National Herald case explained: Everything you need to know

The Delhi High Court has rejected pleas by Sonia Gandhi and Rahul Gandhi to quash trial court summons against them in the National Herald case.

Written by Aneesha Mathur , Kaunain Sheriff M | Updated: December 10, 2015 7:10 am
BJP leader Subramanian Swamy has accused Sonia Gandhi and Rahul Gandhi, along with four others, of cheating and breach of trust in the AJL-YIL case. BJP leader Subramanian Swamy has accused Sonia Gandhi and Rahul Gandhi, along with four others, of cheating and breach of trust in the AJL-YIL case.

What is the National Herald case?

BJP leader Subramanian Swamy had filed a complaint before the trial court in 2012, alleging that Congress leaders were involved in cheating and breach of trust in the acquisition of Associated Journals Ltd (AJL) by Young Indian Pvt Ltd (YIL), as assets worth crores of rupees had been transferred to YIL.

Swamy has alleged that YIL, which has Congress president Sonia Gandhi and vice president Rahul Gandhi on its board of directors, had “taken over” over the assets of the defunct print media outlet in a “malicious” manner to gain profit and assets worth over Rs 2,000 crore. Apart from the Gandhis, Congress treasurer Motilal Vora, general secretary Oscar Fernandes, journalist Suman Dubey and technocrat Sam Pitroda were also named in the case.

WATCH VIDEO: Implications of the National Herald case

Swamy has alleged that YIL had paid just Rs 50 lakh to obtain the right to recover Rs 90.25 crore that AJL had owed to the Congress party, given earlier as a loan to start the newspaper. According to documents, 76 per cent of shareholding of YIL is with Sonia Gandhi and Rahul Gandhi, while the remaining 24 per cent vests in the others named in the case. The complaint has also alleged that the loan given to AJL was “illegal”, as it had been taken from party funds.

READ: HC dismisses Sonia, Rahul’s pleas against summons

What has happened in the trial court so far in the case?

The Delhi court had examined four complainant witnesses during the pre-summoning stage. The complainant witnesses examined were Subramanian Swamy, the complainant in the case, R Venkatesh, practising chartered accountant, Gulab Chand, an official from the Office of the Registrar of Companies, NCT of Delhi and Haryana, and J Gopikrishnan, journalist with The Pioneer. The pre-summoning evidence was closed and arguments were heard on the point of summoning of those named in the complaint. On June 26, 2014, the court summoned Sonia Gandhi, Rahul Gandhi, Motilal Vora, Oscar Fernandes, Suman Dubey and Sam Pitroda.

What did the trial court say while summoning these six persons?

While summoning them, Metropolitan Magistrate Gomati Manocha said that from the complaint and the evidence so far, “it appears that YI was in fact created as a sham or a cloak to convert public money to personal use” in order to acquire control over Rs 2,000 crore worth of assets of AJL. The court noted that all accused persons had allegedly acted “in consortium with each other to achieve the said nefarious purpose/design”.

However, the court had noted that this was “only the stage of summoning”, and when the accused persons appear before the court, “they shall be at liberty to refute the allegations of the complainant, cross-examine the complainant’s witnesses, and to lead evidence in their defence.”

National Herald Herald House in New Delhi. Express

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What has the Congress said in its arguments to the High Court?

The trial court had asked all accused to appear before it on August 7, 2014. On July 30, 2014, however, the Congress leaders moved the High Court which stayed the summons. The Congress has claimed that YIL had been created “with an aim of charity” and was not getting any profit. They also claimed that there was “no illegality” in the transaction, as it was “merely a commercial transaction” for transferring shares of the company. It also raised objections to the complaint filed by Swamy, labelling it as “politically motivated”.

What has the High Court said?

The judgment of the High Court has noted that the “probity of the legendary national political party” was “at stake” in the case, as the officebearers of the party held the funds in trust. The Bench dismissed the appeals filed by the Congress leaders, observing that prima facie the case “evidenced criminality”. The court has also raised questions regarding the legality of the initial loan granted to AJL by the Congress party.

The court has noted that officebearers of the Congress were directors at AJL, and also the majority shareholders at YIL, while all decisions were taken without the involvement of the other shareholders of AJL.

The High Court has said that questions including reasons for grant of loan to AJL, modus operandi of the transfer of the loan to YIL, and the related transactions would have to be examined minutely by the trial court. It has also dismissed the objections raised against Swamy’s involvement, stating that locus standi “cannot be restricted” in corruption cases.