Jayalalitha and her ministerial colleague, V. R. Nedunchezhiyan and T. M. Selvaganapathy, were charged with misusing the office to allow Pleasant Stay Hotel in Kodaikanal to build seven floors against the norms.
The case and charge sheet were filed during the following Dravida Munnetra Kazhagam (DMK) government headed by Karunanidhi in 1996.
The Supreme Court disqualified her in September 2001, resulting in her stepping down and elevation of O. Panneerselvam as the chief minister (Sasikala Suggested).
The governor of Tamil Nadu, Fathima Beevi, who administered oath to J. Jayalalithaa, was advised to step down by the union ministry, who also sent the report to the President of India.
Cyriac, who was the secretary of municipal administration and water supply, did not authorize the construction, he was transferred and replaced by Pandey.
The judge noted that the First Investigation Report (FIR) was filed only two years after the incident on account of the involvement of higher officials and politicians.
It quoted that Pandey, who knew the details about the case, did not follow the secretarial functions of passing the file directly to Jayalalitha via Selvaganapathy.
The supporters of Jayalalithaa were angered by the verdict, which led to statewide protests and violence, including damage to public property by AIADMK members.
On 2 February 2000, seventy students from the Tamil Nadu Agricultural University, Coimbatore, were returning from a study tour in two buses.
Three girls, Hemalatha from Chennai, V. Gayathri from Virudhachalam, and Kokilavani from Namakkal were burned to death, and 16 others sustained injuries.
Schools and colleges were asked to shut for a week, and students across the state held silent processions and protest marches condemning the act.
[9] The verdict came at a time when the Tamil Maanila Congress, which was in alliance with DMK during the 1996 parliamentary elections, was supporting the AIADMK in the upcoming by-elections.
There was an appeal in Supreme Court against her appointment as Chief minister quoting a convicted person cannot hold government office.
On 21 September 2001, a five-member bench of the Supreme Court ordered that a disqualified person cannot hold office of the Chief minister.
[14] The governor of Tamil Nadu, Fathima Beevi, who administered oath to Jayalalithaa, was advised to step down by the union ministry, who also sent the report to the President of India.