In orders granting bail to three Opposition leaders in the Delhi liquor policy money-laundering case over the past two months, the Supreme Court rejected some claims made by the Enforcement Directorate and criticised the reasoning of lower courts for keeping the politicians in jail.
Delhi Chief Minister and Aam Aadmi Party National Convener Arvind Kejriwal was given interim bail on July 12 and former Delhi Deputy Chief Minister Manish Sisodia was given bail on August 9.
Former parliamentarian and legislative council member from Telangana K Kavitha was granted bail on August 27.
The cases spring from the Aam Aadmi Party government’s decision in March 2021 to make sweeping changes to the liquor policy for Delhi, granting licences not to individual shops but to entire zones.
The Bharatiya Janata Party-run Central government accused the Delhi government of tailoring the policy to suit a select group of businessmen and giving them licences in exchange for kickbacks.
In July 2022, the Central Bureau of Investigation launched an inquiry into alleged financial irregularities and corruption in the liquor licence regime. Manish Sisodia, who had drafted the policy as Delhi’s excise minister, was arrested by the agency in February 2023.
Sisodia was also booked in a money-laundering case by the Enforcement Directorate. It accused him of using the alleged bribes generated from the sale of liquor licenses to fund the Aam Aadmi Party’s Goa Assembly election campaign in 2022.
On March 21, a few days after the Lok Sabha election schedule was announced, the Enforcement Directorate arrested Kejriwal. Months later on June 26, while Kejriwal was still in custody in the money-laundering case, the Central Bureau of Investigation also arrested him.
Kavitha, the daughter of former Telangana Chief Minister K Chandrashekar Rao, was arrested by the Enforcement Directorate on March 15 and then by the Central Bureau of Investigation on April 11. She is alleged to be a part of a so-called South Group that paid “Rs 100 crore to the leaders of AAP” in exchange for favours related to the policy.
Sisodia and Kavitha have been released from jail after they got bail in both the Central Bureau of Investigation and Enforcement Directorate cases. But Kejriwal remains behind bars in the case filed by the Central Bureau of Investigation – his plea challenging his arrest and requesting bail is pending before the Supreme Court.
The cases by both central investigating agencies are primarily based on witness statements. Since the trial has not started in either case, these testimonies have not been judicially tested. However, the veracity of this testimonial evidence has been questioned by the Supreme Court in at least two instances.
When Kejriwal went to court, he contended that his arrest by the Enforcement Directorate under the Prevention of Money Laundering Act was illegal.
The Supreme Court bench of Justices Sanjiv Khanna and Dipankar Datta did not decide on the legality of Kejriwal’s arrest. This was because the unresolved legal questions on the grounds of arrest under the act come within the purview of a judicial review that the court has referred to a larger bench.
However, the court granted Kejriwal interim bail until those questions are decided.
In their judgement, Khanna and Datta rejected several claims by the Enforcement Directorate about its powers to make arrests in money-laundering cases.
The agency argued that making arrests was part of its investigative powers. It contended that judicial scrutiny of such arrests would interfere with its investigations.
The court rejected this claim. It said that reviews may be conducted both before and after criminal proceedings are filed or complaints are prosecuted.
The Enforcement Directorate also argued that the reasons it believes a person is guilty of money laundering, arrived at on the basis of material in its possession, cannot be revealed to the accused. This information is too sensitive to be shared, it contended.
The court rejected this argument too, noting that “this would effectively prevent the accused from challenging their arrest”. It said that in exceptional circumstances, the agency may apply for some details to be redacted when the reasons are made available to the accused.
The Enforcement Directorate went on to claim that “grave suspicion” is sufficient grounds on which to make an arrest, since this is sufficient grounds on which to frame charges and put an accused to trial.
The court rejected this. It held that framing charges and putting an accused person on trial could not be equated with the power to arrest. “A person may face the charge and trial even when he is on bail,” Khanna wrote.
The bench also pointed out that the central agency had presented alleged WhatsApp chats of Kejriwal that were retrieved after his arrest. But these chats did not form part of the evidence on the basis of which the agency had arrested him.
The court also rejected the Enforcement Directorate’s claim that the material based on which it makes arrests under the money laundering act need not be of a standard that is legally admissible in a trial. The Supreme Court held that the presumed guilt of an accused cannot be based on inadmissible evidence.
Both Sisodia and Kavitha were granted bail by the bench of Justices BR Gavai and KV Viswanathan of the Supreme Court because their fundamental right to a speedy trial had been violated.
The bail applications of both politicians were rejected several times by sessions courts and the Delhi High Court.
Sisodia’s pleas to the Supreme Court had been unsuccessful three times before this. Soon after his arrest in February 2023, the court had told him to approach the lower courts first. The second and third times, the court had asked him to approach it later if his trial did not begin expeditiously .
In its judgements related to both Sisodia and Kavitha, the Supreme Court criticised the Delhi High Court and the sessions courts for denying them bail and disregarding their right to a speedy trial. Since 493 witnesses had to be examined and documents totalling about 50,000 pages needed to be considered, the trial would not conclude any time soon, the Supreme Court held in both judgements.
In the judgement on Sisodia, Gavai emphasised that trial courts and High Courts must recognise the principle that “bail is rule and jail is exception”. Gavai pointed out that due to their refusal to grant bail “even in straight forward open and shut cases”, the Supreme Court is “flooded with huge number of bail petitions”.
The judgments by both Gavai and Viswanathan noted other errors in the decision-making of the lower courts.
Gavai criticised the lower courts for concluding that Sisodia was contributing to the delay in his trial by filing “hundreds of applications” for documents to be supplied to him. The judge pointed out that as per the case records, Sisodia had filed 13 applications in the Central Bureau of Investigation matter and 14 in the Enforcement Directorate matter. Only some of these applications were requests for documents.
All of them had been allowed by the trial court, which had not contendeded that any of the applications was frivolous.
In addition, Gavai noted the Enforcement Directorate had assured the Supreme Court in October that it would take appropriate steps to conclude the trial within six months to eight months. This was recorded in the court order. However, the final chargesheet was filed only on June 28.
If the investigation went on for eight months after that order, there was no way the trial could have commenced, let alone concluded by the deadline the directorate laid out, Gavai noted. This fact was missed by both the sessions court and the High Court, he pointed out.
In Kavitha’s judgment, Gavai noted a peculiar error in the Delhi High Court’s decision to deny her bail. The High Court had held that though the Prevention of Money Laundering Act stipulates leniency in granting bail to women, such a concession is applicable only to “vulnerable” women. This was because the Enforcement Directorate argued that as a “highly qualified and well-accomplished person”, Kavitha could not apply for bail under this provision.
Gavai said this reasoning was “misdirected”. All women, regardless of their stature or educational qualifications, were entitled to the benefit of the law, he said.