FAQ on Numbers in Jayalaitha case

This is the third post analysing HC verdict acquitting Jayalalitha. My first post  summarised the numbers. The second post  pointed errors in the computation.

Here, I summarise my answers to issues raised by lawyer Vikram Hegde , Journalist Indulekha Aravind and others relating to computation.

1. Why should discrepancy upto 10% be permitted?

Supreme Court came up with the idea, it is not stated in the statute. In Krishnanand v. The State of Madhya Pradesh [AIR 1977 SC 796], the accused had an unexplained income of Rs. 11,349. Justice P.N. Bhagwati noted 

"...the excess is comparatively small - it is less than ten per cent of the total income of Rs. 1,27,715.43 - we do not think it would be right to hold that the assets found in the possession of the appellant were disproportionate to his known sources of income..."

A lot of commentators have observed that Justice Bhagwati could not have imagined that a verdict given in the context of a few thousand would be used as a precedent in a case involving crores. 

However, it must be appreciated that Valuation is a tricky business. When you are estimating, say, cost of constructing a property 5 years ago, you can only hope to give a reasonable estimate. Bias of investigator can compound the problem. Objectively speaking, a 10% leeway is on the lower side.

2. How did the error of Rs. 13.5 crores happen?

The first item in the table is a loan of Rs. 1.50 crores. My guess is that the person totalling the table entered 15.0, instead of 1.50, in his calculator. Normally, such an error would be pointing out by the other side. The Public Prosecutor alleges that he was not given enough time.

3. You suggest that loan should be reduced from assets, not added to income. But there is no provision for that in law.

The law does not provide for reducing loans from assets. The law also does not provide for adding loans to income. Now, since loans are directly relevant to the matter, they should surely go somewhere. If law is silent on the issue, we should be guided by custom and logic. Both require that loans be reduced from assets, to determine a person's worth, and then compare it with his/her income. The High Court has added loans by stating simply 'Loans as Income'. There is no such thing as 'Loans as Income'.

4. What is the basis of decrease in estimated values of assets?

The Karnataka High Court reduced the cost of construction from Rs. 27.79 crores to Rs. 5.1 crores. Essentially, the valuation done by DV&AC was rejected. Then, the HC added the total constructed area of all properties, and applied a rate of Rs. 280 per square feet on the total construction.