The Enforcement Directorate has moved the Delhi High Court, challenging a trial court order that dismissed a money-laundering complaint against Congress leaders Rahul Gandhi and Sonia Gandhi in the National Herald case, reported Live Law on Friday.

The central agency filed the petition on Wednesday, describing the trial court order as “erroneous”, according to PTI.

On Tuesday, Special Judge Vishal Gogne of the Rouse Avenue Court said that the complaint filed by the central agency under the Prevention of Money Laundering Act was not maintainable because the case is based on a private complaint filed by Bharatiya Janata Party leader Subramanian Swamy before a magistrate.

It was not based on a first information report, the judge said, adding that cognisance of the complaint was “impermissible in law”.

The Enforcement Directorate can initiate a money-laundering case only based on an FIR pertaining to an alleged offence mentioned in the Prevention of Money Laundering Act, the court further added.

The judge also said that because the Delhi Police’s Economic Offences Wing had recently registered an FIR in the case, it would be premature to decide on the merits of the allegations made by the Enforcement Directorate.

In its petition, the central agency told the High Court that the trial court judgement “amounts to judicial legislation” as it sought to “add words to the expression ‘scheduled offence’ to mean ‘scheduled offence only registered by a law enforcement agency’”, reported PTI.

It added that it was important to impose a stay on the order to “prevent irreparable loss” to the money laundering investigation against the Congress leader and to secure the attached proceeds of alleged crime worth Rs 752 crore.

The Congress described the action as a “political vendetta undertaken against the Gandhis at the behest of the BJP government”, reported PTI.

The allegations

In April 2008, the National Herald newspaper, which was founded and edited by Jawaharlal Nehru before he became India’s first prime minister, suspended operations as it had incurred a debt of over Rs 90 crore.

Swamy filed a complaint against the newspaper in 2012, alleging that Sonia Gandhi and Rahul Gandhi set up an entity named Young Indian to buy the debt using the funds from the party.

The BJP leader alleged that Young Indian paid only Rs 50 lakh to obtain the right to recover Rs 90.2 crore that the Associated Journals Limited owed to the Congress.

The Congress has claimed that there was no money exchange, and that only debt was converted into equity to pay off certain dues including employee salaries.

On October 3, Enforcement Directorate Assistant Director Shiv Kumar Gupta filed a complaint with the Delhi Police alleging government properties originally allotted to Associated Journals Limited at concessional rates for public welfare activities were allegedly “diverted for personal gain”.

The FIR invoked sections of the Indian Penal Code relating to cheating, criminal conspiracy, dishonest misappropriation of property and criminal breach of trust.

It named Sonia Gandhi, Rahul Gandhi, Suman Dubey, Sam Pitroda, Young Indian, Dotex Merchandise Private Limited, its promoter Sunil Bhandari, Associated Journals Limited and other unidentified persons.

The Enforcement Directorate alleged that the case concerns a “serious form of criminal conspiracy and financial fraud”, asserting that Young Indian, which is owned by Sonia Gandhi and Rahul Gandhi, fraudulently took control of Associated Journals Limited properties worth more than Rs 2,000 crore for a “paltry sum” of only Rs 50 lakh.

“The accused persons have exploited these assets by engaging in fraudulent activities such as collecting bogus rents or generating fake revenue through sham advertisements, thereby laundering illicit money under the guise of legitimate transactions,” the complaint had alleged.

In November, the Delhi Police’s Economic Offences Wing registered a fresh FIR based on the Enforcement Directorate’s request under Section 66(2) of the Prevention of Money Laundering Act, which allows the agency to share evidence to enable registration of predicate offences.