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Sukh Ram said he was stepping down in view of his conviction so that the image of the party remained intact.
He, however, clarified that he would assume the leadership of the party once he was exonerated of all the charges.
He said he would contest the forthcoming assembly election in Himachal Pradesh and that his party would contest all the 68 seats.
Soon after the announcement, Anil Sharma formally donned the mantle of the HVC chief.
Sukh Ram was convicted by a Delhi court on Friday and sentenced to three years of rigorous imprisonment after holding him guilty of abusing his official position in awarding a telecom contract to a private firm and causing a loss of Rs1.68 crore to the government.
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