R SAI BHARATHI Vs. J JAYALALITHA

JUDGEMENT

(1.) These two sets of criminal appeals arise out of the two criminal cases filed against respondents Nos. 1 to 6 and the fall out thereof unfolding against currents and cross currents of political

(2.) The Government of Tamil Nadu formed a Tamil Nadu Small industries Corporation Limited (for short 'TANSI'). It was registered under the Companies Act, 1956 as a Government company. The entire shares, namely, 100% of the shares of the said Corporation, were held by the Government. In the Memorandum of Association it is stated that the said company is formed 'to take over from the Government of Tamil Nadu any of their production and/or servicing units with the rights and liabilities of the Government of Tamil Nadu so far as they relate to such units'. Article 72 of Articles of Association empowers the Government to appoint all the Directors with the power to remove any Director from time to time. Article 79 empowers the Government to appoint and remove the Managing Director. Similarly Government can also appoint a Chairman and Vice-Chairman of the Board. The Chairman can reserve for the approval of the Government any proposals or decisions of the Board in respect of any of the matters regarding (a) increase or reduction of the capital of the Company; (b) loan granted by the Company or giving of a guarantee or any other financial assistance to any person or concern; (c) winding up of the Company; and (d) any other matter which in the opinion of the Chairman be of such importance as to be reserved for the approval of the Government. In respect of any proposal or decision of the Board reserved for the approval of the Government no action shall be taken by the Company until approval to the same has been obtained. The Government also exercises the power to issue directives or instructions as it may deem fit in regard to finances and the conduct of the business and affairs of the Company and the Directors shall duly comply with and give effect to such directives or instructions. TANSI has 10 Directors and all of them were the nominees of the Government of Tamil Nadu, including the Chairman-cum-Managing Director who was an IAS officer.

(3.) 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 Department/Undertakings/Boards or Government of India Departments/Undertakings/Board without the provious written approval of the Government. A Code of Conduct for Ministers was brought into force by G. O. Ms. Nos. 1350 on June 16, 1968 which was revised from time to time and clause 2(b) thereto provides that 'a Minister shall refrain from buying from, or setting 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 joing 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 30th September, 1985 the Government decided that eight units mentioned in the G.O. Ms. 832 can never be made viable whatever measures to be adopted to achieve the objects for which they were set up in the public sector and therefore their continuance will cause a drain on the finance of TANSI. TANSI Enamelled Wires, Guindy and TANSI Foundry, Guindy, situate in Thiru. vi ka. Industrial Estate were two of the units among the eight identified as the units incurring losses mentioned in the said G.O. Therefore, the Government decided that TANSI should close down the 8 units and explore the possibility of disposing the properties by inviting offers through advertisement in newspapers.