How The National Herald Case Has Brought Back Focus To The Congress’ ‘Corrupt Image’

Posted on December 9, 2015 in Politics

By Abhishek Jha

India’s Congress party president Sonia Gandhi wipes her sweat as party’s vice-president Rahul Gandhi (L) watches during a farmers rally at Ramlila ground in New Delhi, India, September 20, 2015. REUTERS/Adnan Abidi - RTS1Z5K
Image source: REUTERS/Adnan Abidi

In a major embarrassment to the Indian National Congress, the Delhi High Court on Monday (7th December) ruled that the accused in the National Herald case will have to appear before a trial court. The accused include Sonia Gandhi, Rahul Gandhi, Motilal Vora, and Oscar Fernandes, the President, the Vice President, Treasurer, and General Secretary of the Congress party respectively. Journalist Suman Dubey and technocrat Sam Pitroda, both considered close to the INC have also been accused. BJP leader Subramaniam Swamy had filed a complaint before a trial court in 2012 and the aforementioned were named as accused in a case pertaining to Section 403 (Dishonest misappropriation of property), Section 406 (Punishment for criminal breach of trust), and Section 420 (Cheating and dishonestly inducing delivery of property) read with Section 120B (Punishment for criminal conspiracy) of the Indian Penal Code.

The verdict of the Delhi HC led to the disruption of both the houses of the parliament on Tuesday (8th December), as the Congress alleged that Swamy had filed the complaint to fulfil vendetta politics. As the accused were to appear in the trial court on Tuesday, Abhishek Manu Singhvi pleaded before the court that the accused be exempted from personal appearance on Tuesday and that they were willing to appear on a later date. The court exempted the accused from appearing on Tuesday but had asked them to appear on December 19, The Hindu reported. The verdict and the resulting disruption in the parliament can meanwhile become another roadblock in the discussion of bills listed for discussion in the winter session.

The case in itself has yet again brought to fore the INC’s corrupt image. The allegations against the accused is that they used party funds to lend interest loans to Associated Journals Private Limited (AJL), which was running the National Herald (founded before independence by Jawaharlal Nehru), and then floated a company Young Indian Private Company (YI) (Both Sonia and Rahul Gandhi own 38% shares of YI each) to wrongfully acquire assets of AJL which run into about 2000 crores.

YI, however, was created under Section 25 of The Companies Act, which requires that company will use its “profits, if any, or other income in promoting its objects” and not pay dividends to its members. The arguments in the High Court illustrate, however, that “The Memorandum of Association of the AJL bars the Company from entering into any transaction which is not for furthering its objective to publish newspapers.” The AJL does not publish National Herald anymore. Therefore, the allegation arose that in acquiring the assets of AJL, the accused, who own major chunks of YI, acquired all the immovable assets of AJL.

The Delhi HC has hence ruled that it needs “to be explained by petitioners as to what was the need to assign the huge debt of 90 crores when this debt could have been easily liquidated by AJL from its sizeable assets. Even writing off such a huge debt by the Congress Party can legitimately attract allegations of cheating, fraud, etc.” Although the petitioners had tried to argue before the court that being in possession of the shares as part of YI, a Section 25 company, does not necessarily mean that they filled their personal “kitties”, the HC has ruled that “such a deep scrutiny of facts is required at the charge stage and not at the summoning stage” and asked them to appear before the trial court.

The petitioners, the accused in the Herald case, had also tried to get an exemption from appearance in the trial by submitting that Section 39 of the CrPC, which allows any person to initiate criminal proceedings against several criminal offenses, does not have a provision for those not being affected by a cheating and misappropriation case to file a complaint. However, the High Court was of the opinion that “how a Political Party of national stature acts is everybody’s concern. Rather, it is a matter of serious concern as allegations of fraud, etc. are levelled against the Congress Party, who has ruled the Nation for many decades. Precisely, it is the act of Office Bearers of Congress.”

Also, the HC has observed that “In a unique case, like the instant one, expanded meaning to the law has to be given.”

The judgment has been welcomed by the BJP. Although a political motive behind the complaint cannot be totally ruled out as BJP and Congress are arch rivals in India’s electoral politics in most states as well as in the nation, the High Court’s observation does lend weight to the serious allegations levelled against the accused. At a time when Congress seemed to have been having an upper hand in the Parliament, with the voice of several opinion shaping personalities in the country being in alignment with the issues Congress is raising, the judgment is going to be a big blow their campaign.