By Nidhi Mudgal, Amity Law School, Lucknow.

The National Herald scam is an ongoing case in a Delhi Court filed by an Indian economist and politician, Subramanian Swamy against the politicians named Sonia Gandhi and Rahul Gandhi and their companies and associated persons. As per the complaint filed by Subramanian Swamy in the Court of the Metropolitan Magistrate,  he alleged that the Indian National Congress had granted an interest free loan of Rs. 90.25 crore to Associated Journals Limited (AJL), owner of National Herald Newspaper, which was established in 1938 by Jawaharlal Nehru. He also alleged that the loan was not repaid either in cash or in any other form which is in debate between the two political parties as all the assets and liabilities of the Associated Journal Limited were with the Company named Young India, in which the Congress President, Sonia Gandhi and her son Rahul Gandhi hold more than three fourth equity. Swamy alleged criminal misappropriation by both Congress leaders.  While rejecting their plea, the Court has made some scathing remarks saying that the conduct of Congress office-bearers “smacks of criminality”.

ASSOCIATED JOURNALS LIMITED (AJL)

Associated Journal Limited (herein after referred as AJL), also known as a brain child of Jawaharlal Nehru, is a public company limited by shares, incorporated on 20th November 1937 having its registered office at Herald House, New Delhi. Though Jawaharlal Nehru was the prime founder of AJL but he never utilised the company as his personal property as it was started with the support of about 5,000 freedom fighters who became shareholders of AJL. The company had capital of worth Rs.5 lakhs and was divided among 2,000 preferential shares each worth Rs. 100 and 30,000 ordinary (equity) shares worth Rs 10 each. Apart from  Jawaharlal Nehru, the AJL Memorandum of Association was signed by stalwarts such as Purushottam Das Tandon, Kailash Nath Katju, Rafi Ahmed Kidwai, Krishna Dutt Paliwal and Govind Ballabh Pant. However, neither the company  belonged to any particular person nor it  wanted to be associated with any sort of business except news. AJL had 1,057 shareholders on 29th September 2010 as per the annual return filed by the company at New Delhi registrar office. Since 22nd March 2002, the Chairman and Managing Director of AJL was Motilal Vora. The company incurred losses before its holdings were transferred to Young India in 2011.

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AJL also owns real estate property in various cities including New Delhi, Lucknow, Mumbai but it publishes newspapers with different names in different languages, such as, the National Herald newspaper in English, Qaumi Awaz in Urdu and Navjeevan in Hindi.

YOUNG INDIA

Young India is a private company limited by guarantee and was incorporated on 23rd November 2010 with a capital of Rs 5 lakhs. It has its registered office at Herald House, Bahadur Shah Zafar Marg, Delhi. On 13th December 2010, Vice President of Indian National Congress, Rahul Gandhi was appointed as the director of Young India while Congress President Sonia Gandhi joined as a member of the board of directors on 22nd January 2011. The  Young India company’s 76 percent shares are held by Sonia Gandhi and Rahul Gandhi equally and the rest are held by the other two Congress leaders, Motilal Vora and Oscar Fernandes, each possessing 12 percent of the remaining shares. Rahul Gandhi’s office describes it as a “not-for-profit company” which has no commercial operations.

WHAT IS THE CASE ABOUT?

On 1st November 2012, Subramanian Swamy filed a complaint in a Delhi Court alleging that the Congress Leaders were involved in cheating and breach of trust. Both President Sonia Gandhi and Vice President Rahul Gandhi have committed fraud and grabbed Rs. 16 billion by acquiring a public limited company, called Associated Journals Limited (AJL) through their owned private company, Young India. Swamy claimed that  in this fraud, they acquired the publication rights of the National Herald and Qaumi Awaz newspapers, with real estate properties in Delhi and Uttar Pradesh but they attained these  from for running the newspaper  and ended up using them for  running a passport office with rental income amounting to millions of rupees.

His complaint in the Court further alleges that on 26th February 2011, AJL approved the transfer of an unsecured loan of Rs. 90 crore from the All India Congress Committee at zero interest rate with the company’s all 9 core shares of Rs. 10 each to Young India. Swamy argued that it is illegal for a political party to lend money for commercial purposes as per Sections 29A-29C of The Representation of The People Act, 1951, and Section 13A of Income Tax Act, 1961, and he demanded investigation by the Central Bureau of Investigation (CBI) and de-recognition of the Indian National Congress party for using public money. Swamy has also alleged that Young India had paid just Rs 50 lakhs to obtain the right to recover Rs. 90.25 crore which AJL had owed to the Congress party when that was given as a loan to start the newspaper. According to the documents, 76 per cent of shareholding of Young India Company is with Sonia Gandhi and Rahul Gandhi, while the remaining 24 per cent of shares vest in the other named members in the case. On 2nd November 2012, the party responded that the loan was given only for reviving the National Herald newspaper with no commercial interest.

The hearing of the criminal proceedings case was taken up by the Magistrate on various dates while the defendants opposed the petition and asked the Magistrate to dismiss it. The Court finally observed that prima facie evidence against all the accused was found, thus issuing summons to the defendants to appear in the Court to defend themselves against all the allegations made in Swamy’s complaint.

On 26th June 2014, Metropolitan Magistrate Ms. Gomati Manocha summoned Congress President Sonia Gandhi, and Vice President Rahul Gandhi, Congress Treasurer Motilal Vora, General Secretary Oscar Fernandes, Journalist Suman Dubey and Technocrat Satyan Pitroda to appear in the Court on 7th August 2014 as they were also involved in the case. She said that according to the evidence so far, “it appears that YIL was in fact created as a sham or a cloak to convert public money to personal use” to acquire control over Rs. 20 billion worth of AJL. The Court noted that all accused persons had allegedly acted “in consortium with each other to achieve the said nefarious purpose and design”.

The defendant appealed in the Delhi High Court against the summons issued by the Magistrate. The Court issued a temporary injunction against the summons for a week. Swamy then appealed to the Supreme Court for speedy trial in the case on 27th January, 2015. The Court rejected the plea and on 19th December 2015 the Patiala House Court granted bail to all and ordered them to appear in the Court for the next hearing, i.e., 20th February 2016.

CONCLUSION

From all the above stated facts, one can conclude that the scam of 5 crores looks like an open and shut case. If all the allegations are true, the BJP government should dither over it since such inaction shall cost the party dearly.

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