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National Herald Case

ET- 14 Dec, 2015,

How much were Associated Journals' seven properties worth?

NEW DELHI | MUMBAI: Amid the controversy raging over ownership of

Associated Journals Ltd, the company that owns National Herald,

Navjeevan and Qaumi Awaz newspapers, estimates of the company's

prime properties ranging from Rs 2,000 crore to Rs 5,000 crore have been

doing the rounds.

Get a realistic valuation of the seven properties located in Delhi, Mumbai,

Lucknow, Patna, Indore, Bhopal and Panchkula. Several property brokers

and top real estate consultants help estimate in these cities.

Experts pegged value of these properties at about Rs 1,150 crore, as per

conservative estimates.

Controversy erupted after BJP leader Subramanian Swamy alleged

irregularities in the acquisition of Associated Journals Ltd by Young Indian

Ltd, a section 25 nonprofit private company. Delhi High Court in a recent

order dismissed a plea by Congress president Sonia Gandhi and Vice-

president Rahul Gandhi to quash summons issued against them by a trial

court.

They now have to appear before the court on December 19. Swamy

has said that the Gandhis hold 76 per cent stake in Young Indian.

All seven of the company's properties are located in prime locations.

The biggest among these in terms of both value and size is the one on

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Bahadurshah Zafar Marg in Delhi, with 100,000 sq ft of built-up space

spread over five floors. According to conservative estimates by real estate

experts, this property may well be worth Rs 300-400 crore.

Two floors in the building are leased to the ministry of external affairs,

which has been running the Passport Seva Kendra since 2012. Two floors

are occupied by TCS to process passport applications. The top floor has

been kept empty for use by Young Indian. The building currently generates

about Rs 7 crore as rent every year.

While the Delhi edition of National Herald started from this building in

1968, the paper was established by Jawaharlal Nehru in Lucknow way

back in 1938.

The property in Lucknow, in the historic Kaiserbagh area of the city,

used to publish three newspapers - National Herald in English, Navjeevan

in Hindi and Qaumi Awaz in Urdu. The two-acre property has two buildings,

Nehru Bhawan and Nehru Manzil, which are spread over 35,000 sq ft. One

part today houses the Indira Gandhi Eye Hospital and Research Centre,

run by the Rajiv Gandhi Charitable Trust. The property originally had

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Church Mission Birkett High School on it before Associated Journals

acquired it.

A property broker said this is the heart of Lucknow, with Bahujan

Samaj Party chief Mayawati's property next to it. K Vikram Rao, president

of Indian Federation of Working Journalist, senior journalist and son of K

Rama Rao, the first editor of National Herald, said plots were given by

Congress governments for the purpose of running newspapers, at

throwaway prices and now their market value is much higher. The three

newspapers that Associated Journals ran shut down in 1999 after facing

troubles for almost a decade.

Some properties, however, were never used for the intended

purpose. In Mumbai, the paper had been given a 3,478 sq metre plot in

Bandra along the Western Express Highway. This is a large plot by

Mumbai standards. This land was given in 1983 for publishing a daily

newspaper and to set up the Nehru Library and Research Centre.

Instead, an 11-storey commercial office building stands constructed

on the plot. "As per rules, the work on the said plot for the designated

purpose should have started within three years of allotment. However, the

construction started in 2014 and that too for a commercial building, with 14

offices and 135 car parks in total," said Anil Galgali, a Mumbai based Right

to Information activist who has written to chief ministers of Maharashtra

thrice since 2013 to take the plot back. "I had written twice to Prithviraj

Chavan, then chief minister of Maharashtra to take the plot back. I have

also recently urged current chief minister Devendra Fadnavis through a

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letter to do so as the plot was allotted for a different purpose," he said.

The Bandra property is valued at about Rs. 300 crore on the basis of its

commercial development potential of over one lakh sq ft of office space.

Similar is the case with the one acre property in Patna's Adalatganj

area which has been lying vacant since it was given to the paper. Over the

past few years, the plot has been illegally occupied by slums that the

company has been trying to clear up. Associated Journals' newspapers

used to operate out of a leased space on Exhibition Road while the allotted

land remained empty, said media watchers in Patna.

But even an acre of vacant land in this part of the city would be worth

Rs 50-60 crore, said a property broker who operates in the area. With the

attendant buildings, it will be worth about Rs 100 crore. An older property

broker in the area recalled that some part of the property was converted

into shops which were sold off a few years ago. The 3,360 sq metre plot in

Panchkula that stands in the prime Sector 6, opposite the Haryana Police

headquarters, is Associated Journals' latest addition.

