Though it’s come a bit late, we finally have the defence in the National Herald case being laid out. At the moment it is still not a defence that has been formally presented in court even at this pre-pre-trial phase, but we can see the elements and glimpses of what’s going to be the response to the complaint that was filed by Dr Subramanian Swamy and others before the Magistrate, and on the basis of which a summons was issued to the accused. The Congress Party’s defence in the National Herald case for the purposes of this article has been culled out from an FAQ circulated by Jairam Ramesh, the tweets of the Congress party account on twitter and the version put out by its spokespersons such as P Chidambaram.
Straight up it’s clear that there is no divergence on the main events between the parties. There is agreement on the following points:
1. Unsecured loans amounting to Rs. 90 crore were given by the Congress party to Associated Journals Limited.
2. AJL was not able to repay the loans to the Congress party as it had shut down its newspaper operations.
3. The loans were assigned by the Congress party to Young India, a Section 25 company (a not for profit company) for a sum of Rs. 50 lakhs.
4. The directors of Young India were Sonia Gandhi and Rahul Gandhi who held 76% of the shareholding of Young India, along with Motilal Vora and Oscar Fernandes who held the rest.
Difference Lies in Interpretation of Events
In the eyes of Swamy and the complainants, this was a clear case of the Gandhis at wresting control of the vast real estate assets of AJL to the detriment of the Congress Party which has nothing to show for the Rs. 90 crores of loans it gave AJL. As Swamy points out, the same persons seem to be on both sides of the transaction assigning the loan and has therefore raised questions of misappropriation of property, cheating and breach of trust on this basis.
To this, the Congress’ counter is that it was a business transaction taken in good faith by the Congress to revive a party newspaper by forgiving the debt and assigning it to a third party to allow the newspaper to come back to life without extended legal proceedings. The Congress contends that it took proper legal counsel on the creation of Young India, the Section 25 company and the revival of National Herald as a newspaper being for the benefit of the Congress itself, no loss or harm was caused to the Congress party as a result. The Congress claims that it took the “unanimous approval” of the shareholders of AJL, though this has now been disputed.
Things are of course at a very preliminary stage in this case as far as the criminal law is concerned and the statements so far have been taken at face value. With the sequence of facts generally undisputed, what matters now is the intention of the parties at the time of undertaking this transaction.
Question on Sonia and Rahul’s Intentions Remain
While it is also alleged that the Congress could not have given loans to AJL or assign its loans to YI per se, the complainants are on a weaker footing here. As the Congress response points out, buttressed by an Election Commission decision in 2012 in its favour, there is no provision of law, whether in the Representation of the People Act, 1951 which governs political parties, or any other generally applicable law which expressly prohibits giving of loans or how political parties may spend their funds as long as it’s in accordance with their charter. To be fair, nothing much turns on this, as far as the criminal case is concerned, since the criminality will have to be shown on the basis of the intent of the parties.
Therein lies the rub.
Being a criminal trial, the burden is on the prosecution (including the complainants) to show that the intention behind undertaking this transaction was dishonest and in bad faith. This will have to be shown with the documentary and other evidence that they have in their possession and by examining witnesses (if any) to show that the transaction was in fact carried out with dishonest intentions.
Burden on Swamy and Agencies to Prove ‘Dishonesty’ by Gandhis
The complainants have to show, from the evidence, that the basic elements of “misappropriation of property”, “breach of trust” and “cheating” are respectively made out. For all these offences, whether the property was entrusted and misused, or put to one’s own use, the common element which has to be shown is the “dishonest” intention – that there was some deception by which the transaction took place and in the absence of which the transaction wouldn’t have taken place. It is now, therefore, up to the complainants to show what was the deception that was carried out in the assignment of the loan to YI.
Is there enough material already to show that such deception had indeed taken place? It’s tough to say at such an early stage of the proceeding and much water must flow under the bridge before we can say so for sure. Of course, the partisans on either side have already made up their mind one way or another, but sober reflection on the merits of the case requires that the judicial process to unearth the truth must be allowed to get underway.
(The writer is a Senior Resident Fellow at the Vidhi Centre for Legal Policy. The views expressed here are purely personal)
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