National Herald case: Delhi HC seeks response of Rahul, Sonia Gandhi on ED’s plea challenging trial court’s order

Solicitor General (SG) Tushar Mehta, appearing for the ED, informed Justice Ravinder Dudeja at the outset that if the trial court’s order in the National Herald case is to be sustained, it would “affect several cases” while demonstrating “how the (trial) court has gone horribly wrong”.

“Sum and substance of the impugned order is, ‘if someone goes and files a one-page FIR before the police, that can be a subject matter of ED investigation. But if the competent court takes cognisance under section 200 of CrPC (Criminal Procedure Code), that cannot be a ground on which cognisance can be taken.’ That is how the court bifurcates…This order under challenge says that if it is a private complaint, though the competent court has taken cognisance of offences which are scheduled offences, ED can do nothing, it is impermissible, it has to start with the FIR…,” Mehta submitted.

“What is necessary is (as per the PMLA), that there has to be an allegation, criminal activity pertaining to scheduled offence…whether the scheduled offence started with an FIR (First Information Report) or a (private) criminal complaint, according to me, academically as well as practically, criminal complaint stands on a much higher footing than an FIR,” the SG stated.

Justice Dudeja, during the hearing, orally inquired if there are other similar cases where on the basis of a private complaint, cognisance was taken of the scheduled offence and thereafter PMLA proceedings were initiated. Mehta responded in the negative, saying, “No, not to my knowledge”.

The SG pointed out that there is a predicate offence in the present case – raised by former Rajya Sabha BJP MP Subramanian Swamy in a private complaint – cognisance of which was also taken by the concerned court. The apex court had later dismissed a challenge against the cognisance of this complaint.

‘FIR only for cognisable offences’

Arguing against the reasoning in the trial court order, Mehta pointed out that for non-cognisable offences, FIRs cannot be registered anyway. He submitted, “FIR is only for cognisable offences. There are several sections under the Schedule (of PMLA’s scheduled offences) which are non-cognisable… Some of them in law cannot be in an FIR. I have to go before the competent court. Now the competent court has options – examine the complainant, witnesses, if any, and thereafter take cognisance. It can also direct police or somebody else to investigate… What happens then (to PMLA prosecution)?”

The ED, in its revision petition against the December 16 verdict in the National Herald case, has submitted that it gives a “hall pass” to a category of money launderers only on the ground that the scheduled offence in the present case was reported by a private individual, and not through an FIR or a person authorised to probe the scheduled offence.

AJL shareholders, AICC donors ‘defrauded’

In the National Herald case, the ED has primarily alleged that the Gandhis, along with a few other office-bearers of the Congress, entered into a criminal conspiracy to usurp Rs 2,000-crore-worth of assets of Associated Journals Limited (AJL), a public unlisted company and the publisher of the National Herald newspaper. The All India Congress Committee (AICC) had loaned Rs 90.21 crores to AJL.

Subsequently, Young Indian, a private not-for-profit company in which Sonia and Rahul Gandhi together held 76 per cent of the shares, purchased from AICC the right to recover the loan for Rs 50 lakh. According to the agency, AJL simultaneously converted the outstanding loan of Rs 90.21 crore into 9.02 crore equity shares of face value Rs 10 each in favour of Young Indian, thereby defrauding the shareholders of AJL as well as the public donors of AICC. These allegations were made by BJP leader Subramanian Swamy in connection with the National Herald case in a private complaint to the ED in 2014.

In July 2014, the agency had dispatched a letter to the Central Bureau of Investigation (CBI) for taking appropriate action based on Swamy’s complaint. This was reiterated by the ED director in a letter to the CBI director in 2015. However, the CBI did not file an FIR.