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A company was created for the purpose of starting a newspaper

“National Herald‟. The company got allocation of prime land in several

parts of the country. The land was meant to be used for the newspaper

business. Today, there is no newspaper. There is only land and built up

structures which are being commercially exploited.

Effectively, the Section 25 Company substantially controlled by the

leaders of the Congress Party now owns all the properties acquired for a

newspaper publication. And for virtually no consideration, the Section 25

Company owns all the assets. This profit will become huge taxable income

for it. Tax exempted income is used for a non-exempted purpose. They

have transferred the income of a political party to a real estate company.

The Criminal Court, meanwhile, has taken cognizance of the

offence. The High Court has agreed with the Trial Court. The

battle has to be fought legally.

About the Vyapam, Lalit Modi and other controversies involving two

BJP chief ministers and External Affairs Minister Sushma Swaraj, it may be

inquired whether the prosecuting agencies are going ahead and

investigations are progressing?

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Here are some key facts about the National Herald case, which has placed

the Gandhis squarely in the eye of a storm:

-The National Herald was a newspaper that India's first prime minister

Jawaharlal Nehru helped set in pre-Independence India in the year 1938. It

was part of a company called Associated Journals Limited, which was

funded by the Congress. An article in Mint quotes a biographer of Nehru as

saying that he found himself being unable to make an impact on the

'reactionary tendencies' in the Congress, after which the National Herald

was started. However, as the article pointed out, it faced financial

difficulties throughout its existence. The newspaper officially closed down in

April 2008.

-According to the Enforcement Directorate (ED), a private non-profit

company 'Young Indian' was formed in March 2011, with Sonia and Rahul

holding 38 percent of the shares each, allegedly with the specific aim of

taking over the liabilities of AJL. In 2012, BJP leader Subramanian Swamy

filed a complaint before a court. Swamy accused Congress leaders of

being involved in cheating through the acquisition of AJL by Young Indian

Pvt Ltd. He alleged that YIL paid merely Rs 50 lakh to recover an amount

of Rs 90.25 crore that AJL owed to the Congress. Going by the current

value of the properties of National Herald, the scam could be to the tune of

anywhere between Rs 1,600 crore and Rs 5,000 crore.

-The case has seen several twists and turns in the recent past. In August,

reports had suggested that the ED had decided to close the case, citing

lack of substantive evidence against Sonia and Rahul Gandhi. However,

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ED director Rajan S Katoch was removed from service after the reports to

that effect surfaced. In September, the ED decided to report the case.

The Delhi High Court has now rejected the plea filed by the Gandhis

challenging the summons, which means that they will have to appear

before the court unless the order is set aside. As of now, a Delhi court has

asked them to appear on 19 December and exempted them from personal

appearances on 8 December.

BJP booklet on NH issue

"It will give our leaders basic information

about the issue and help them in explaining the stand of party as well the

government. It will also give our spokespersons and leaders various talking

points so that they could highlight them in debates and discussion," he

said.

The BJP has resorted to bringing out booklets on almost every major issue

since it came to power in May 2014. The Congress had accused the

Central government of practicing "vendetta politics" and has alleged that

the National Herald case against Sonia and Rahul Gandhi is part of the

conspiracy.

The party has brought out booklets on a host of issues, including Land

Acquisition Bill, intolerance debate and the recent debate on Constitution.

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New Delhi: Escalating its attack on the Congress over the National Herald

case, the BJP has brought out a booklet titled 'Family Greed and National

Blackmail' that aims to "inform" its party leaders about the issue.

The party will distribute the booklet, which is a compilation of a number of

write-ups on the issue, among its MPs and leaders across the country to

"inform" them on the issue and give them "talking points", BJP

parliamentary party office secretary Balasubrahmanyam Kamarsu said.

"It will give our leaders basic information about the issue and help them in

explaining the stand of party as well the government. It will also give our

spokespersons and leaders various talking points so that they could

highlight them in debates and discussion," he said.

The BJP has resorted to bringing out booklets on almost every major issue

since it came to power in May 2014. The Congress had accused the

Central government of practicing "vendetta politics" and has alleged that

the National Herald case against Sonia and Rahul Gandhi is part of the

conspiracy.

The party has brought out booklets on a host of issues, including Land

Acquisition Bill, intolerance debate and the recent debate on Constitution.

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New Delhi: The Congress seems to have changed its legal tactic and

adopted a combative strategy in the National Herald case. Sources have

revealed that Congress brass has decided that both Congress President

Sonia Gandhi and her son Rahul will appear before the lower court.

The reverse stand came in less than 24 hours after it approached the

Supreme Court to get a stay on personal appearance. The tactical shift

indicated that Congress wants to take the bull by its horns than letting its

opponents set the agenda for it.

