On Tuesday, the Delhi High Court issued a ruling expanding the scope of the Prevention of Money Laundering Act, 2002 (PMLA). The ruling specifies that Section 70 of the PMLA, which previously applied to companies, will now encompass political parties as well, subjecting them to anti-money laundering regulations.

Justice Swarana Kanta Sharma reasoned that according to Section 2(f) of the Representation of the People Act (RP Act), a 'political party' is defined as an 'association or body of individuals'. Additionally, Explanation 1 of Section 70 of the Prevention of Money Laundering Act (PMLA) equates a 'company' to an 'association of individuals'. Therefore, extending the provisions of PMLA to include political parties is consistent with this interpretation.

The Bench also referred to Section 29A of the Representation of the People Act (RP Act), which pertains to the registration with the Election Commission of associations and bodies as political parties. This section further supports the understanding that political parties are indeed recognized as associations or bodies under the law.

While Section 70 of the Prevention of Money Laundering Act (PMLA) addresses offenses committed by a company, Section 70(1) stipulates that every individual who held a position of authority within the company at the time the offense was committed by the company shall be liable for punishment.

The Bench delivered these conclusions while dismissing a petition submitted by Delhi Chief Minister Arvind Kejriwal, contesting his arrest by the Enforcement Directorate (ED) in relation to the Delhi Excise Policy case. Additionally, the Bench upheld the trial court's decision to remand him to ED custody.

The Enforcement Directorate (ED) contended that the Aam Aadmi Party (AAP) should be considered as a company under the purview of Section 70 of the Prevention of Money Laundering Act (PMLA). According to their argument, as the National Convenor of AAP, Arvind Kejriwal would be deemed in charge of and accountable for its affairs, thereby making him liable under Section 70(1) of the PMLA.

Senior Advocate Abhishek Manu Singhvi, representing Kejriwal, countered that this argument was misplaced and should be dismissed. After deliberating on the arguments presented, the Court observed that there is adequate evidence to prima facie establish that Kejriwal holds a position of authority and is accountable for overseeing the operations of the Aam Aadmi Party (AAP). Consequently, he is deemed to be liable for the party's affairs, thereby falling within the ambit of Section 70(1) of the Prevention of Money Laundering Act (PMLA).

Alongside Singhvi, Senior Advocates Amit Desai and Vikram Chaudhary, as well as 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 on behalf of 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 on behalf of the Enforcement Directorate (ED).