The National Herald saga deserves a deeper examination, which is possible only through a full-fledged trial. The reason is a shocking absence of arm's length in the grant, assignment and eventual conversion of loan into equity of a company possessing prime (and commercially exploitable) real estate assets in several cities.

By Kartikeya Tanna

The Delhi HC judgment rejecting application filed by Sonia Gandhi, Rahul Gandhi and others to quash the summons issued to them by the trial court in the National Herald case has created perhaps the biggest political storm in recent years.

Many eminent individuals have already explained the National Herald case in an elaborate manner and, therefore, it would be useful for readers to read a comprehensive explanation of what the National Herald case is about in a series of tweets by S Gurumurthy. (Or scroll to the bottom of this piece for a brief explainer)

The National Herald saga deserves a deeper examination, which is possible only through a full-fledged trial. The reason is a shocking absence of arm's length in the grant, assignment and eventual conversion of loan into equity of a company possessing prime (and commercially exploitable) real estate assets in several cities.

A 2009 report in The Telegraph brought to light something very peculiar. As is known from the facts of the National Herald case, the newspaper aspect was sought to be shut down in 2008 due to financial difficulties Associated Journals Ltd (AJL) was facing. In 2009, however, publication of National Herald mysteriously resumed in Indore without anyone in Congress being aware of it. The editor of the paper, Sunil Salve, is quoted in The Telegraph as stating that since the land had been allotted to the paper, they revived the newspaper in Indore.

When Motilal Vora, someone who played three roles (conflicting, as we will later see) as Congress party treasurer, CMD of Associated Journals Ltd (AJL) and, later, director and shareholder of Young Indian, was asked about the revival, he told the reporter in a rather perplexed state, "You are well aware that we announced suspension of the publication last year".

The same report also mentioned that Vora, as CMD of AJL, had asked all National Herald employees to opt for a compulsory retirement scheme which cost the company over Rs 35 to 40 crore. Where did a supposedly financially-defunct AJL get the money for compulsory retirement scheme and the closure of National Herald?

The Congress party.

Its treasurer was the same individual who, as CMD of AJL, enforced the compulsory retirement scheme, ie Motilal Vora.

Fast forward to 2012.

The Congress, in an official press conference, clearly indicated it intended to revive National Herald. This press conference by Janardhan Dwivedi was in response to allegations raised by Subramanian Swamy, the complainant in the case against Gandhis and other stalwarts of Congress.

However, just few days prior to this press conference, Rahul Gandhi's office had, in an email reply to The Pioneer, clarified that there was no intention to relaunch any newspaper.

Why was there this discrepancy in intent to revive National Herald?

Why was Vora unhappy at the prospect of revival of National Herald in Indore, a dream Nehru saw?

Why were Rahul and Vora adamant about quelling any talks of revival of National Herald, when party officers-bearers such as Dwivedi and the Indore editor Salve showed keenness?

The answer lies in what happened to the loan Congress party gave AJL. The topmost echelons of Congress party set up Young Indian, a company to which Congress assigned the rights to recover the loan it gave AJL back in 2008-09. Vora was a 12 percent shareholder in Young Indian and a director.

What happened, thereafter, is common knowledge. Instead of asking AJL to repay the loan by using its assets for commercial rent (which the property in Delhi is currently doing under the ownership of Young Indian), Young Indian converted its right to receive repayment of loan into a staggering 99 percent ownership of AJL.

Why? Is control of prime land a probable answer?

A 1986 report in India Today reported about how two news publication groups in Madhya Pradesh received extraordinarily preferential treatment in allotment of prime land from the government led by then-chief minister Motilal Vora.

Which were these two news publication groups? Amrit Sandesh and National Herald. The report stated: "While other newspapers have been forbidden land-use diversion there is no such condition in the case of these two favourite newspapers".

Does this explain why Vora sounded agitated when, in 2009, he got the news that National Herald revived itself in Indore since, according to the editor, it was granted land for that purpose?

Wednesday's report in The Indian Express states that prime plot of land allotted to AJL in Mumbai will now house an eleven-storey office commercial building. The proposal for a Nehru memorial library, the apparent purpose for which land was allotted, is not mentioned in the building permission documents! The watchman at the site called the upcoming construction a "Congress Bhavan".

If there were no restrictions on land use diversion for National Herald which increasingly seems to be the case, why did the Congress not insist on AJL repaying the loans by offering prime properties on rent?

If Vora, as director of Young Indian which owns 99 percent of AJL, can have Young India rent out property now under its control to commercial businesses without any fear of violation of land-use restrictions, why couldn't Vora, as the CMD of AJL, do the same and repay the loan that he once gave as Congress party treasurer?

The only explanation is that, in Young Indian, the two Gandhis have a mammoth 76 percent ownership and controlling interest.

This financial skullduggery which lacks an arm's length nature, deserves a full-fledged trial.

Shanti Bhushan claims father owned AJL shares

The latest nugget on this story is senior jurist Shanti Bhushan claiming that his father owned shares in Associated Journals Ltd and said he will challenge the decision of transfer of its ownership to Young Indians, in which Congress president Sonia Gandhi and vice president Rahul Gandhi are majority shareholders.

The 90-year-old former law minister said his father Vishwamitra had bought shares of AJL and the decision to transfer the ownership of AJL to Young Indians was taken without the consent of the share holders.