• Rahul Gandhi Vs. Subramanian Swamy & Anr.

  • Citation: Rahul Gandhi  Versus. Subramanian Swamy & Anr, Crl.M.C.  3332/2014, Judgment Dated-07.12.2015, Sunil Gaur, J, Delhi High Court  [Full PDF Judgment]

    Excerpts From The Judgment

    9. In the impugned order, trial court has subjected the case of respondent-complainant to the test of a prima facie case. By relying upon Apex Court’s decision in A.R. Antulay v. Ram Dass (1984) 2 SCC 500 trial court has concluded that anyone can put the criminal law into motion except where the statute enacting or creating an offence indicates to the contrary. After adverting to the ingredients of the offence of cheating, criminal breach of trust, dishonest misappropriation and criminal conspiracy, trial court has concluded as under: - “From the complaint and the evidence led so far it appears that YI was infact created as a sham or a cloak to convert public money to personal use or as a special purpose vehicle for acquiring control over `2000 crores worth of assets of The AJL and since all the accused persons have allegedly acted in consortium with each other to achieve the said nefarious purpose/ design, there are sufficient grounds for proceedings against all of them. It goes without saying that guilt of an accused is determined after trial when the burden of proof is discharged beyond reasonable doubt. This is only the stage of summoning of the accused. When the accused persons appear before the court they shall be at liberty to refute the allegations of the complainant, cross-examine the complainant’s witnesses and to lead evidence in their defence. However, as the complainant has established a prima facie case against the accused u/s 403, 406 and 420 read with section 120B I.P.C. hence, let the accused No 1 to 6 namely Mrs. Sonia Gandhi, Mr. Rahul Gandhi, Sh. Moti Lal Vohra, Sh. Oscar Fernandes, Sh. Suman Dubey and Mr. Sam Pitroda be summoned for 7.08.2014. Let the accused No.7 (Young Indian) be summoned through it’s authorized representative for the same date.”  

    17. On behalf of petitioners, it was pointed out that Section 403 of IPC is applicable in respect of movable properties whereas assets of AJL are immovable properties. According to petitioners, there is no evidence to indicate misappropriation of any immovable property of AJL or Y.I. or that the rental income of AJL has been misappropriated by petitioners. Thus, it was submitted that there is neither wrongful gain or loss to AJL or Y.I. and no illegal act has been committed by petitioners and so, on a plain reading of the complaint in question, it can be certainly said that neither the offence of cheating nor of fraudulent or dishonest misappropriation is made out. It was thus submitted that in view of the dictum of Apex Court in Thermax Limited and Others v. K.M. Johny and Others (2011) 13 SCC 412, in the absence of essential ingredients of dishonest intention, prosecution of petitioners in the instant complaint is wholly untenable. Reliance was placed upon decisions in State of Haryana and Others v. Bhajan Lal and Others 1992 Supp. (1) SCC 335, Dhariwal Tobacco Products Limited and Others v. State of Maharashtra and Another (2009) 2 SCC 370, Rajiv Thappar and Others v. Madan Lal Kapoor (2013) 3 SCC 330 to submit that the stand of petitioners ought to be considered while exercising jurisdiction under Section 482 of Cr.P.C. as it is manifestly clear that allegations levelled against petitioners, when taken on their face value, do not constitute any offence.

    18. On the issue of locus standi, it was submitted that in a case of cheating and misappropriation, victim or the person or entity cheated, who complains of wrongful loss, alone can maintain a complaint of cheating, misappropriation, etc.. Reliance was placed upon Apex Court’s decision in Mohammed Ibrahim & Ors. V. State of Bihar & Anr. (2009) 8 SCC 751 to submit that a third party, who does not claim to be cheated, cannot maintain such a complaint. Attention of this Court was drawn to Section 39 of Cr.P.C. to point out that for the offences scheduled therein, any person can maintain a complaint, but the offences of cheating and criminal misappropriation are not there in the said Schedule to Section 39 of Cr.P.C.. It was thus submitted that unless the necessary mens rea is there, such a complaint cannot be proceeded with. It was asserted on behalf of petitioners that neither the shareholders of AJL nor any supporter/donor of Congress Party or anyone from Y.I. has made any complaint and infact, only such persons are competent to file the complaint in question and not the respondent-complainant, who has malafidely filed the instant complaint. It was submitted that the complaint in question proceeds on the basis of unwarranted assumptions and presumptions and contains misstatement of facts and so, there is no justification to proceed further with the instant complaint.

    21. The submissions advanced on behalf of petitioners were concised by Dr. Singhvi, learned Senior Counsel for one of the petitioners, as under: - i) No conversion, appropriation by Y.I. for benefit is possible. ii) Y.I. is Section 25 Company-barred in law from giving any benefit, salary, remuneration, dividend etc to its shareholders. iii) All properties owned by AJL remains in ownership of AJL; only shareholders of AJL change. iv) In law, shareholders of a company do not own properties owned by the company. Company is a separate legal entity. Ownership of shares in company is not ownership of properties of company. v) Since all properties remain properties of AJL, there is and can be no entrustment. vi) No identifiable or identified person or entity even claims to be deceived or cheated as a victim. vii) Complainant himself filed the balance sheet of AJL and Y.I. shows; a) Property of AJL remains property of AJL at all times. b) Rent received from these properties is received by AJL and so shown in balance sheet. c) AJL is a loss making company, admittedly, and hence no dividend declared. So neither Y.I. nor accused shareholder of Y.I. can get any dividend. d) Y.I. balance sheet similarly shows nil income received.

