Is converting debt into equity a scheduled offence, asks former Additional Solicitor General Bishwajit Bhattacharyya in an opinion piece published in The Economic Times on the National Herald case.
“The entire ball game is to exercise the power of arrest. But usurping power without jurisdiction is travesty of due diligence,” he concludes. He points out that though selective leaks in the media have drummed up allegations of Income Tax violations, ‘hawala’ etc. against Congress President Sonia Gandhi and former president Rahul Gandhi, neither the I-T Act nor FEMA empowers officials to make arrests.
But Prevention of Money Laundering Act (PMLA) does and “if PMLA is mixed into any investigation pot, then the threat of arrest looms large”, he writes.
Taking note of the charges and insinuations levelled against National Herald from 2012 onwards ranging from “fraud, land
grabbing, criminal intent, hawala operation, cash transaction and public money being used for personal use,” Bhattacharya scathingly writes that people levelling these allegations do not seem to have read either PMLA, 2002 or section 25 of the Companies Act.
Since “both The Associated Journals Ltd. (AJL) and its final owner Young Indian are incorporated under section 25 of the Companies Act, assets of the two companies cannot be dissipated”, he points out. In other words, the assets cannot be sold or transferred to individuals or any other company except a Section 25 (Section 8 company under Companies Act, 2013) charitable not-for-profit company.
And if they are, Bhattacharyya points out, the Government of India, which issued the licence to the concerned companies, could and would have cancelled them. Since the above said licences have not been cancelled since 2012, when the charges were first levelled, the inevitable conclusion is that assets of the AJL have not been dissipated.
Those who therefore accuse Sonia and Rahul Gandhi of personally amassing wealth belonging to the AJL, the former law officer writes, reflect their ignorance of basic corporate law. Under corporate law, a legally incorporated company is an independent entity and independent of its shareholders. Thus, the wealth of the company does not become the wealth of the shareholders. Where is then the question of individually amassing wealth or usurping properties that belong to AJL and are reflected on its books, the former Additional Solicitor General wonders.
