Can AAP be an accused in Delhi excise policy case? What law says

What is the law under which a political party can be booked for money laundering?

Section 70 of the stringent Prevention of Money Laundering Act deals with offences by companies.

The provision states that, “Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.”

While a political party is not a ‘company’ incorporated under the Companies Act, 2013, the provision has a crucial explanation that could bring a political party under the ambit of the anti-money laundering law.

It reads: “Explanation 1[1].–For the purposes of this section (Section 70),–(i) “company” means any body corporate and includes a firm or other association of individuals;”

The phrase ‘association of individuals’ can include a political party. A party, according to Section 29A of the Representation of the People Act, is any association or body of individual citizens of India calling itself a political party.

Has a political party ever been booked for money laundering?

If AAP is directly named as an accused in the excise scam under the PMLA, it would be the first instance of a political party being accused of money laundering. However, political parties have been booked and investigated under the Income Tax Act.

Trusts and NGOs are already under the PMLA ambit. In May, the Finance Ministry in a notification included trustees of an express trust also within the PMLA.

How are the charges against Sisodia tied to AAP?

The main allegation of the ED is that AAP was the recipient of the proceeds of crime in the excise scam.

A second explanation to Section 70 of the PMLA adds that a “company may be prosecuted, notwithstanding whether the prosecution or conviction of any legal juridical person shall be contingent on the prosecution or conviction of any individual.” This means that, even if the cases involving Sisodia and others fall, the political party can still be prosecuted for money laundering separately.

While Sisodia was arrested in February and AAP’s communication in-charge, Vijay Nair, was arrested in September last year, the party’s Rajya Sabha MP Sanjay Singh was arrested earlier this month.

What prompted the ED to consider booking AAP as an accused?

Additional Solicitor General S V Raju, who appeared for the ED, told the SC that the AAP might be booked under the PMLA“to probe it additionally with respect to vicarious liability.”

This statement before a Bench comprising Justices Sanjeev Khanna and SVN Bhatti was made during a hearing seeking bail for former Delhi Deputy Chief Minister Manish Sisodia.

Raju’s statement was in response to an observation by the Bench in an earlier hearing on October 4 that, as per the ED’s case, the recipient of the proceeds of crime was “a political party” and not Sisodia. The bench then asked why the party was not made an accused too.

“As far as PMLA is concerned, your whole case is that it went to a political party. That political party is still not an accused. How do you answer that? He is not the beneficiary, the political party is the beneficiary,” Justice Khanna had said.