    23. Respondent-complainant, who has chosen to argue these petitions in person, had submitted at the outset that impugned order suffers from no illegality or perversity and that there is due application of mind. It was submitted that in the exercise of jurisdiction under Section 482 of Cr.P.C., the truthfulness or otherwise of the allegations cannot be gone into and the inherent powers are to be exercised with circumspection on the basis of the complaint and not by taking into consideration any fresh material/documents. To submit so, reliance was placed upon Apex Court’s decision in N. Soundaram v. P.K.Pounraj & Anr. 2014 (10) SCC 616.

    24. Dismissal of these petitions was sought by respondent-complainant by submitting that petitioners have alternate remedy to approach the trial court while invoking Section 245 of Cr.P.C.. Reliance was placed upon Apex Court’s decision in Nupur Talwar v. CBI (2012) 11 SCC 465 to submit that it is not essential for trial court to deliver a detailed order while issuing the process. It was submitted that sufficient grounds exist for summoning petitioners for the offences in question. It was highlighted by respondent-complainant as to how interest free loan was questionably extended to AJL by Congress Party and was dubiously assigned to Y.I., who had in turn, taken over the Management of AJL and thereby offence of cheating, criminal misappropriation has been blatantly committed by petitioners, which calls for their prosecution in the instant complaint. It was asserted by respondent-complainant that the question of locus standi does not arise as the supporters/donors, etc., of Congress Party as well as the shareholders of AJL have been blatantly duped and larger public interest has been sacrificed which is a serious cause of concern as the trust reposed in the Congress Party has been openly breached. It was pointed out that with the mala fide intention, Special Purpose Vehicle i.e. Y.I. was floated to indirectly acquire the control of AJL without being saddled with huge liabilities.

    25. According to respondent-complainant, the modus operandi of petitioners clearly smacks of criminal intent. As per respondent-complainant, an extraordinary and unprecedented fraud has been played upon the entire nation by petitioners. Respondent-complainant maintained that the first step in the commission of the crime in question i.e. criminal breach of trust, is assigning of the Deed of Assignment of Loan and the second pre-mediated step, smacking of criminal conspiracy to commit the offences in question, is the extinguishment of the debt of `90 crores odd by merely paying `50 lacs and of converting the assigned loan into equity shares and thereby acquiring the control over AJL having huge assets of `2,000/- crores.

    26. According to respondent-complainant, Extraordinary General Meeting (EGM) was indeed held but with just seven shareholders and no proxies and yet, it was said that the quorum was requisite. The legality of this EGM is questioned by respondent-complainant by pointing out that approximately 99% shares of AJL stood transferred to Y.I. and thus, AJL became an almost wholly owned subsidiary of Y.I.. In the written synopsis placed on record by respondent-complainant, it has been highlighted as to how 761 shareholders of AJL were reduced to minority status of 1% with no clue as to what was in store for them and instead of reviving the newspaper publication, the assets of AJL are being misused to earn commercial profits, which was not the purpose of AJL. In support of the stand taken by respondent-complainant, reliance was placed upon decisions in Binod Kumar & Ors. v. State of Bihar & Anr; (2014) 10 SCC 663; N. Soundaram v. P.K.Pounraj & Anr; (2014) 10 SCC 616, Rishipal Singh v. State of U.P. (2014) 7 SCC 215; Arvind Kejriwal & Ors. v. Amit Sibal & Anr. (2014) 1 JCC 229; Rajiv Thapar & Ors. v. Madan Lal Kapoor (2013) 3 SCC 330; Crl.M.C. 4751 of 2013 titled Kamla Rana v. NCT State & Ors. decided on 19th May, 2014; Nupur Talwar v. CBI (2012) 11 SCC 465; Bhushan Kumar v. NCT (2012) 5 SCC 424; Subramanian Swamy v. Manmohan Singh (2012) 3 SCC 64; Centre for Public Interest Litigation & Ors. v. Union of India & Ors. (2012) 3 SCC 1= (2012) 1 SCC; Indian Oil Corporation v. NEPC India Ltd. & Ors. (2006) 6 SCC 736; M/s Medchl Chemicals & Pharma P.Ltd. v. M/s Biological E.Ltd. & Ors. (2000) 3 SCC 269; Rashmi Kumar v. Mahesh Kumar Bhada (1997) 2 SCC 397; State of Haryana & Ors. v. Bhajan Lal & Ors. (1992) Supp. (1) SCC 335 and Express Newspapers (P) Ltd. v. Union of India AIR 1986 SC 872.

