Caught between Akbar Road and 'Akhbaar' Road

A little over five years ago, the leaders of Congress, headquartered in the capital's Akbar Road, set in motion a set of events. These would give them direct control over National Herald and its home, Herald House, based at Bahadur Shah Zafar Marg, dubbed as Akhbaar Road in metro murals for its umpteen newspaper offices. As Bharatiya Janata Party leader Subramanian Swamy jumped in with red flags, the matter has now reached the Supreme Court, on the nearby Tilak Marg. Business Standard looks at the key charges and the counter-arguments that the Supreme Court will consider on Friday

INTEREST-FREE LOAN

Charges in high court order: Based on Swamy's contentions, Delhi High Court found the grant of interest-free loans by the Congress to Associated Journals Ltd (AJL) "a matter of concern in a democratic set up"

Defence of Gandhis before SC: The Representation of Peoples' Act does not prohibit the giving of loan by a political party to a public limited company. This aspect has been clarified by the Election Commission vide its order dated November 6, 2013

DEBT WRITE-OFF

Charges: Writing off a huge debt by "a legendary political party is indeed questionable"

Defence: Writing off of the debt by the Congress attracts the allegation of cheating, fraud, etc. It is an observation which is clearly beyond even the stated case of the Complainant. The essence of the complaint revolves around the alleged wrongdoings of the directors of a company, which has resulted in purported injustice to the shareholders

PUBLIC ISSUE

Charges: The issuance of shares to Young Indian "without any public issue" is questionable

Defence: The shares were issued following the due process of law and it is nobody's case that the prescribed procedure was not followed

HIJACK OF ASSETS

Charges: Conspiracy to hijack AJL's assets via Young Indian

Defence: The shareholders of the company are not the owners of the assets of the company

SHARES FOR DEBT

Charges: What was the need for assignment of debt by the Congress to Young Indian and issuance of shares by AJL to Young Indian?

Defence: These are matters which are solely in the domain of the shareholders of a company. None of the aforesaid can come within the ambit of the alleged offences. A third party has no locus to dictate the course of action a corporation ought to follow. Further, none of the shareholders had complained or supported the case of the complainant that they had been cheated

NEGATIVE NETWORTH

Charges: 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

Defence: This observation is against the plain and basic principles of accounting and company law. The net worth of a company is not based only on the assets but on a variety of factors

MARGINALISED SHAREHOLDERS

Charges: That genuine shareholders were marginalised in the egm of ajl

Defence: The equity was issued following the due process of law after sending the notices and holding the EGM of shareholders. The notice as well as the minutes of the meeting dated January 21,2011, were also placed on record. It was nobody's case that the notices of the EGM were not served on "genuine shareholders" or that any of them were marginalised in the EGM or that only seven shareholders had been issued notices

Source: Special Leave Petition