Meanwhile, the case continues to rock Parliament. In Rajya Sabha,

Congress leader Ghulam Nabi Azad accused the government of

manipulating the Herald case. In the Lower House, there was a war of

words between Congress's Mallikarjun Kharge and Union Minister

Venkaiah Naidu. While Kharge alleged that government is indulging in

vendetta politics, Naidu accused the Congress of threatening judiciary

through Parliament.

The scene was no different outside Parliament as Congress Vice

President Rahul Gandhi accused the Prime Minister's office of political

vendetta and claimed that the Centre was threatening the judiciary.

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Subramanian Swamy, the Scarlet Pimpernel of Indian politics has proved to

be the harbinger of bad times for more than one political heavyweight. Ask

the Tamil Nadu Chief Minister, Ms Jayalalithaa Jayaram. She‟s the first

sitting chief minister in the country to be disqualified from holding office

after her conviction in a disproportionate assets case by a Karnataka court

in September last year. Jayalalithaa suffered the ignominy of going to jail

but was reinstated when the conviction was set aside by the Karnataka

High Court in May this year. However, that tale‟s not fully told since an

appeal in the Supreme Court against the HC decision could well turn the

tables against Jayalalithaa once again. Subramanian Swamy filed that case

in 1996.

In September 2010 the Supreme Court was petitioned in seeking the

prosecution of then Telecom Minister A Raja in something famously

became the 2G case. It was none other than the ebullient Subramanian

Swamy who had moved the Supreme Court.

Subramanian Swamy filed the National Herald case in 2012. Accusing

Congress leaders of cheating and breach of trust in the acquisition of

Associated Journals Ltd (AJL), Publishers of National Herald, by Young

Indian Pvt Ltd (YIL),Swamy contended that the “take over” was done in a

malicious manner to gain profit. Congress president Sonia Gandhi and vice

president Rahul Gandhi are directors in YIL. Besides the Gandhis,

Congress treasurer Motilal Vora, general secretary Oscar Fernandes,

journalist Suman Dubey and technocrat Sam Pitroda were also named in

the case.

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Swamy has alleged that YIL has paid just Rs50 lakh to obtain the right to

recover Rs90.25 crore loan the AJL owed to the Congress party. He says

the Rs 90.25 crores owing to the Congress Party could easily be paid off by

partial sale of assets. Sonia Gandhi and Rahul Gandhi own 76 per cent of

YIL. The complaint has also alleged that the loan, taken from party funds

and given to AJL, was “illegal”.

The Congress says that no director of YIL has derived any financial

benefit from either the company or its dealings with AJL. It further claims

that all the assets and income of AJL continue to remain with the company

and not gone to YIL, YIL directors or YIL shareholders. By advancing Rs 50

lakhs to AJL and taking over the responsibility of recovering the Rs 90

crore debt, YIL had effectively wiped out AJL‟s debt enabling it to raise

bank loans to refurbish its properties or build on them to increase its

income. The legal merits of the case will be decided by the courts although

that‟s likely to take a long time going by past experience.

Meanwhile, both sides say the case has been “politicised.” The

Congress claims that the Enforcement Directorate (ED)closed its case

investigations in August this year “because there was no evidence of any

wrongdoing. But the then ED Director was sacked and just a month later in

September 2015 the case was reopened.” The Congress alleges that

senior BJP leaders “have made frequent and partisan pronouncements in

the media — a clear attempt to influence public opinion and tarnish the

reputation of the Congress Party and its leadership on a false pretext.”

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It has redoubled efforts to disrupt Parliament. This means that crucial

legislation such as the ones relating to GST and Land Acquisition will

remain in cold storage. The BJP has retaliated by accusing the Congress of

defending the indefensible.

Whatever else it may be, the National Herald case is clearly “political.”

Anything that Subramanian Swamy touches, apart from his morning idlis

and forenoon thayir sadam, has to be political and so is this case. It could

upset the anti-BJP applecart in the coming months. Of course, the reverse

also could well be true. The anti-BJP formation that swept the Bihar

assembly elections last month owes much to Sonia and Rahul Gandhi.

True, the Congress came in a distant fourth in that election but Sonia and

Rahul Gandhi were crucial to bringing together the irresistible Lalu Yadav

and the immovable Nitish Kumar. Without their earnest efforts, the unity

wouldn‟t have been possible.

Evidently it is Sonia Gandhi who convinced Lalu Yadav not only to

team up with Nitish but also to allow him to play “first fiddle” in the concert!

It stands to reason therefore that anything that could adverse impact the

Gandhis would be a major setback to the functioning of an anti-BJP

electoral front: precisely what the National Herald case could achieve.