    27. Lastly, it was submitted by respondent-complainant that the conspiracy to commit the offence in question is writ large on the face of it and so, prosecution of petitioners in the complaint in question is very well justified on merits and no case for quashing the instant complaint or the impugned order is made out. Thus, dismissal of these petitions is sought.

    28. The respective stand taken by both the sides needs to be considered in view of the fact that in a democratic set up, how a Political Party of national stature acts is everybody’s concern. Rather, it is a matter of serious concern as allegations of fraud, etc. are levelled against the Congress Party, who has ruled the Nation for many decades. Precisely, it is the act of Office Bearers of Congress Party and their associates which is under scanner in this case.

    29. Upon evaluating the impugned order on the touchstone of judicial precedents and in the light of submissions advanced by both the sides, this Court finds that question of locus standi of respondent-complainant to maintain the complaint in question pales into insignificance in view of the fact that Apex Court in Subramanian Swamy v. Manmohan Singh (supra) has reiterated that freedom of a private citizen to proceed against the corrupt cannot be restricted. It will not be fair to literally interpret Section 39 of Cr.P.C. or to assert that a private citizen is free to proceed against corrupt public servants but not against a political party when it is accused of serious offences of cheating, misappropriation, etc.. In a unique case, like the instant one, expanded meaning to the law has to be given. In the considered opinion of this Court, the plea of locus standi cannot be restricted to typical cases of cheating, misappropriation, etc., as here is a case where the act of Office Bearers of Political Party having criminal overtones is under scrutiny and so, the challenge to the locus of respondent-complainant to maintain the complaint in question is hereby repelled.

    30. Impugned order elaborately notes the facts of this case and considers the pre-summoning evidence, the ingredients of the offences alleged and after considering the judicial precedents and the submissions advanced, concludes that a prima facie case to summon petitioners as accused is made out. Upon scrutiny of the impugned order, this Court is constrained to note that the presumptive observations made by the trial court are uncalled for and such a deeper scrutiny of facts is not required to be undertaken at this initial stage and on a bird’s eye view, it is required to be seen whether a prima facie case to summon petitioners as accused is made out or not. Such a deep scrutiny of facts is required at the charge stage and not at the summoning stage.

    31. In the instant case, it cannot be disputed that the Office Bearers of the Congress Party are the trustees of the funds belonging to the Party. No doubt, a Political Party can have income from other sources as well and can invest money in mutual funds, etc., to augment its resources. However, it has to be kept in mind that the allegations against the Office Bearers of the Congress Party are of siphoning off the party funds in a Crl.M.Cs.3332/14, 3333/14, 3335/14, 3336/14 & 2156/15 Page 22 of 27 clandestine manner. The impropriety of extending interest free loans to a separate legal entity i.e. AJL, which is a Public Limited Company, by the Congress Party is a matter of concern in a democratic set up, particularly, when the source of Congress Party’s fund is largely from donations given by public and so, any citizen can legitimately question the siphoning off funds by Political Party. What crops up in the mind of a prudent person is as to where was the need of extending interest free loans to a Public Limited Company engaged in a commercial venture of publishing newspapers.

    37. Apex Court in N. Soundaram v. P.K. Pounraj and Another (2014) 10 SCC 616 has reiterated the principles governing the inherent jurisdiction under Section 482 of Cr.P.C. by reminding the Courts that this power has to be exercised sparingly and cautiously to prevent abuse of process of the court and to secure the ends of justice while cautioning that inherent powers should not be exercised to stifle a legitimate prosecution and High Courts should refrain from giving a prima facie opinion at the initial stage unless there are compelling reasons to do so, as the case set up has to be considered as it is, without adding or subtracting anything to it. Applying the afore-noted parameters to the instant case, this Court finds that the ingredients of the offences alleged are not lacking and sufficient ground to proceed against petitioners certainly exists. No mala fides can be alleged against respondent-complainant nor can it be said that the summoning of petitioners is an abuse of process of the court.

    38. This Court is of the considered view that the gravity of the allegations levelled against petitioners has a fraudulent flavour involving a national Political Party and so, serious imputations smacking of criminality levelled against petitioners need to be properly looked into.

    39. After having considered the entire case in its proper perspective, this Court finds no hesitation to put it on record that the modus operandi adopted by petitioners in taking control of AJL via Special Purpose Vehicle i.e. Y.I., particularly, when the main persons in Congress Party, AJL and Y.I. are the same, evidences a criminal intent. Whether it is cheating, criminal misappropriation or criminal breach of trust is not required to be spelt out at this nascent stage. In any case, by no stretch of imagination, it can be said that no case for summoning petitioners as accused in the complaint in question is made out. Questionable conduct of petitioners needs to be properly examined at the charge stage to find out the truth and so, these criminal proceedings cannot be thwarted at this initial stage. Such a view is being formed on a bird’s eye view of the whole case and the observations in the impugned order of there being a prima facie case have to be read in the context of there being sufficient grounds for summoning petitioners.

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