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Delhi Chief Minister Sent to Enforcement Directorate’s Custody in Excise Policy Case


A Magistrate Court in Delhi has recently remanded the Chief Minister of Delhi to the custody of the Enforcement Directorate (ED) in connection with the Excise Policy Case. The ED has accused the Chief Minister of being the “kingpin and key conspirator” in the Delhi excise scam, marking a significant development in the ongoing investigation.


GS II: Polity and Governance

Dimensions of the Article:

  1. Delhi Excise Policy Case: An Overview
  2. Can a Sitting Chief Minister Govern the State/UT Administration from Prison?
  3. Enforcement Directorate

Delhi Excise Policy Case: An Overview

Policy Implementation and Scrapping:

  • The Delhi Excise Policy 2021-22 was introduced in November 2021 but was revoked in July 2022.
  • The policy faced criticism due to perceived procedural lapses, corruption, and financial losses.
Key Allegations:
  • Financial Losses: Delhi’s Chief Secretary reported that the decisions made by Delhi’s Deputy Chief Minister and Excise Minister resulted in financial losses amounting to over Rs 580 crore.
  • Conspiracy and Kickbacks: The Enforcement Directorate (ED) claimed that the new excise policy was part of a larger conspiracy to ensure a 12% profit margin for specific private companies in the alcohol sector.
  • Kickbacks: Allegations suggest a 6% kickback scheme was in place, where certain entities would receive bribes in exchange for favorable policy decisions. A kickback typically refers to illicit payments made to individuals, often public officials, in exchange for favorable actions or decisions.
  • Loopholes and Cartel Formation: The ED believes that the policy contained intentional loopholes meant to encourage cartel formations, benefiting leaders of the Aam Aadmi Party (AAP).
  • Preferential Treatment: Certain alcohol business owners and operators allegedly received special treatment, including discounts, fee extensions, penalty waivers, and pandemic-related relief. These favors were allegedly granted in return for kickbacks.
  • Political Influence: The kickbacks acquired through this scheme were purportedly utilized to influence Assembly elections in Punjab and Goa in early 2022.

Can a Sitting Chief Minister Govern the State/UT Administration from Prison?

Constitutional Provisions:
  • President and Governors: They are immune from civil and criminal proceedings until their term ends as per Article 361 of the Constitution. They are not answerable to any court for acts done in discharge of their official duties.
  • Prime Ministers and Chief Ministers: They do not enjoy such immunity. However, they are treated equally under the Constitution’s Right to Equality before the law.
Legal Framework:
  • Disqualification: A Chief Minister can be disqualified only when convicted in a case. As per the Representation of the People Act, 1951, disqualification provisions exist for certain offenses, but a conviction is mandatory.
  • Loss of Office: A Chief Minister can lose the position either due to loss of majority support in the assembly or through a successful No-Confidence Motion against the government.
Judicial Pronouncements:
  • Manoj Narula vs Union of India Case, 2014: The Supreme Court emphasized constitutional morality, good governance, and public trust as basic norms for holding a public office. Public officials, especially those like Chief Ministers, are expected to uphold high standards of moral conduct.
  • S. Ramachandran vs V. Senthil Balaji Case, 2023: The Madras High Court highlighted the practical difficulties of a Minister functioning while in custody. The court questioned whether such individuals should receive salaries from the public exchequer without performing associated duties.
Practical Challenges:
  • Access to Resources: A Chief Minister in jail may face restrictions on accessing official documents or communicating with government officials.
  • Legitimacy Concerns: Even if technically possible, concerns about the legitimacy and effectiveness of a Chief Minister’s leadership while in custody remain.
Administrative Measures:
  • Failure of Constitutional Machinery: In case of impracticality in governing from jail, the Lt. Governor can cite the ‘failure of constitutional machinery in the state,’ which could lead to the imposition of President’s rule in the UT under Article 239AB. This would bring the territory under direct control of the Union government.

Enforcement Directorate

  • The Directorate of Enforcement (ED) is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
  • It is part of the Department of Revenue, Ministry of Finance, Government Of India.
  • It is composed of officers from the Indian Revenue Service, Indian Corporate Law Service, Indian Police Service and the Indian Administrative Service.
  • The origin of this Directorate goes back to 1 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’.
Functions of Enforcement Directorate
  • The prime objective of the Enforcement Directorate is the enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA).
  • The ED’s (Enforcement Directorate) official website enlists its other objectives which are primarily linked to checking money laundering in India.
  • In fact this is an investigation agency so providing the complete details on public domain is against the rules of GOI.
  • The ED investigates suspected violations of the provisions of the FEMA. Suspected violations includes; non-realization of export proceeds, “hawala transactions”, purchase of assets abroad, possession of foreign currency in huge amount, non-repatriation of foreign exchange, foreign exchange violations and other forms of violations under FEMA.
  • ED collects, develops and disseminates intelligence information related to violations of FEMA, 1999. The ED receives the intelligence inputs from Central and State Intelligence agencies, complaints etc.
  • ED has the power to attach the asset of the culprits found guilty of violation of FEMA. “Attachment of the assets” means prohibition of transfer, conversion, disposition or movement of property by an order issued under Chapter III of the Money Laundering Act [Section 2(1) (d)].
  • To undertake, search, seizure, arrest, prosecution action and survey etc. against offender of PMLA offence.
  • To provide and seek mutual legal assistance to/from respective states in respect of attachment/confiscation of proceeds of crime and handed over the transfer of accused persons under Money Laundering Act.
  • To settle cases of violations of the erstwhile FERA, 1973 and FEMA, 1999 and to decide penalties imposed on conclusion of settlement proceedings.

-Source:  Indian Express

May 2024