SC ruling on PMLA strengthens ED hand as the agency grills Sonia in Herald case

New Delhi: The ten-year-old National Herald Case is hogging political limelight again as the Enforcement Directorate (ED) is grilling Congress president Sonia Gandhi for the last three days. Ms Gandhi was on Wednesday interrogated for 3 hours while no fresh summons was issued.

According to the media reports, Congress supremo Sonia Gandhi was questioned for over two hours during her first day of questioning in the case on July 21 when she replied to 28 questions put forth by the agency. The interrogation is related to the charge of alleged financial irregularities in the Congress-promoted Young Indian Private Limited, which owns the National Herald newspaper related to the transfer of funds within the news media establishment. Rahul Gandhi has also been questioned by the ED in this case last month in sessions for over 50 hours over five days.

Gandhi’s family has maintained there has been no misconduct and Young Indian is a “not-for-profit” company established under section 25 of the Companies Act hence there can be no question of money laundering. Rahul Gandhi, during his deposition before the ED, held to the position that there was no personal acquisition of assets by himself or his family.

The ED case is based on a trial court order that allowed the Income Tax Department to probe the affairs of the National Herald newspaper and conduct a tax assessment of Sonia and Rahul Gandhi. The I-T department probe against Young Indian was based on a private criminal complaint by BJP MP Subramanian Swamy in 2013. The ED summons was about a case registered nine months ago to interrogate alleged financial irregularities at Young India Ltd under the Prevention of the Money Laundering Act (PMLA).

What is the National Herald Case?

The National Herald newspaper was started by India’s first Prime Minister Pandit Jawaharlal Nehru in 1938 from Lucknow. It was part of the independence movement against the British.

According to the Business Standard report, Associated Journals Limited (AJL), which published National Herald along with Qaumi Awaz in Urdu and Navjeevan in Hindi, did not belong to any one person but was founded in 1937 with 5,000 other freedom fighters as its shareholders, there were 1,057 shareholders in 2010.

BJP leader Subramanian Swamy 2012 filed a complaint alleging some Congress leaders, including the Gandhis, were involved in cheating and breach of trust in the acquisition of Associated Journals Ltd (AJL) by Young Indian Ltd (YIL) in 2011.

Sonia and Rahul Gandhi owned 76% of YIL and the remaining 24% was owned by Congress leaders Motilal Vora and Oscar Fernandes the Live Mint reported.

AJL published the National Herald newspaper in English, Qaumi Awaz in Urdu, and Navjeevan in Hindi until 2008 when it was disbanded after running into losses.

The Congress party granted a Rs 90 crore interest-free loan to the AJL to help it, but it could not be revived, and AJL failed to repay the loan to Congress, said the report.

Under the Income Tax Act, no political organization can have financial transactions with a third party. Accusations were made that the Congress party wrote off the loan given to AJL as unrecoverable which means that YIL ended up having control of AJL and its real-estate assets for Rs 50 lakh on a Rs 90 crore loan that the Congress party wrote off. Some AJL shareholders, such as former law minister Shanti Bhushan and former Allahabad High Court Chief Justice Markanday Katju, said their shares in AJL were transferred to YIL without their knowledge.

SC Verdict on PMLA

Meanwhile the SC in a significant ruling on Wednesday upheld the provisions of the Prevention of Money Laundering Act, 2002 which relate to the power of arrest, attachment, and search and seizure conferred on the Enforcement Directorate.

A Bench comprising Justices A.M. Khanwilkar, Dinesh Maheshwari, and C.T. Ravikumar pronounced the verdict on the case Vijay Madanlal Choudhary v Union of India and 240 connected petitions. Justice Khanwilkar read out the operative portions., The Live Law reported.

The court made two important points:

·       ED officials are not police officers and so statements recorded by them are not hit by Article 20(2) Constitution.

·       ECIR, not the FIR, supplying ECIR to the accused is not mandatory, disclosure of reasons for arrest sufficient Supplying ECIR is not mandatory and disclosure of grounds of arrest is sufficient. However, when a person is before Special Court, it can ask for records to see if continued imprisonment is necessary. – INDIA NEWS STREAM