The court rejected bail even though Special Public Prosecutor Bhavani Singh said he had no objection to Ms Jayalalithaa being granted conditional bail.

Justice AV Chandrashekhara said in a packed courtroom that there "are no grounds" to give bail to the AIADMK chief and observed, "Corruption is seen as a violation of human rights of all."

Ms Jayalalithaa's lawyers have said they will appeal in the Supreme Court against the denial of bail; sources said they could move the top court tomorrow. Ms Jayalalithaa has been in jail for nine days now.

Scenes of celebration outside the Bangalore court and at Ms Jayalalithaa's Chennai residence as television channels reported that the prosecution had said it had no objections to conditional bail soon gave way to tears and hysteria when the court's verdict was delivered.

O Panneerselvam, Ms Jayalalithaa's loyalist now serving as Chief Minister of Tamil Nadu, has urged her supporters to stay peaceful. There have been widespread protests against her conviction. "Keeping calm is the only way to express love for Jayalalithaa," the new Chief Minister said.

Ms Jayalalithaa, 66, was arrested for corruption late last month after being convicted by a Bangalore court. She was sentenced to four years in prison and penalised Rs. 100 crore; three of her aides, including live-in friend Sasikala Natarajan were also found guilty.

She appealed against her conviction and asked for bail. She was represented in court today by famous lawyer Ram Jethmalani, who did not seek bail on grounds of Ms Jayalalithaa's health. He argued on technical points, citing precedent in past cases and even quoted Oscar Wilde.

Ms Jayalalithaa says she has wrongly been convicted of misusing her first term as chief minister from 1991 to 1996 to collect assets worth nearly Rs. 50 crore, which were incommensurate with her declared income.

Her trial was moved in 2001 to neighbouring Karnataka from Tamil Nadu to ensure it would be free of political influence.