New Delhi. In the National Herald case, senior Congress leaders Sonia Gandhi and Rahul Gandhi have got a big relief from the lower court of Delhi. Delhi’s Rouse Avenue Court has rejected the money laundering complaint filed against him by the Enforcement Directorate. The court says that ED’s action under the Prevention of Money Laundering Act (PMLA) in this case is not legally sustainable. With the decision of the Delhi court, the question has again arisen whether a money laundering case can be initiated only on the basis of Subramanian Swamy’s personal complaint? And what is the scope of Section 3 and 4 of PMLA? Not only this, is there any other message for ED in this decision of the court?
What exactly is the National Herald case?
The National Herald case started with a personal complaint by BJP leader and former Union Minister Subramanian Swamy. He had alleged that Congress leaders had allegedly hatched a conspiracy to grab assets worth more than Rs 2000 crore of Associated Journals Limited (AJL), which publishes the National Herald newspaper. Swamy alleged that these properties were taken under his control through a new company, Young Indian Private Limited, in which Sonia Gandhi and Rahul Gandhi have majority stake.
What did ED say in the court?
The ED claimed that AJL’s assets were illegally transferred to Young Indian and all this was done through criminal conspiracy and fraud. The properties of AJL and the income derived from them are ‘proceeds of crime’. Money laundering has been done by showing these money and properties as clean assets. On this basis, ED filed a prosecution complaint under PMLA against Sonia Gandhi, Rahul Gandhi, Suman Dubey, Sam Pitroda and others but the court rejected the ED complaint.
What did the lower court say…
Special Judge Vishal Gogane of Rouse Avenue Court said in clear words that a case of money laundering is made out only when a scheduled crime is first registered and there is an FIR for it. The court said that this entire matter is based on the personal complaint of Subramanian Swamy and not on any police FIR.
Why is FIR necessary in PMLA?
According to the court, Sections 3 and 4 of PMLA are applicable only then. When an FIR is registered for an offense listed in the schedule of PMLA and investigation and prosecution of money laundering without an FIR is unacceptable by law. That means, first the crime will be proved, only then the money laundering case will be started.
What do sections 3 and 4 of PMLA say?
According to Section 3 of PMLA, if a person conceals, keeps, uses property obtained from crime and shows it as ‘clean’ property, he will be guilty of money laundering. But the court said that unless the basis of income from crime is proved, Section 3 cannot be applied. Under Section 4, there is a provision of imprisonment of 3 to 7 years and fine for money laundering, but the court made it clear that when an offense is not made out under Section 3, then the punishment under Section 4 automatically falls.
The court also said that now the Economic Offenses Wing of Delhi Police has registered an FIR in this case. In such a situation, it would be too early to give a decision on ED’s arguments. If ED wants, it can take further action on the basis of FIR. This clearly means that this decision is not a permanent clean chit, but is limited to dismissing the existing complaint.
What did Congress and BJP say?
Congress is clearly calling it a severe blow on political vendetta. The party says that no personal benefit has been taken from the property. Young Indian is a non-profit company and the loan was given to AJL to make it debt free. Whereas BJP says that the matter is not over yet and investigation is going on.
Why is the role of Subramanian Swamy important?
This whole matter neither started from any government complaint nor from any FIR but proceeded from a personal complaint of Subramanian Swamy. This point proved to be the strongest legal shield for the Gandhi family. Now the investigation on the Delhi Police FIR will continue and if a scheduled crime is proved in it, then the ED can again take action under PMLA. But at present the court has made it clear that PMLA cannot be used as a ‘shortcut law’.
