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‘Pierce the Corporate Veil’: Govt asks Delhi HC to Hold Gandhis Personally Liable in National Herald Case

Both Rahul Gandhi and Sonia Gandhi hold a stake in Young Indian to which Associated Journals Ltd (AJL), the publisher of National Herald newspaper, was transferred.

Debayan Roy | News18.com

Updated:February 11, 2019, 5:34 PM IST
‘Pierce the Corporate Veil’: Govt asks Delhi HC to Hold Gandhis Personally Liable in National Herald Case
Congress leader Rahul Gandhi goes through the pages of National Herald newspaper during the launch of its commemorative edition in Bengaluru on December 6, 2017. (PTI)

New Delhi: The central government on Monday asked the Delhi High Court to hold the shareholders of Young Indian Pvt Limited, in which Congress leaders Sonia Gandhi and Rahul Gandhi hold a stake, personally liable for the company’s defaults.

Solicitor General Tushar Mehta urged the court to “pierce the corporate veil of Young India”. Piercing the corporate veil or lifting the corporate veil is a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders.

Apart from Gandhis, other shareholders of the publishing company include Oscar Fernandes and Motilal Vora.

Mehta was arguing before a two-judge bench where he stated that Associated Journals Ltd (AJL), the publisher of National Herald newspaper, violated the lease deed signed with the government of India when the company was transferred to Young Indian.

A single judge had on December 21 last year dismissed AJL's plea challenging the Centre's order to vacate its premises. The court asked the publisher to vacate the ITO premises within two weeks after which eviction proceedings under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971, would be initiated.

AJL approached the high court seeking a stay on the single-judge order.

The high court had dismissed AJL's plea challenging the Centre's order by holding that the publisher has not provided any instance to support the serious allegations of mala fide levelled against the ruling dispensation.

The Centre had ended its 56-year-old lease and asked AJL to vacate the premises, saying no printing or publishing activity was going on.

In his order, the single judge had said that AJL has been "hijacked" by Young Indian (YI). The Solicitor General also argued that Young Indian has been accused of evading income assessment by the I-T department.

On Monday, the Solicitor General argued that the manner in which AJL was transferred to Young Indian was “questionable”. He further accused Rahul Gandhi and Sonia Gandhi of “holding on to a public property (herald house) to earn crores in rent”.

AJL had denied the allegations in the petition filed in the high court. The court noted on December 21 that by transfer of AJL's 99 per cent shares to Young Indian, the beneficial interest of AJL's property worth Rs 413.40 crore stands clandestinely transferred to Young Indian.

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