Ext. D-21, PW 1 himself admitted that Exts. P-70, 71 and 8 were not the comparable sales and further, it was seen from the evidence that the land conveyed under Ext. P-8 was close to 100-feet road and the extent was also smaller as is in the case of Ext. P-57. Ext. 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 Ext. 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. Ext. 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 property and that he need not even accept the value mentioned in Exts. P-8, P-57, P-70 and P-71 as the properties conveyed under the said sale deeds were smaller in extent.

40. 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.

41. As regards the charge under Section 169 IPC, the findings of the trial court are affirmed by the High Court.

42. 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.

43. 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 of 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 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 the 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 21 Rule 73 CPC are brought to our notice and reliance was also placed on the decision of the Privy Council in Kanhaya Lal v. National Bank of India Ltd. 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 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 GO No. 1012 issued by the Tamil Nadu Government states that after taking office and so long as he remains in the 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 has 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 v. N.T Ramarao, Chief Minister AIR 1990 AP 20, (1989) 3 An LT 66 (FB). 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 the TANSI Foundry land was technically the property of the Government but of a government company, but whether A-1 was purchasing it from the Government within the prohibition of Rule 2(b) of the GO and whether A-1 was purchasing the 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 77-A(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, as the Government had necessary control over the said properties, and such properties fall within the concept of the GO 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.

44. We may now advert to the contentions of the learned Senior Counsel appearing for the first respondent:

The arguments of the learned counsel for the appellant go beyond the scope of the charge, that the phrase “legally bound not to” has not been defined in 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 a 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 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, the 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.

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

46. 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 for “certain property”, and (3) either in his name or in the name of another or jointly, or in shares with others.

47. The offence under Section 169 IPC is incomplete without the assistance of some other enactment which imposes the legal prohibition required.

“[T]he 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 Narayan v. Emperor (1910) 11 Cri LJ 613, Cri LJ at p. 615.)

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 of the 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.

48. 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 application in this case. The law, which is pointed out, is the Code of Conduct for Ministers issued in GOMs No. 1350, dated 26-7-1968 by the Government of Tamil Nadu in the name of the 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”.

49. 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.

50. 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 v. N.T Ramarao 1992 Supp (3) SCC 217. 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. Harinadhababu case 1992 Supp (3) SCC 217 are quite apposite: (AIR pp. 33-34, para 21)

“21. 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 para 50, it was further observed: (AIR p. 51)

“50. (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.”

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 persons concerned 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 guesswork and the accused cannot be expected to meet such case at this stage.

51. 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 a 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.

52. 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.

53. 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 belong to TANSI, a corporation which is a separate and distinct entity from the Government and the properties are held by it as an 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 portfolio 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.

54. Though the learned counsel wanted us to reappreciate 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.

55. Before we part with the matter, it is necessary to notice certain aspects of the matter.

56. 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.”

57. 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 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.

58. 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 the Government headed by the first 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 overenthusiastic 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. 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 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.

59. 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 the 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 the 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 have 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 favourites 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.

60. In the result, we dismiss these appeals and the special leave petition, subject to the observations made above.