EDITORIAL ANALYSIS Parties, serious crimes and the need for judicial clarity
Kartavya Desk Staff
Source: The Hindu
• Prelims: PMLA, Enforcement directorate, Money laundering, liquor policy, ECI, RPA 1951, FATF etc
• Mains GS Paper II and III: Important aspects of governance, transparency and accountability, institutions and other measures etc
ARTICLE HIGHLIGHTS
• The Supreme Court granted interim bail to Delhi Chief Minister and Deputy CM in money laundering charges linked to the Delhi excise policy case
INSIGHTS ON THE ISSUE
Context
Money laundering:
• Money Laundering refers to converting illegal earned money into legitimate money.
• The government does not get any tax on the money because there is no accounting of the black money. So Money Laundering is a way to hide the illegally acquired money.
• The term “money laundering” originated from the Mafia group in the United States of America. Mafia groups have made huge amounts of extortion, gambling, etc. and this money is shown as legal money.
• Mafia groups have made huge amounts of extortion, gambling, etc. and this money is shown as legal money.
• In India, “money laundering”* is popularly known as Hawala transactions.*
PMLA Act:
• The PMLA was introduced in 2002, ostensibly to tackle the problem of money laundering.
• It has been subject to several amendments including 2005, 2009, 2012.
• There are mainly 3 objectives of PMLA: To prevent and control money laundering. To confiscate and seize the property obtained from the laundered money. To deal with any other issue connected with money laundering in India.
• To prevent and control money laundering.
• To confiscate and seize the property obtained from the laundered money.
• To deal with any other issue connected with money laundering in India.
• It was enacted in response to India’s global commitment (including the Vienna Convention) to combat the menace of money laundering.
• Money laundering has become a matter of international concern and India has undertaken several international commitments in this regard.
Observation from the Bench:
• The Bench prompted the Enforcement Directorate to make the political party an accused party in the case.
• Invoking Section 70 of the PMLA: This section deals with offenses by companies. Company means any body corporate and includes a firm or other association of individuals’ It doesn’t include political parties.
• Company means any body corporate and includes a firm or other association of individuals’
• It doesn’t include political parties.
Political party brought under PMLA and issues associated:
• The investigation agency(ED) picked up the definition of political parties from The Representation of The People Act (RPA), 1951 and brought it under Section 70 of the PMLA.
• Section 29A of the RPA 1951 defines a political party as “any association or body of individual citizens of India calling itself a political party. An association or individual citizen of India becomes a political party only when it calls itself a political party. The explanation to Section 70 of the PMLA covers only associations of individuals and not associations which call themselves a political party. It is not legally permissible to bring a political party within the definition in this clause.
• An association or individual citizen of India becomes a political party only when it calls itself a political party.
• The explanation to Section 70 of the PMLA covers only associations of individuals and not associations which call themselves a political party.
• It is not legally permissible to bring a political party within the definition in this clause.
• Other associations of individuals” are preceded by the words “any body corporate and includes a firm. Applying the rule of interpretation of statutes, ejusdem generis (of the same kind), association of individuals can only mean a body in the nature of a body corporate or a firm. A political party is not in the nature of a body corporate or a firm.
• Applying the rule of interpretation of statutes, ejusdem generis (of the same kind), association of individuals can only mean a body in the nature of a body corporate or a firm.
• A political party is not in the nature of a body corporate or a firm.
Role of Political parties:
• They are not transactional bodies.
• They mobilize people, fight elections and run a government.
• Running a business, legal or otherwise, is not the domain of a political party.
• Most political parties run their affairs with money donated by individuals or corporates. The law permits this but it does not concern itself with why such donations are made.
• The law permits this but it does not concern itself with why such donations are made.
• The law requires political parties to make a declaration to the ECI of all contributions received from individuals or companies other than government companies under Section 29C of the RP Act 1951. If a political party does not comply with this provision, it will not get any income-tax relief. Entire donations received by a political party are exempted from income-tax.
• If a political party does not comply with this provision, it will not get any income-tax relief.
• Entire donations received by a political party are exempted from income-tax.
Delhi Excise Policy Case:
Way Forward
• The Constitution has adopted the British system of parliamentary democracy, with the cabinet form of government for the Union and the States. The highest decision-making body is the cabinet headed by the Prime Minister at the Centre and Chief Ministers in the State. The cabinet of the Union or of a State has exclusive and final authority to frame a policy on any matter.
• The highest decision-making body is the cabinet headed by the Prime Minister at the Centre and Chief Ministers in the State.
• The cabinet of the Union or of a State has exclusive and final authority to frame a policy on any matter.
• Ivor Jennings: In substance the cabinet is the directing body of the national policy”, it may be a good policy or a bad one. In case a bad policy is made, it may be disapproved by Parliament or the Assembly, as the case may be. The cabinet is accountable to the people. They can punish the government and the party which runs it if the policy is harmful to them. Under no circumstances does the judiciary examine the correctness or otherwise or the motive of a policy made by a cabinet. No criminality can be attributed to the cabinet for a policy made by it.
• In case a bad policy is made, it may be disapproved by Parliament or the Assembly, as the case may be.
• The cabinet is accountable to the people.
• They can punish the government and the party which runs it if the policy is harmful to them.
• Under no circumstances does the judiciary examine the correctness or otherwise or the motive of a policy made by a cabinet.
• No criminality can be attributed to the cabinet for a policy made by it.
• A criminal charge against an individual Minister for a decision taken by the cabinet is legally unsustainable and is unheard of in the history of the cabinet form of governments. A Minister as a public servant becomes culpable for an individual action which is in violation of law, but not as a part of the constitutional entity like the cabinet which has framed a policy.
• A Minister as a public servant becomes culpable for an individual action which is in violation of law, but not as a part of the constitutional entity like the cabinet which has framed a policy.
• Bringing political parties within the purview of Prevention of Corruption Act and the PMLA will have far-reaching consequences. Such an action would make all political parties vulnerable.
• Such an action would make all political parties vulnerable.
QUESTION FOR PRACTICE
Discuss how emerging technologies and globalization contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels(UPSC 2021) (200 WORDS, 10 MARKS)
India’s proximity to the two of the world’s biggest illicit opium-growing states has enhanced her internal security concerns. Explain the linkages between drug trafficking and other illicit activities such as gunrunning, money laundering and human trafficking. What counter-measures should be taken to prevent the same?(UPSC 2018) (200 WORDS, 10 MARKS)