An old ghost has come back to haunt the Congress party: the three-year-old National Herald case, in which party president Sonia Gandhi and vice president Rahul Gandhi are both named for cheating and misappropriation of funds. On Monday, the Delhi High Court rejected the plea that summons issued to the Gandhis by a trial court be repealed. On Tuesday, a Delhi court directed them to appear before it on December 19.

The case reverberated in Parliament on Tuesday as government and Opposition traded barbs. While the Congress stormed the well, protesting against “political revenge”, Union Minister Venkaiah Naidu called the Congress “unethical” and “undemocratic”. Both Houses were adjourned for three hours and a defiant Sonia Gandhi declared she was not scared of anyone: “I am Indira Gandhi’s daughter-in-law."

A short while later, the Congress appeared more conciliatory. Congress leader and senior advocate Abhishek Manu Singhvi said both the Gandhis were “keen to appear” in court and defend themselves.

The truth of the charges will be proved or disproved as the case unfolds. For now, the history of the National Herald makes it particularly susceptible to being absorbed in a partisan battle.

'Freedom is in peril'

The newspaper was started by Jawaharlal Nehru in 1938. According to biographer Benjamin Zachariah, Nehru, increasingly frustrated with internal dissensions in the Congress and powerless to control them, “took refuge in journalism”. In those early years, it was considered the voice of the freedom movement and in 1942, after the Quit India movement brought on reprisals from the British government, it was forced to shut down. The paper shut shop with an editorial called “Bande Mataram” and reopened three years later with one entitled “Jai Hind”.

Another personality who shaped the paper was M Chalapathi Rau, one of the most influential figures in independent India’s journalist circles, who also played a part in setting up the Press Council and the Wage Board for Working Journalists. The venerable MC took over in 1946 and edited the paper for 32 years.

In spite of the paper’s claims to fierce editorial independence, Nehru seemed to cast a long shadow over it. Zachariah describes how the “editorial desk became his spiritual and political refuge”. In unsigned editorials, Nehru was able to put forward opinions that he could not publicly own up to. In a message to National Herald on its silver jubilee, Nehru himself praised the paper for its editorial independence, while noting that it “generally [favoured] Congress policy”.

In an article published in the Economic and Political Weekly shortly after Nehru’s death, MC is emotional, almost hagiographic. He calls Nehru a “passionate defender of press freedom, as of all freedom”. Though insisting that Nehru never asked him to write editorials on a particular subject except on one occasion, MC’s article shows how much of a mark the political leader left on the paper. He describes Nehru writing articles, as if in a spontaneous flow of genius, the way “a man of history” should. Nehru, says the editor, “wrote unsigned articles, signed articles and once he reported his own speech at Bara Banki late at night. It was the Puck in him.”

After Nehru’s death and with the rise of Indira Gandhi, party control became more explicit. Umashankar Dixit, who later became Union home minister in a Congress government, took over as managing director and MC reportedly left in a huff.

Financial trouble

From the start, the paper was plagued with financial difficulties, surviving mainly because it was Nehru’s personal project. In 2008, seven decades after it was first started, the National Herald was “temporarily suspended”, because of technological constraints and financial trouble.

These very financial difficulties have contributed to the  paper’s bitter afterlife. Commentators have noted how the paper dealt in real estate to supplement its dwindling income, branching out from its offices in Lucknow to Delhi. But then the problem grew deeper.

National Herald was published by the Associated Journals Private Limited. At the time it closed printing, AJL owed the Congress Party a sum of Rs 90 crore, a debt accumulated over time though interest-free loans. Later, the Congress party signed over these debts to Young Indian Private Company, formed in November 2010, for the paltry amount of Rs 50 lakh. In December 2010, AJL allotted a large part of its shares to YIL instead of paying back the debt. This meant that YIL now owned and controlled AJL, which reportedly has real-estate assets worth at least Rs 2,000 crore.

Rahul and Sonia Gandhi own 38% each of the YIL shares, a fact ferreted out by Bharatiya Janata party leader Subramanian Swamy.

The charge

In 2012, Swamy filed a criminal complaint of cheating against major shareholders of AJL, naming Rahul and Sonia Gandhi, senior Congress leader Motilal Vora, journalist Suman Dubey and technocrat Sam Pitroda.

Following the charges, a trial court in Delhi heard the testimony of four complainant witness: Swamy himself, R Venkatesh, a chartered accountant, Gulab Chand, an official from the Office of the Registrar of Companies, NCT of Delhi and Haryana, and J Gopikrishnan, a journalist with The Pioneer.

This is what the trial court concluded:

“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.”

Court summons were accordingly issued to the five named in the complaint as well as Oscar Fernandes, general secretary of the Congress. From the start, the Congress alleged it was a politically motivated case, that the BJP was using a party member, Swamy, as its point man. But on Monday, the Delhi High Court dismissed these objections, saying “locus standi” was not restricted in a corruption case. The “probity of a legendary National Political Party” was at stake, the court said, and the petitioner “claims to be a  public spirited person”.