Assembly elections are due in Tamil Nadu, West Bengal, Kerala,

Puducherry and Assam where the terms of the present legislatures are

ending in May and June next year. The Congress in general and the

Gandhis in particular need to perform superlatively in these elections in

order to keep the post-Bihar momentum going. Though a junior partner in

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Bihar, the Congress, happens to be the only all-India party in that front

providing it with the “political glue” to bind it together and attract other

regional allies in untapped states such as UP, Odisha, Seemandhra and

Telengana. Any decline in the Congress‟ fortunes is likely to affect the

entire block adversely. The National Herald Case could severely tarnish the

image of the Gandhis and hurt the entire anti-BJP front

Kerala and Tamil Nadu don‟t really count in this calculation. The former

famously votes alternately for the Congress-led United Democratic Front

and the CPM-led Left Democratic Front. The latter is witness to a two-horse

race between Jayalalithaa‟s AIADMK and the DMK led by M Karunanidhi

and son MK Stalin. West Bengal and Assam could prove significant. The

Congress has been in power in Assam for three consecutive terms. A

strong anti-incumbency wave coupled with a resurgent BJP could spell

doom for the Congress in Assam. Recent elections have been more than

unkind to the Narendra Modi-Amit Shah duo.

Having lost Delhi ignominiously soon after winning India and then

trounced in Bihar, the duo are battling for one famous victory to redeem

themselves. And Assam is that battleground. Modi has set a target,

“Mission 84” to win those many seats in the 126 strong State Assembly. He

has ensured that at least one of his Central Ministers visits Assam every

week. The National Herald “ghotala” would be grist to Modi‟s electoral

rhetoric.

West Bengal could prove interesting. The Congress opted to contest

the 2011 Assembly elections as a junior partner of Mamata Banerjee‟s

Trinamool Congress, winning 42 of the states 294 assembly seats. The two

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parted ways thereafter and the Congress won just four of West Bengal‟s 42

seats in last year‟s Lok Sabha elections. Is it possible that the two will

reunite once again? That could perhaps be the silver lining for the

Congress.

However the long shadow of the Herald case could well put paid to all

of this. Not too many will be prepared to take a chance if the image of the

Gandhi‟s gets tarnished any further, and this time Manmohan Singh won‟t

be eligible to play the fall guy.

National Herald Case: Is There An Oblique Political Objective By The BJP?

By George Abraham 15 December, 2015 Countercurrents.org

India is once again in the throes of another political storm of great

magnitude that threatens not only to setback the current legislative agenda

of the Parliament‟s winter session but may also permanently fracture the

trust needed for future consensus among political parties to conduct the

nation‟s business. The National Herald case has all the familiar hallmarks

of a political mud fight rather than the true ingredients needed to prove any

alleged impropriety and/or violation of laws.

National Herald was started by Pandit Jawaharlal Nehru in 1937 along

with other leaders of the independence movement. Undoubtedly, it was a

symbol of this struggle and provided a voice to the freedom movement

across the country. In addition to Pandit Nehru, freedom fighters like

Purushottam Das Tandon, Acharaya Narendra Dev, and India‟s first

Communications Minister, Rafi Ahmad Kidwai were among the first

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subscribers and signatories to the memorandum of Association of the

„Associated Journals Limited (AJL)‟.The company that was published

National Herald and later Quami Awaaz and Navjeevan.

From its inception, the National Herald was in poor financial health.

There were reports to the effect that Mahatma Gandhi originally even

opposed the idea of the Congress party owning a newspaper but relented

to the wishes of Pandit Nehru and others in the party. The determination of

Nehru to carry on with the publication despite the heavy odds against it is

quite evident in his statement; “I will not let the National Herald close down

even if I have to sell Anand Bhavan.”

The Congress party supported AJL until now because of its rich and vibrant

legacy associated with the freedom struggle, as well as its inextricable link

with the policies and principles of the Indian National Congress. Despite the

editorial excellence of the paper, AJL continued to bleed financially and ran

into losses year after year. The published records show that AJL received

multiple loans adding up to 90 crores from the Congress Party.

It has come to a point where no bank would sanction AJL a loan

because of the 90 crore debt in its balance sheet, and its benefactor, the

Congress Party, had no choice but to rethink its strategies. Towards that

end, some of the most eminent experts were consulted, and their

considered advice was to form a section 25 not-for-profit company called

„Young India‟. Further, in order to bail out AJL and free it from the burden of

debt, the loan was reassigned to the not-for-profit company. In so doing,

Congress party leaders truly believed that it could rescue and revive

Nehruji‟s paper while relieving AJL of its financial distress. In today‟s world,

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conversion of debt into equity is a normal business practice to restore the

financial health of companies that are over-burdened with debt.

