Pierce corporate veil: Govt to HC

THE SOLICITOR GENERAL TOLD SC THE LAND IN QUESTION WAS ALLOTTED TO AJL ON LEASE TO RUN PRINTING PRESS AND THIS “DOMINANT PURPOSE” WAS STOPPED SEVERAL YEARS AGO

NEW DELHI : The Centre on Monday told the Delhi High Court that it needs to “pierce the corporate veil” of Associated Journal Limited (AJL), the publishers of the newspaper, to see who owns the premises of the Herald House, which has been leased to it for running a printing press.

Raising questions on the manner in which the shares were transferred to Young India (YI), in which Congress president Rahul Gandhi and his mother Sonia Gandhi are stakeholders, solicitor general Tushar Mehta told a bench of Chief Justice Rajendra Menon and Justice V Kameswar Rao that the land in question was allotted to AJL on lease to run a printing press and this “dominant purpose” was

National Herald

stopped several years ago.

The submissions by the Centre came during the hearing of an appeal by AJL challenging the December 21, 2018 order of a single judge dismissing its plea against the urban development ministry’s October 30 direction that AJL’S 56-year-old lease on Herald House was over and that it should vacate the premises.

The single judge in its order on December 21 had noted that by transfer of AJL’S 99% shares to YI, the beneficial interest of AJL’S property worth ₹413.40 crore stands “clandestinely” transferred to YI.

On Monday, Mehta said Young India was formed with an intention to take over Herald House.

However, countering such allegations, senior advocate Abhishek Manu Singhvi said that it was a “complete antithesis of company law to say that change in share holding of a company would lead to change in lessee of properties owned by it”.

“Even a 100% shareholder of a company does not become the owner of its assets,” Abhishek Manu Singhvi said.

The court will hear further arguments in the matter on February 18.