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National Herald Case: Delhi High Court allows I-T Department to probe Sonia and Rahul Gandhi

In probably one of the biggest setback for the Gandhi family, the Delhi High Court on Friday, cleared all decks for an Income Tax investigation into Young Indian Private Limited in which Congress chief Sonia Gandhi and party vice-president Rahul Gandhi are directors.

A bench of Justice S Muralidhar and Justice Chander Shekhar asked the company to approach the Income Tax assessing officer, after which the firm withdrew its petition. The court then dismissed the plea as it was withdrawn. Young India had approached the high court seeking a direction to stay the IT proceedings and quashing of notices against it with regard to the National Herald misappropriation of assets case. The company was issued notices regarding the assessment year 2011-12.

Sonia and Rahul have been accused of conspiring to “cheat and misappropriate funds” by paying Rs 50 lakh through which Young Indian Pvt. Ltd obtained the right to recover Rs 90.25 crore which Associate Journals Ltd (AJL) owed to the Congress. Speaking to CNN-News18, BJP leader and Rajya Sabha member Subramanian Swamy said that these cases will see the light of day. “If Prime Minister Narendra Modi does not do anything, people will say that he only gives speeches.”

Congress chief Sonia Gandhi and party vice-president Rahul Gandhi. PTICongress chief Sonia Gandhi and party vice-president Rahul Gandhi. PTI

In the first official reaction from the Congress, spokesperson Randeep Singh Surjewala, said, “The Gandhis have the option of approaching the Supreme Court. The I-T (department) cannot open a one-sided investigation. Swamy is not in-chare of I-T.”

Others accused in the case, which was filed by Swamy, include Motilal Vora, Oscar Fernandes, Suman Dubey and Sam Pitroda. The court had summoned the accused, besides Young Indian on 26 June, 2014. On 19 December, 2015, it had granted bail to Sonia, Rahul, Vora, Fernandes and Dubey, who had appeared before it pursuant to summons. Pitroda was granted bail on 20 February, 2016 when he had appeared before the court.

In 1938 during the freedom struggle, Jawaharlal Nehru, who went on to become Independent India’s first prime minister, started the National Herald newspaper. The paper originally served as a mouthpiece of the Congress and was published by The Associated Journals Limited (AJL). However, over the decades, circulation dropped and finances dried out, and it finally closed in 2008 accruing a debt of Rs 90 crore.

In a bid to keep AJL afloat, the Congress party gave the company unsecured, interest-free loans for some years up to 2010. On 23 November, 2010, AJL was taken over by a newly-floated company called Young Indian Private Limited (YIL) with Gandhi family loyalists Dubey and Pitroda as directors.

The All India Congress Committee (AICC) decided to assign the nearly Rs 90-crore debt it was owed by AJL to YIL, thus making it the owner of the debt in the books. In December 2010, AJL decided to transfer its entire equity to Young Indian in lieu of YIL owning its Rs 90 crore debt. The firm paid Rs 50 lakh for this acquisition.

The AJL, which originally owed Rs 90 crore to the Congress party, became a fully-owned subsidiary of Young Indian by virtue of this decision and transaction. In December 2010, Rahul was appointed its director and in January 2011, Sonia also joined the board as a director. Vora and Fernandes too were appointed to the Young Indian board on the same day.

As per documents, Sonia and Rahul have individual shareholdings of 38 percent each in the company while Vora and Fernandes hold the remaining 24 percent in equal parts.

In 2012, Swamy filed a complaint before the trial court alleging that Congress leaders were involved in cheating and breach of trust in the acquisition of AJL by YIL. The Gandhis and others will be tried on charges of dishonest misappropriation of property (section 403 IPC), criminal breach of trust (section 406), cheating (section 420) and criminal conspiracy (section 120 B).

Swamy alleged that YIL had taken over over the assets of the defunct outlet in a “malicious” manner to gain profit and assets worth over Rs 2,000 crore. Swamy 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.

Metropolitan magistrate Gomati Manocha, had issued summons to Gandhis and other on 26 June, 2014 and noted that all accused persons had allegedly acted “in consortium with each other to achieve the said nefarious purpose/design”. The court had asked all accused to appear before it on 7 August, 2014.

The Congress leaders on 30 July, 2014 moved the high court, which stayed the summons. On 7 December, 2015, the high court dismissed the appeals filed by the Congress leaders, observing that prima facie the case “evidenced criminality”.

The high court also raised questions regarding the legality of the initial loan granted to AJL by the Congress party. Following the high court’s order, on 8 December, the trial court had directed them to appear on 19 December.

A notice appeared in Lucknow-based newspapers of Friday giving notice for an extraordinary general meeting of the AJL on 21 January, 2016 to transform it into a not-for-profit company.

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