11 Dec 2015

National Herald Case - Delhi High Court decision

A recent decision of the Delhi High Court has created quiet a storm in country, particularly among the political circles. This decision dismissed the petition [filed under Section 482 of Code of Criminal Procedure] filed by senior Congress party officials. The petition was filed against an order passed by the Criminal Court directing proceedings to be initiated in a criminal case alleging cheating on the part of these officials. 

The High Court has essentially held that, on a prima facie basis, the order of the Criminal Court is essentially based on documentations relevant for such direction and therefore there is no reason for the High Court to exercise its discretion and extraordinary power to quash the proceeding initiated by the Criminal Court. For the benefit of our readers we have uploaded the decision of the High Court. 

While the decision of the High Court is largely on discussion of facts and the legal position relating to discretion being exercised in such cases by the High Court, we have sought to cull out some of the excepts relevant to the national polity and in general relating to corruption, which are as under;

"1. Probity of a legendary National Political Party is under scanner in these petitions. This case is one of its own kind. The complainant claims to be a public spirited person, who wishes to expose cheating, criminal breach of trust and criminal misappropriation in high places with a view to protect general public interest. In an attempt to do so, recourse to criminal law is sought to be made. The complainant, who is a respondent herein, is a Parliamentarian, who claims to have been a Member of Parliament for five times and his credentials are highlighted in the impugned order. The respondent-complainant claims to be champion in leading crusade against corruption. This time, he has sought to expose cheating, fraud, criminal misappropriation, etc., by Office Bearers of the Congress Party who also happen to be the members of a Private Company-Young Indian Private Company (hereinafter referred to as Y.I.) and major shareholders of Associated Journals Private Limited (hereinafter referred to as AJL), which was engaged in publishing of newspapers including National Herald, etc..

28. The respective stand taken by both the sides needs to be considered in view of the fact that in a democratic set up, how a Political Party of national stature acts is everybody’s concern. Rather, it is a matter of serious concern as allegations of fraud, etc. are levelled against the Congress Party, who has ruled the Nation for many decades. Precisely, it is the act of Office Bearers of Congress Party and their associates which is under scanner in this case.

31. In the instant case, it cannot be disputed that the Office Bearers of the Congress Party are the trustees of the funds belonging to the Party. No doubt, a Political Party can have income from other sources as well and can invest money in mutual funds, etc., to augment its resources. However, it has to be kept in mind that the allegations against the Office Bearers of the Congress Party are of siphoning off the party funds in a clandestine manner. The impropriety of extending interest free loans to a separate legal entity i.e. AJL, which is a Public Limited Company, by the Congress Party is a matter of concern in a democratic set up, particularly, when the source of Congress Party’s fund is largely from donations given by public and so, any citizen can legitimately question the siphoning off funds by Political Party. What crops up in the mind of a prudent person is as to where was the need of extending interest free loans to a Public Limited Company engaged in a commercial venture of publishing newspapers.
32. Considering the fact that AJL has sizeable assets of `2000 crores, it needs to be explained by petitioners as to what was the need to assign the huge debt of `90 crores when this debt could have been easily liquidated by AJL from its sizeable assets. Even writing off such a huge debt by the Congress Party can legitimately attract allegations of cheating, fraud, etc.. Petitioners had gone step further in conspiring to get this huge debt assigned to a Special Purpose Vehicle i.e. Y.I. and thereafter, to hijack AJL via Y.I.. Such grave allegations levelled against petitioners cannot be brushed aside lightly by relying upon judicial precedents cited, to conclude that the ingredients of the criminal offences alleged are lacking. To say the least, to do so would be preposterous. Such a prima facie view is being taken in view of the fact that the assignment of the huge debt by Congress Party to Y.I. was for a paltry sum of `50 lacs. This is certainly questionable and justifiably attracts the allegations of cheating, misappropriation, criminal breach of trust, etc.. Such a view is being taken as it needs to be explained before the trial court as to how the net worth of AJL can be negative when it has assets worth crores of rupees. It also crops up in the mind of a prudent person as to why interest free loan was assigned and why it was not written off. In any case, writing off such a huge debt by a legendry Political Party is indeed questionable. Instead of adopting such a questionable course, what was done by the Congress Party is more questionable. It also needs to be answered as to why the genuine shareholders were marginalized in the Extraordinary General Meeting, which was attended by just seven shareholders. Such a questionable conduct of petitioners certainly invites allegations of committing the offences for which petitioners have been summoned. Is it not criminal misappropriation of Congress Party’s funds? This aspect needs to be addressed after respondent-complainant is cross-examined at the pre-charge stage. It also needs to be examined at pre-charge stage as to whether lacs of citizens who had donated to the Congress Party felt cheated by assignment of such a huge debt to Y.I. who was managed by none others than petitioners, who were Office Bearers of Congress Party as well as Directors of Y.I.. Not only this, the main persons, who were instrumental in allegedly siphoning off political funds were the recipients of the assignment of the huge debt by the Congress Party and they were the same persons, who had clandestinely acquired the control of AJL. All this smacks of criminality. What species of criminal offence is made out is not required to be seen at this initial stage.

38. This Court is of the considered view that the gravity of the allegations levelled against petitioners has a fraudulent flavour involving a national Political Party and so, serious imputations smacking of criminality levelled against petitioners need to be properly looked into."