Political parties can be prosecuted for money laundering, rules Delhi High Court

New Delhi (TIP)- The Delhi High Court’s verdict upholding the legality of Delhi Chief Minister Arvind Kejriwal’s arrest in a money-laundering case linked to the excise policy scam has wider ramifications for political parties as it ruled that a political party can be prosecuted under the Prevention of Money Laundering Act (PMLA).
While dismissing Kejriwal’s petition challenging his arrest by the Enforcement Directorate, Justice Swarana Kanta Sharma held that the definition of ‘political party’ under the Representation of Peoples Act and definition of ‘company’ under the PMLA were identical.
After examining the two definitions, Justice Sharma said, “This Court is of the opinion that the definition of ‘political party’ as per Section 2(f) of the Representation of Peoples Act is that a political party means an ‘association or body of individuals’. As per Explanation-1 of Section 70 of PMLA, a ‘company’ also means an ‘association of individuals’.”
It upheld Kejriwal’s arrest as he was the National Convenor of AAP which has been accused of using proceeds of the crime in the 2022 Goa Assembly polls.
“Thus, at this stage, the material placed on record, the statement recorded under Section 50 of PMLA of Sh. N.D. Gupta and the reply of the petitioner Sh. Kejriwal dated 18.01.2024 to the summons issued by the Directorate of Enforcement prima-facie make it clear that Sh. Kejriwal is in charge of and responsible for the conduct of the business of Aam Aadmi Party, and prima facie would be liable for affairs of the party so as to attract Section 70(1) of PMLA,” the High Court said in its April 9 judgment.
Justice Sharma, however, noted that “as per proviso of Section 70(1), the petitioner Sh. Kejriwal will have the right to prove, at the appropriate stage, that he did not have any knowledge of the contravention of provisions of PMLA committed by his party or that he had exercised due diligence to prevent the same. This right, however, is not available as in all other criminal cases at the stage of arrest or remand as per existing law of the country.” The HC accepted the ED’s arguments that by virtue of Section 70 of PMLA, a ‘company’ also included within its ambit an ‘association of individuals’ and a political party was an association of individuals/citizens as per the RPA and thus, APP would be deemed to be a company for the purpose of Section 70 of PMLA. Kejriwal being its National Convenor would be in-charge of and responsible for its business, making him liable under Section 70(1) of PMLA.
It rejected senior counsel AM Singhvi’s arguments on behalf of Kejriwal that the ED’s argument was misplaced. “… in his capacity as the National Convenor of Aam Aadmi Party as per Section 70(1) of PMLA, for use of proceeds of crime of Rs 45 crore in the election campaign of Aam Aadmi Party in Goa Elections 2022, which are prima facie apparent from the material relied upon by the respondent in this regard as well as the statement recorded on 08.03.2024 of one of the candidates of Aam Aadmi Party in Goa Elections 2022…,” the HC said. Source: TNS

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