Political party can write off or assign loans: Sonia to HC

Congress President Sonia Gandhi today opposed in the Delhi High Court the private criminal complaint against her and the summons issued  by a trial court in the National Herald case saying a political party is within its right to "write-off" or "assign" a loan.

"The issuance of process in this case is shocking and out of order, to say the least, and no illegality can be found either on the facts or on the law," former Law Minister and senior advocate Kapil Sibal, appearing for the Congress President, told a bench of Justice V K Vaish.

The trial court had issued summons to various Congress leaders on the complaint of BJP leader Subramanian Swamy who has alleged cheating and misappropriation of funds in acquiring ownership of the now-defunct daily National Herald by Young Indian (YI).

Sonia Gandhi, Congress Vice President Rahul Gandhi, Party Treasurer Moti Lal Vora are among the directors of YI, who have been summoned.

Seeking setting aside of Swamy's complaint, Gandhi said the Associated Journals Limited (AJL), which had been publishing newspapers 'National Herald' in English, "Navjivan" in Hindi and "Quami Awaz" in Urdu, had taken loans to the tune of Rs 90 crores from the Congress Party.

The loan, given to AJL, was assigned to YI by the Congress party and then a process of conversion of Rs 90 crores loan was taken by AJL which then issued fresh equities in favour of charitable firm YI.

Congress Party for a monetary consideration of Rs 50 lakhs had decided to assign Rs 90 crores loan to YI, she maintained. PTI HMP SJK VSC 08051940

Citing various law and verdicts, Sibal said that these are valid transactions and no illegality can be found.

"The Congress Party was well within its right to give the loan to AJL in view of the objects of AJL which included dissemination of the views of policy and principles of INC.
"The INC was equally within its right to write-off the loan/assign the loan to YI and there was no breach or illegality. There is no illegality in extending support to a Section 25 company (charitable firm YI) by the INC," he said.

The trial court on June 26 had summoned Sonia, Rahul, Vora, party General Secretary Oscar Fernandes, Suman Dubey and Sam Pitroda to appear before it on August 7.

The High Court would hear tomorrow the remaining arguments in the case.
Sibal said that the Congress party was well within its right to give the loan of Rs 90 crores to AJL as it has had a long standing association with the ailing publication and wanted to revive it.
Referring to trial court's order in the case, he said that the basic ingredients of the offences have not been met.

"There may be allegations in the complaint but there was no evidence to support them," he said.
Dealing with the offence of dishonest misappropriation of property, he said the basic ingredients of the offence are that the property should belong to a person other than the accused and "the accused should wrongly appropriate or convert such property to his own use".

"The complaint does not disclose that the petitioner had 'appropriated' any movable property or 'converted' any property to her own use," he said.

Referring to the offence of criminal breach of trust, the lawyer said a person should have been entrusted with property, or entrusted with dominion of property and "the person should dishonestly misappropriate or convert to his own use that property or dishonestly use or dispose of that property or wilfully suffer any other person to do so."

"Sadly, this is also not backed by documentary evidence," he said, adding that the basic elements of breach of trust and cheating are missing.

Sibal referred to the law and said that a political party can have incomes from property and capital gains.

"So far as the income from other sources are concerned. I need to pay tax on them. How can we be held liable for the offence of criminal breach of trust?," he said.
He also said the donations to political parties cannot be equated with the entrustment of property as the donor has no control over the donations.

However, in the case of entrustment of property, there are always directions attached about the manner of utilisation of the same and moreover, the person does not lose control or ownership, he said.

Sonia Gandhi, in her plea, has also sought setting aside of the compliant saying it was "politically motivated and intended to wreak vengeance and unleash political vendetta" against her.
While summoning the six as accused in the case, the trial court had held that Swamy has established a prima facie case of cheating, misappropriation of funds and criminal breach of trust against them.

Swamy had accused Sonia and Rahul Gandhi and others of conspiring to cheat and misappropriate funds by just paying Rs 50 lakh by which YI obtained the right to recover Rs 90.25 crore which the AJL had owed to the Congress party.

The accused persons were summoned under sections 403 (dishonest misappropriation of property, 406 (criminal breach of trust) and 420 (cheating) read with section 120B (criminal conspiracy) of the IPC.