Can AAP be an accused in Delhi excise policy case

  • October 17, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
No Comments

 

 

Can AAP be an accused in Delhi excise policy case

Subject : Polity

Section: Elections

Context: The Enforcement Directorate considers implicating AAP in a money laundering probe tied to scrapped Delhi excise policy.

More about the news:

  • The Enforcement Directorate (ED) told the Supreme Court that it is contemplating adding the Aam Aadmi Party (AAP) as an accused in its money laundering probe linked to the Delhi government’s now-scrapped excise policy.
  • ED said that it is planning to invoke Section 70 of the Prevention of Money Laundering Act to probe the role of AAP in this regard.
  • Main allegation of the ED is that AAP was the recipient of the proceeds of crime in the excise scam.

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

  • Section 70 of the Prevention of Money Laundering Act (PMLA) deals with offenses by companies.
    • Section 70 of the PMLA 2002 states that if a company commits a contravention of any provision of the Act, every person who was in charge of the company’s business at the time of the contravention is also liable.
    • The provision to Section 70 states that the person in charge of the company’s business can defend themselves by proving that the contravention took place without their knowledge or despite all due diligence.
  • Despite political parties not being incorporated as ‘companies’ under the Companies Act 2013, the PMLA’s Section 70 contains a significant explanation that could potentially subject political parties to anti-money laundering regulations.
    • The explanation defines a ‘company’ as any corporate entity, encompassing firms and other associations of individuals.
    • The term ‘association of individuals’ is expansive enough to include political parties. The Representation of the People Act, Section 29A, defines a political party as an association or body of Indian citizens registered with the Election Commission, self-identifying as 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.

Some facts Enforcement Directorate:

  • It is a Multi-Disciplinary Organization mandated with the task of enforcing the provisions of two special fiscal laws – Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA). 
  • The origin of this Directorate goes back to 1st May, 1956, when an Enforcement Unit Was formed, in Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947 .
  • In the year 1957, this Unit was renamed as ‘Enforcement Directorate’.
  • The administrative control of the Directorate was transferred from Department of Economic Affairs to Department of Revenue in 1960.
  • The Directorate enforces two laws;
    • FEMA, a Civil Law having quasi-judicial powers, for investigating suspected contraventions of the Exchange Control Laws and Regulations with the powers to impose penalties on those adjudged guilty.
    • PMLA, a Criminal Law, whereby the Officers are empowered to conduct enquiries to locate, provisionally attach/confiscate assets derived from acts of Schedules Offenses besides arresting and prosecuting the Money Launderers.
  • The ED has its headquarters in New Delhi and has many regional offices all over the country.
  • Composition– Besides directly recruiting personnel, the Directorate also draws officers from different Investigating Agencies, viz., Customs & Central Excise, Income Tax, Police, etc. on deputation.
  • It is headed by the Director of Enforcement, who is an IRS officer Other functions:

What is ED’s Jurisdiction:

  • Both FEMA or PMLA apply to the whole of India. So, the ED can take action against any person on which this act applies.
  • Cases under FEMA may lie in civil courts where PMLA cases will lie in criminal courts.
  • The agency has jurisdiction over a person or any other legal entity who commits a crime.
  • All the public servants come under the jurisdiction of the agency if they are involved in any offence related to money laundering.
  • ED can not take an action suo motu. One has to complain to any other agency or Police first and then ED will investigate the matter and will identify the accused.
  • The ED will investigate the matter and may attach the property of an accused person and also make an arrest and start proceeding with the violation of the provisions of FEMA and PMLA act.
  • The matter will be resolved by way of adjudication by courts or PMLA courts.
Can AAP be an accused in Delhi excise policy case Polity