In this blogpost, Rajnanadini Mahajan, Student, Rajiv Gandi National LawUniversity, Punjab analysis the national herald case.
What is the National Herald case?
The National Herald case, which has grabbed the eyeballs of media, is an alleged scam regarding the misappropriation of property. In this high profile case, BJP leader Subramaniun Swamy has filed a petition alleging Congress President Sonia Gandhi and Vice-President Rahul Gandhi to be the main conspirators in the scam. While the Congress is claiming that it is a political vendetta, BJP has distanced itself asserting that it is a judicial matter, and BJP has nothing to do with it.[1] This article explores the legal details and aspects of the case.
Timeline of the case
January 2013: Subramanium Swamy files a complaint against Sonia Gandhi, Rahul Gandhi and others.
June 26, 2014: The Delhi High Court issues summons to Sonia Gandhi and Rahul Gandhi to appear before the court for hearing
August 6, 2015: The proceedings are started by the HC against Sonia Gandhi, Rahul Gandhi and Others.
December 7, 2015: HC refuses to quash the order of summons issued by the lower court.
December 8, 2015: Delhi Court orders Sonia Gandhi, Rahul Gandhi and others to appear on December 19
December 19, 2015: Bail granted to Rahul Gandhi and Sonia Gandhi till next hearing which is scheduled for February 20.
Key facts of the case:
A company called Associated Journals Limited was set up in 1938 by Congress. It ran three newspapers named National Herald (English), Navjeevan (Hindi) and Qaumi Awaz (Urdu). After facing a financial crisis for a long time, National Herald finally shut down in March 2008. In 2011, a non-profit company, Young India Limited was set up with Sonia Gandhi and Rahul Gandhi holding 38% of stake each. The remaining 24% is owned by Oscar Fernandes and Moti Lal Vora, both of whom are senior Congress leaders. All the four people are the directors of the firm as well. The Young India Limited planned and bought the liabilities of National Herald, which were worth INR 90.21 crores for INR 50 lakhs.
Swamy’s allegations:
- According to Subramanium Swamy, National Herald had grown well owing to the goodwill of the Congress party and had property worth INR 5,000 crores. The Young India Limited sent its director Motilal Vora to strike a deal with National Herald that Young India would provide it with funds in the form of loans to discharge its liabilities and in return National Herald would transfer its shares to National Herald. The Chairman of National Herald was also Moti Lal Vora. After that, the treasurer of Congress Party who was also Moti Lal Vora was asked to provide a loan of INR 90 crores from the party funds to National Herald. The resolution to affect the same was passed by Congress President (Sonia Gandhi), Vice- President (Rahul Gandhi), General Secretary (Oscar Fernandes) and the Treasurer (Moti Lal Vora). After that, the loan given to National Herald was declared ‘sick loan’ ( a loan which is unlikely to be recovered) in the books of accounts of the Congress Party by passing a resolution to this effect by the same people. Thus, the Young India Limited acquired property worth INR 5000 crore without paying anything for it.
- Swamy also alleges that the property of National Herald was rented out to the government at INR 60 lakhs a month. Thus, the money of taxpayers was also spent by the government to fill the pockets of Rahul Gandhi and Sonia Gandhi.
- Swamy has accused Sonia Gandhi to have spent Congress Party’s funds worth INR 1 crore in the renovation of Herald House, one of the properties of National Herald.
Legal Issues:
- According to the petitioner, granting of the unsecured loan at zero per cent interest by a political party to commercial ventures is illegal and violation of Section 29A, B and C of the Representation of the People Act, 1951.
- It also violates the provisions of Section 13A of the Income Tax Act, 1961 which requires the treasurer of a political party to audit and send a report to the income tax department regarding voluntary contributions and total income of the party in a year.
- The criminal breach of trust under Section 405 of the Indian Penal Code, 1860, cheating (Section 420 of IPC), criminal conspiracy (Section 120A of IPC) to defraud Congress party and Misappropriation of funds (Section 403 of IPC) by Sonia Gandhi, Rahul Gandhi and others is also alleged to have been committed.
Controversies regarding the case:
The case has been controversial since its inception. In 2013, when the case was filed by the petitioner, the then Enforcement Directorate, Rajan Katoch, closed the case citing lack of substantive evidence against Sonia Gandhi and Rahul Gandhi. However, he was removed from his post in September 2013, and the case was reopened. Kapil Sibbal, a senior Congress leader, argues that Swamy has no locus standi in the case as he is not even a shareholder in any of the companies. It is also alleged by the Congress party that the case is a mere political tool to defame and bring down the Congress party.[2]
Holding by the Court:
The court has held that there is a prima facie evidence against the accused on the following grounds:
- Dubious names and addresses of the shareholders of Associated Journals Limited.
- The holding of the shareholders’ meetings at the residence of Sonia Gandhi which is allotted by the government which is violative of the law that places of accommodation cannot be used as the place of business or commercial activities.
- Rahul Gandhi’s failure to mention that he owns 38% shares of Young India Limited in his election affidavit.
The trial in the case is still awaited. Many shareholders of Associated Journals Limited like Markandey Katju and Shanti Bhushan have alleged that the shares of their fathers have been fraudulently transferred to Young India Limited.[3]
[1] https://twitter.com/officeofrg?lang=en, http://indianexpress.com/article/india/india-news-india/national-herald-case-bjp-asks-congress-not-to-politicise-a-court-matter/
[2]http://indianexpress.com/article/india/india-news-india/national-herald-case-gandhis-or-other-shareholders-havent-made-a-single-paisa-from-ajl-yil-deal-says-sibal/
[3]http://indianexpress.com/article/india/india-news-india/ajl-did-not-inform-us-or-obtain-approval-for-equity-transfer-say-shareholders/
