AAP named as accused in Delhi liquor policy case: Is it ‘political party’ or ’company’? Here is what the law says

The Enforcement Directorate (ED) has named Delhi Chief Minister Arvind Kejriwal and his Aam Aadmi Party (AAP) as accused in the seventh supplementary chargesheet it has filed in the court regarding allegations of money laundering in the Delhi excise policy case, according to a report in legal news website Live Law. 

The Aam Aadmi Party, borne out of an anti-corruption campaign in 2012, becomes the first political party in India to be charged in a criminal case.

During the hearing in the case on Friday, the Additional Solicitor General of India is reported to have informed the Supreme Court that a prosecution complaint “is being filed" on Friday and the AAP has been made an accused in the case.

Also Read: AAP made accused in Delhi excise policy case: Report

The Supreme Court was hearing a plea filed by Delhi Chief Minister Arvind Kejriwal, challenging his arrest in the money laundering case registered against him by the ED in connection with the now-scrapped Delhi excise policy. Kejriwal, who was arrested in the case in March this year, is out on interim bail until June 1. 

What does the law say about a political party, and which laws govern it, when it becomes an accused in a money laundering case?

What is a political party?

A political party is defined under Article 324 of the Constitution and Section 29A of the Representation of the People Act (RPA), 1951. According to this definition, any association or group of Indian citizens can register as a political party, subject to specific guidelines.

Article 324 describes powers of superintendence, direction and control of elections to be vested in an Election Commission. And Section 29A of the RPA mandates that any association intending to register as a political party has to register itself with the Election Commission of India. 

Also Read: ‘Tiger is back’: How Arvind Kejriwal’s bail alters Lok Sabha poll campaign dynamics in Delhi and beyond

“Any association or body of individual citizens of India calling itself a political party and intending to avail itself of the provisions of this Part shall make an application to the Election Commission for its registration as a political party,” reads Section 29A.

The rule stipulates that at least 100 members have to submit separate affidavits swearing that they are registered electors and not members of any other political party.

What is Section 70 of PMLA?

The ED has involved Section 70 of the Prevention of Money Laundering Act (PMLA) to make the Aam Aadmi Party an accused in the Delhi liquor policy case. Though the section deals with ‘offences by companies’, the investigation agency said that Section 70 empowered it to book a political party for any alleged violation under PMLA. 

To put it simply, the provision in Section 70 of PMLA says that when an offence of money laundering is committed by a company, each individual who at the time of crime was in charge or responsible, being a part of the entity conducting business, “shall be deemed guilty of the contravention and shall be liable to be proceeded against and punished accordingly," legal news website Bar and Bench reported.  

Can a political party be treated as a company?

As per the legal definition, a company is a business entity registered under the Companies Act, 2013. A company is also referred to as an “artificial person”. Also, a company seeks profits, unlike a political party.

But the ambit of Section 70 was expanded last year to include political party as a 'company' under the definition of ‘association of individuals’ in money laundering case.

Also Read: Does BJP have a plan B if it fails to cross majority mark in Lok Sabha polls? Here is what Amit Shah says. Watch video

“A political party is defined as an association or a body of individual Indian citizens registered with the Election Commission of India as a political party under Section 29 A. Since AAP is also an association of individuals, it would also fall within the definition of 'company' as contemplated in Section 70 of PMLA, 2002,” the ED said in its submission to the court. 

The provision further clarifies that a company is a separate legal entity and can be prosecuted independently of its members or those who operate it.

Are there any precedents?

The AAP is the first political party in the history of India that has been made an accused in a criminal case, money laundering allegation in this case. However, many non-profits and organisations have been under the ED's lens.