National Herald Case

Well…I generally don’t comment on politicking between political parties, but since this judgment has opened up new arenas of accountability of political parties, I am commenting on it.

The judge has made three very strong exceptions in the case of a political party. First, he has held that in case of a political party, the rule of locus standi needs to be eased, for public interest is involved. Secondly, he has put the onus upon the office bearers of the political parties to lift the veil of the companies to whom they lend and see if the assets of the company can be sold off suitably to pay-off the debt. Thirdly, he has imputed a criminal intent on the top managers of the political party when they are also the managers of a company to whom the funds of the political party have been alleged to have been siphoned off, irrespective of whether any attempt has been made to impute criminal intent directly on  the said managers per se.

When a judgment opens up so many new arenas in a 14 page judgment, you know what to expect. I think the judgment stands on very weak legs. First, even if the rule of locus standi can be eased, it can be done in PILs, not in criminal trial court matters. If Swamy indeed wanted to act in public interest, he should have moved a PIL in the high court seeking a police/CBI enquiry, not filed a private complaint. I will also have to blame the petitioners here. They made unnecessary reference to Sec 39 CrPC to make a case for absence of locus standi, which probably confused the court. Sec 39 CrPC is irrelevant here. It doesn’t provide for any locus standi to file criminal complaints. Secondly, though I have not studied corporate law in LL.B., but this is so fundamental an issue that the little bit of corporate law I studied during my management course makes me comfortable to assert that veil of the companies can’t be lifted by lenders, especially when they have given unsecured loans. Unsecured lenders come last in the queue when the company is wound up! Thirdly, there is no way criminal intent can be imputed in this manner. Even while adopting this modus operandi, I fail to understand why the judge has ignored the fact that the managers of the company to whom the funds are alleged to have been siphoned off were impotent by law to make any gains therefrom.

I think this judgment is an opportunity lost. Much better course would have been to convert the rebuttal of Swamy into a PIL and order a CBI enquiry.

Note: The judgment can be downloaded from this link.

About the Author

Ankur Mutreja
Ankur Mutreja is an advocate-cum-writer, and his blogs are amongst his modes of expression. He has also authored six books: "Kerala Hugged"; "Light: Philosophy"; "Flare: Opinions"; "Sparks: Satire and Reviews"; "Writings @ Ankur Mutreja"; and "Nine Poems"; which can be downloaded free from the links on the top menu.

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