All shareholders of AJL, who were present and voting on 21st

January 2011, approved the advice of the experts unanimously. Meanwhile

AJL, now able to borrow money for the first time in years, renovated its

Delhi building and rented them at the current market rates. It is believed

that these new avenues of income would fund the re-launching of the

National Herald in the foreseeable future.

Undoubtedly, there are a number of misconceptions promoted by

groups intending to tarnish the image of the Congress party. A few things

are quite evident upon the examination of this case: 1) the Assets and

properties owned by AJL will continue to remain with AJL; 2) no assets

have been transferred from AJL to „Young Indian‟; 3) as Directors or

Shareholders of „Young Indian‟, Smt. Sonia Gandhi or Shri. Rahul Gandhi

is prohibited by law from drawing any financial benefits from the company;

4) At the Extraordinary General meeting in 2011, shareholders were

present and unanimously voted to approve the issuance of fresh equity to

„Young Indian‟, in order to extinguish the debt of AJL.

It is also clear to independent observers that AJL was directed and

sustained over the years by a successive leadership of the Congress Party,

and this continues to remain the case today. The newly created „Young

India‟ also lists the major office holders of the party as its shareholders. In a

nutshell, this whole exercise appears to be a major overhaul of an entity

within an organization that has become financially burdensome because of

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its debt, and otherwise unresponsive to revival in the prevailing market

conditions. Political Parties in India are under no restriction in giving loans

or restructuring their various entities. A complaint along these lines by

Subramanian Swamy was dismissed by the Election Commission in 2012.

In light of all of these clarifications, why is there still all of this hubbub? BJP,

at the outset, would want everyone to believe that it was a case brought up

by Subramania Swamy in 2012, and they (the BJP) have very little to do

with it! However, this case was reopened by Enforcement Directorate after

Rajan S. Katoch, the ED Director, was removed from service after his

recommendation to close the case due to lack of evidence against two

leaders. In addition, the BJP has already brought out a booklet called

„Family Greed and National Blackmail‟ in a deliberate attempt to sully the

names of the Congress President and the Vice-President.

Kapil Sibal, a senior Congress leader and lead attorney, in this case, said

the following: „The BJP, in the last year or so, has been targeting the

leaders of the Congress Party. Since they have no idea how to govern the

country, they want to distract the attention of people from the promise of

good governance. They have targeted the Congress Party president Smt.

Sonia Gandhi, Rahul Gandhi and our leaders Virbhadra Singh, who was

accosted during his daughter‟s wedding, ShankarsinhVaghela, Ashok

Gehlot and Sachin Pilot. They have filed sedition charges against young

people in Gujarat and targeting West Bengal, Madhya Pradesh and Bihar‟.

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Since the ascension of BJP to power in 2014, there is a growing

intolerance to dissent in a democratic framework. For some in their

leadership, a responsible opposition is altogether an inconvenience to the

unilateral BJP agenda. Senior BJP leaders who appear to have taken an

oath for a „Congress-free Bharat‟, might believe that the top leadership of

the Congress party in the Court in an alleged case of cheating and criminal

breach of trust makes for bad optics and will help them in their quest to

discredit and destroy them politically. There is no doubt then why Sonia

Gandhi and Rahul Gandhi became their prime targets.

Subramanian Swamy is a known operative for the BJP, and his

malevolence and hatred towards the Nehru family and anything Nehru

touched including the venerable National Herald is well documented. He

has long been discredited on these shores for his vitriolic statements

against minorities in India, which got him booted out from the prestigious

Harvard University in the immediate past. In one of his infamous quotes

from 2011, he states „implement the uniform civil code, make learning

Sanskrit and singing Vande Mataram mandatory, and declare India a Hindu

Rashtra in which non-Hindus can vote only if they proudly acknowledge

that their ancestors were Hindus. Rename India Hindustan as a nation of

Hindus and those ancestors were Hindus”. In his view of the world, Smt.

Sonia Gandhi or any other foreigners our sons or daughters may marry will

be permanently relegated to second-class citizenship. Unfortunately, his

demagoguery and bigotry come in handy for the BJP in its stealth

campaign to undo the Nehruvian legacy.

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Filing the plea, Congress leaders insisted that Swamy is a political

opponent, insisting that the present criminal proceedings have been

initiated only with intent to secure an oblique political objective! Hopefully,

the days ahead may prove just that!

(The writer is a former Chief Technology Officer of the United Nations and

Chairman of the Indian National Overseas Congress, USA)