In February 2021, a Group of Ministers, headed by Deputy Chief Minister Manish Sisodia and Health Minister Satyendra Kumar Jain, came together to discuss reforms to Delhi’s excise policy, forming a committee of experts for the task. Deputy Chief Minister Manish Sisodia, who also oversees the Excise portfolio, introduced Delhi’s Excise Policy (2021–22). This legislation aimed to privatize liquor sales in Delhi, ending government involvement in the alcohol market. The bill opened the field to private enterprises, intending to significantly boost the revenue of the excise department. It phased out government-owned liquor stores, replacing them with licenses for private companies to operate. The annual license fee was also increased from Rs. 8 lakh to Rs. 75 lakh.

Delhi was divided into 32 zones, each comprising 8-10 wards, with about 27 liquor outlets per zone, resulting in 2-3 vendors per municipal ward. The government claimed the policy would eliminate the liquor mafia and improve consumer experiences at new outlets. Guidelines were issued for the appearance of these outlets, which were permitted to offer discounts on MRP and allowed to operate until 3 AM. The bill was then sent to the Lieutenant Governor for approval and was passed with certain conditions regarding unauthorized areas. The Lieutenant Governor Vinai Kumar Saxena approved the bill with the stipulation that new liquor vendors in non-confirmed areas could only be established with the permission of the Municipal Corporation of Delhi.

Allegations and Accusations 

In July 2022, Lieutenant Governor V.K. Saxena recommended a CBI probe into the alleged irregularities surrounding the excise policy’s formulation. This marked the start of the agency’s involvement, leading to the registration of a corruption case under the Prevention of Corruption Act, 1998 (PC Act). Although Kejriwal was interrogated by the CBI in April, he has not been charged in the case.After allegations of procedural irregularities, the Delhi excise policy was scrapped on August 1, 2022. This led to federal law enforcement agencies, the CBI and the ED, launching investigations. The ED is tracking the alleged money trail, while the CBI is probing corruption and bribery charges against public servants.

On March 21, 2023, Chief Minister Arvind Kejriwal was arrested by the ED on money laundering charges under the Prevention of Money Laundering Act, 2022 (PMLA). In May, the agency filed its first charge sheet naming Kejriwal and the Aam Aadmi Party (AAP) as accused. The nearly 200-page document, part of a series of charge sheets since November 2022, claimed that Kejriwal was directly involved in formulating the excise policy and demanded ₹100 crore in kickbacks from the “South Liquor Lobby,” a group of influential individuals from South India who secured undue favors for establishing wholesale businesses and paid the political party in return. Additionally, the ED accused Kejriwal of using ₹45 crore of laundered money for AAP’s 2022 Goa election campaign.

The state opposition BJP also released a “sting operation” video showing Sunny Marwah’s father collecting money purportedly as “excise duty” under the new policy. BJP IT-cell head Amit Malviya released the video, highlighting extensive corruption and bribery by officials and raising concerns about the state’s dealings with middlemen and mafias within the government.

Arguments of the parties

During the proceedings, CBI special public prosecutor DP Singh argued that the custodial interrogation of Mr. Kejriwal was essential as the investigation had reached a critical stage. He emphasized that the agency had previously refrained from arresting him, even when the Chief Minister was granted interim bail by the Supreme Court from 10th May to 1st June in order to campaign in the Lok Sabha elections.

When seeking Kejriwal’s remand, ASG S.V. Raju argued that “one need not be an accused in the predicate offense to be an accused under PMLA.” The PMLA includes a list of scheduled offenses, or predicate offenses. The ED’s position is that even if Kejriwal is not charged in the predicate offense (the corruption case under the PC Act), he can still be charged with money laundering related to the “proceeds of crime” from that case. In the remand application, the agency described Mr. Kejriwal as “one of the main conspirators of the criminal conspiracy” and alleged that Mr. Vijay Nair, AAP’s former communications-in-charge, had been contacting various liquor manufacturers and traders, demanding undue gratification since March 2021. The CBI claimed that during interrogation, Kejriwal had stated that the plan to privatize the retail liquor business was Mr. Manish Sisodia’s idea.

In his defense, Mr. Kejriwal told the Court that the CBI was manipulating the media by spreading false information to create a rift within the party leadership, particularly between him

and Mr. Sisodia. He stated, “I have never testified that Manish Sisodia is guilty in this matter. He is innocent and the entire AAP is innocent. I am innocent. The aim of such rumors that I have put all the onus on Sisodia is false and the agency is trying to malign us through the media.” Mr. Kejriwal’s lawyers also argued against the necessity of remand by noting that his name did not appear in any of the CBI chargesheets. They challenged the legality of the arrest, highlighting that no Section 41 notice under the Code of Criminal Procedure (CrPC) had been issued to him to appear for questioning.

In remanding Mr. Kejriwal to three days of CBI custody, Judge Rawat emphasized, “Investigation is the prerogative of the investigating agency. The law provides certain safeguards, and based on the material on record at this stage, it cannot be concluded that the arrest is illegal.”

 Bail in Corruption Cases

Unlike the PMLA, the Prevention of Corruption (PC) Act does not impose strict conditions for obtaining bail. An accused individual can request bail from the trial court according to the provisions of the Code of Criminal Procedure (CrPC) and is also eligible for anticipatory bail. However, following a 2014 amendment, no accused can be granted bail under the PC Act without allowing the public prosecutor an opportunity to oppose the application.

In the case of P. Chidambaram v. CBI (2019), the Supreme Court identified key factors for considering a bail application under the PC Act: (i) the nature of the charges and potential penalties, along with the evidence presented by the prosecution; (ii) concerns about witness tampering or threats to complainants or witnesses; (iii) the likelihood of the accused appearing for trial or the risk of fleeing; (iv) the character and behavior of the accused, and any unique circumstances; (v) the broader public interest and related considerations.

In 2022, the Supreme Court, in Satender Kumar Antil v. CBI, urged the Union government to explore the possibility of creating a separate bail law to simplify the bail process. It emphasized that the right to bail is derived from Article 21 of the Constitution, reminding courts of the fundamental principle that “bail is the norm, while jail is the exception.”

Recent Developments

 On July 12, the Supreme Court granted temporary bail to Delhi Chief Minister Arvind Kejriwal amid money laundering allegations related to the Delhi excise policy. The court emphasized that the decision about his continued role in office should be made by him, recognizing his significant constitutional position. Justice Sanjiv Khanna pointed out that the court cannot force an elected official to leave their position. This is the second time Mr. Kejriwal has received interim bail, the first being on May 10 to campaign in the Lok Sabha elections. Despite this bail, he remains in custody due to a separate arrest by the CBI under the Prevention of Corruption Act on June 25. Additionally, the Supreme Court referred several issues to a larger Bench concerning the necessity of arrests under the Prevention of Money Laundering Act (PMLA), raising concerns about the subjective nature of current arrest practices.

Written by- Harsh Shukla, 3rd Year BALLB, DES’s Shri Navalmal Firodia Law College, Pune