The Enforcement Directorate questioned Congress leader Rahul Gandhi for over four hours on Tuesday in connection with the National Herald case. On June 1, the ED issued summons to Gandhi, Congress President Sonia Gandhi, and Priyanka Gandhi Vadra in connection with its 2014 money laundering case.
Gandhi's appearance before the ED was shadowed by high-strung drama as hundreds of party leaders and their supporters escorted him. Congress supporters took out a 'satyagraha' march in front of the ED office in the national capital even as party leaders alleged Gandhi's summons was nothing more than 'vendetta politics' by the current dispensation.
On Monday, "15 members of Lok Sabha, 11 members of Rajya Sabha, and 5 MLAs of different state assemblies were among the 459 detained under Delhi Police Act for not following lawful directions of police," the Delhi police said.
BOOM explains what the National Herald case is all about.
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What is the National Herald Case?
In 2012, BJP leader Subramanian Swamy filed a case against the Gandhis accusing them of misappropriating party funds to the tune of Rs 50 lakhs to purchase Associated Journals Limited (AJL)—the company that published the National Herald—and "fraudulently acquired properties" through Young India Limited (YIL), their non-profit company.
The AJL was a public limited company incorporated by Pandit Jawaharlal Nehru in 1937 under the Indian Companies Act, 1913 to publish newspapers in several languages. Apart from the English daily National Herald, AJL also published Navjeevan in Hindi and Quami Awaz (Urdu).
However, Nehru did not personally own AJL; it was an unlisted property with 5,000 freedom fighters as its shareholders. In 2010, there were 1,057 shareholders, however, Congress leaders claimed there were only 761 shareholders.
AJL owned properties worth thousands of crores in Lucknow, Delhi, Indore, Bhopal, Mumbai, and several other cities.
In 2008, AJL ceased operations after reporting losses and halted the publication of all three newspapers. The properties owned by AJL—including Herald House, a 10,000 sq feet six-storey building in New Delhi—were let out on rent. At the time it ceased operations, AJL owed the Congress Party around Rs. 90 crores in dues.
In 2010, YIL bought AJL for Rs. 50 lakhs. At the same time, in 2010, Congress transferred the Rs. 90 crores debt it was owed to YIL for a consideration of Rs. 50 lakhs. AJL then transferred 99.99% shares to YIL for another consideration of Rs 50 lakhs after it claimed that it was unable to settle the debt of Rs. 90 crores.
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What are the charges against the Gandhis?
In August 2014, the Enforcement Directorate began its probe after a trial court took cognizance of Swamy's complaint filed in 2012. ED has charged the Gandhis under various provisions of the Prevention of Money Laundering Act, 2002.
What does Congress say?
The Congress party said the National Herald Case was a "strange case of alleged money laundering without any money" while it accused the BJP of "political vendetta". Congress spokesperson Abhishek Manu Singhvi said by targeting the National Herald, the BJP was "disrespecting and dishonouring India's freedom fighters, the stalwarts of the nation and their contributions to the freedom struggle".
Congress alleged it believed in the historical legacy of the AJL and bailed out the beleaguered company when it faced financial problems.
YIL is a "not-for-profit company" and no dividend was paid to its shareholders and directors. The AJL "continues to be the owner, printer, and publisher of National Herald and that there is no change or transfer of property", Congress added.
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What do the courts say?
Delhi Court in June 2014 prima facie observed that YIL was "created as a sham or a cloak to convert public money to personal use" while issuing summons to the six accused—including Sonia and Rahul Gandhi—in this case. The court further noted that all the accused had allegedly acted "in consortium with each other to achieve the said nefarious purpose/design".
In 2015, the Delhi High Court dismissed pleas against the summons and recorded that the "modus operandi" adopted by accused in taking control of AJL via Special Purpose Vehicle (Young India Ltd), particularly, when the main persons in Congress Party, AJL and YI are the same, "evidences a criminal intent".
"Questionable conduct of petitioners needs to be properly examined at the charge stage to find out the truth and so, these criminal proceedings cannot be thwarted at this initial stage," the December 7, 2015 order read.
In 2016, even as the Supreme Court dismissed Sonia and Rahul Gandhi's plea to drop proceedings against them, it expunged objectionable parts of the abovementioned order after observing that it was not open for the high court to record the findings conclusively.
In a separate but connected matter, in 2018 the Delhi High Court upheld the Centre's eviction order which cancelled its 56-year-old lease on Herald House—owned by AJL, situated at ITO, New Delhi.
The high court questioned the modus operandi used by Young India Ltd to acquire 99.99% shares owned by Associated Journals Limited (AJL). "By transfer of AJL's 99 per cent shares to Young Indian Company, the beneficial interest of AJL's property worth Rs 413.40 crore stands clandestinely transferred to Young Indian Company. In fact, AJL has been hijacked by Young Indian Company…", the court observed in an indirect indictment of the six accused.
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What is National Herald?
In September 1938, Pandit Jawaharlal Nehru and other freedom fighters launched the 'National Herald' as a daily from Lucknow. The newspaper served as a vanguard of the Indian Freedom Movement. Published by Associated Journals Limited (AJL)—it was an unlisted company with 5,000 freedom fighters as its shareholders—the newspaper had editions in Hindi (Navjeevan) and Urdu (Qaumi Awaz) as well.
Pandit Nehru was the first editor of the newspaper, a position he held till he became the first prime minister of independent India. In 1942, the British clamped down on the newspaper in response to the Quit India Movement and the paper resumed operations three years later.
In 2008, 70 years after its launch, the National Herald – which had become a mouthpiece for the Congress post-independence – shut down. It had a debt of Rs. 90 crores. In 2017, Rahul Gandhi re-launched the newspaper in a digital-only avatar.
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