Political parties can be made accused under PMLA: Delhi High Court in Arvind Kejriwal case

The Delhi High Court on Tuesday ruled that Section 70 of the Prevention of Money Laundering Act, 2002 (PMLA), which brings a company under the ambit of the anti-money laundering law, will include a political party as well [Arvind Kejriwal v. Directorate of Enforcement]..Justice Swarana Kanta Sharma reasoned that the definition of ‘political party’ as per Section 2(f) of the Representation of the People Act (RP Act) is an ‘association or body of individuals’ and as per Explanation-1 of Section 70 of PMLA, a ‘company’ also means an ‘association of individuals’.The Bench also referred to Section 29A (Registration with the Election Commission of associations and bodies as political parties) under the RP Act. "After examining the definitions mentioned above, 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’," the Court recorded. .It added, “…Sh Kejriwal [Arvind 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 Court held.While Section 70 PMLA deals with offences by a company, Section 70(1) says that every person who was in charge of the company at the time offence was committed by the company shall be liable for punishment..Five reasons why Delhi High Court upheld arrest of Arvind Kejriwal.The Bench returned these findings while rejecting a plea filed by Delhi Chief Minister Arvind Kejriwal challenging his arrest by the Enforcement Directorate (ED) in connection with the Delhi Excise Policy case and the order passed by the trial court remanding him to ED custody.The ED had argued that Aam Aadmi Party (AAP) would be deemed to be a company for the purpose of Section 70 of PMLA, and Kejriwal being its National Convenor, would be in charge of and responsible for its business, thus, being liable under Section 70(1) of PMLA.Senior Advocate Abhishek Manu Singhvi, who was representing Kejriwal, said that this argument was misplaced and was liable to be rejected..After considering the arguments, the Court noted that there is sufficient material to prima facie establish that Kejriwal is in charge of and responsible for the conduct of the business of AAP and he “prima facie would be liable for affairs of the party so as to attract Section 70(1) of PMLA”.“However, 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.”.Along with Singhvi, Senior Advocates Amit Desai and Vikram Chaudhary and Advocates Vivek Jain, Mohd Irshad, Rajat Bhardwaj, Karan Sharma, Rajat Jain, Mohit Siwach, Kaustubh Khanna, Rishikesh Kumar, Shailesh Chauhan, Sadiq Noor, Mehul Prasad, Priyanka Sarda, Sheenu Priya and Princy Sharma appeared for Kejriwal.Additional Solicitor General SV Raju, Special Counsel Zoheb Hossain and Advocates Annam Venkatesh, Arkaj Kumar, Vivek Gurnani, Hitarth Raja, Abhipriya Rai, Kartik Sabharwal, Vivek Gaurav, Agrimaa Singh, Kanishk Maurya and Ritumbhara Garg appeared for the ED..[Read Judgment]