'No Money Has Come To Manish Sisodia, How Will You Bring Him Under Money Laundering?' Supreme Court Asks ED In Delhi Liquor Policy Scam Case

The bail proceedings of Aam Aadmi Party (AAP) leader and former Delhi Deputy Chief Minister Manish Sisodia in the cases registered by the Central Bureau of Investigation (CBI) and the Directorate of Enforcement (ED) over the alleged Delhi liquor policy scam are currently ongoing before the Supreme Court. In today's marathon session, spanning approximately four and a half hours, the Supreme Court put forth a barrage of questions towards the investigative agencies. This unfolded during the hearing presided over by a bench comprising Justices Sanjiv Khanna and SVN Bhatti. The bench was considering two petitions filed by Sisodia, challenging the decisions of the Delhi High Court, which had previously denied him bail in connection with the investigations being conducted by the CBI and the ED. Setting the stage for this extensive inquiry directed towards Additional Solicitor General SV Raju, who was appearing for the ED and CBI, Justice Khanna commented, "Normally, in a bail matter, we don't take so long."

1. Is The 'Policy Decision' Under Challenge?

Seeking clarification regarding the nature of submissions of the investigative agencies, Justice Khanna asked if the Delhi government's Excise Policy for 2021-22 was under challenge. To this, ASG SV Raju submitted that the agencies were not challenging the policy decision. Justice Khanna then asked–

"But you say that policy decision was motivated for personal benefits. So will it not mean that you're challenging the policy decision?"

The ASG responded in a negative and reiterated that the submission forwarded by the agencies was that the policy in question was framed in a manner which benefitted certain wholesalers and Sisodia had a role to play in the same. He added that the policy was framed as a "facade" to replace the old excise policy which was not favoured by the Delhi government. In order to change the same, a report was sought from the Ravi Dhawan expert committee. However, when the said report came out as unfavourable, causing Sisodia to be unhappy with the same, objections and suggestions were invited against it. He stated–

"The old policy was not what they wanted. To change the policy they got Dhawan committee report but it wasn't what they wanted. So then they invited objections and suggestions. In those objections we see the role of the petitioner."

2. Is Asking People To Support A Policy Wrong?

ASG Raju, furthering his submissions, stated that the public opinion of stakeholders was concealed and manipulated to frame the new excise policy. In this context, he stated that various parties were asked to draft emails raising objections against the Ravi Dhawan report. He added that these emails were copied from a handwritten note which was handed over by Sisodia to Zakir Khan "with the direction to get multiple emails on the said lines sent to the dedicated email address”. These emails on issues such as allotment of retail licences through auction of zones, reduction of excise and VAT, as well as enhancement of licence fee, and increase in the number of liquor vends were eventually sent to manipulate public opinion, as per the ASG. He submitted that ultimately, all these provisions were added in the new excise policy despite being completely different than the recommendations of the expert committee. To this submission, Justice Khanna stated–

"Mr Raju, it's very hard to believe...A policy is put up. Some political leaders think this policy should be this way. They make statements. They take feedback. They are asking people to support policy- is that wrong?"

ASG Raju reiterated that genuine suggestions would not have been a problem but the identically worded emails established that it had been a "copy-paste job". 

The ASG then stated that Sisodia had been working with a pre-conceived idea to formulate the excise policy in a manner well suited for certain parties. In this context, he stated that Sisodia had asked former excise commissioner Rahul Singh to prepare a draft cabinet note. However, since the said note did not suit his idea of how the policy had to be framed, a new note was framed and placed before the cabinet of ministers and the old not was destroyed. To this submission, Justice Khanna remarked–

"Mr Raju, sometimes bureaucrats make something. Sometimes political executive may say please prepare it this way. Political executive sent a note saying this is not how we wanted it to be..."

ASG Raju responded to this by stating that the fact that the note was destroyed clearly established that there was "something in it which they didn't want to be seen".

3. Is Statement That Vijay Nair Was Working For Sisodia Not Just An Opinion?

As the proceedings continued, the ASG submitted that as per an approver's statement, Vijay Nair was working on behalf of Sisodia. To this, Justice Khanna said– 

"Whose statement is that? That's his opinion. Two questions in the cross examination and this will fall flat. It's an opinion, he's not an expert. Expert opinion is different. It's an inference drawn. His opinion does not matter. The court's opinion matters."

ASG Raju argued that Nair was given a bungalow next to the CM's bungalow and he operated from the office of the CM.

"He is somebody who is connected to the Aam Aadmi Party. So if somebody says he is connected to Deputy CM...see how he is operating. They are having the GoM policy even before the policy was released. This shows that they had a role to play in the policy," ASG Raju added.

4. Policy Changes Without Money Consideration Not Illegal

During the proceedings, Justice Khanna also stated that "pressure groups" and "lobbying" would always be present and that no government could function without the same. He said–

"We understand that there is a policy change. Everyone will support policies good for their business. Pressure groups are always there. Policy changes even if wrong, without money consideration will not matter. It's the money part which makes it an offence. If we go to an extent to say that there cannot be any pressure groups, no government can continue...Lobbying will always be there. Of course we're not saying that bribes can be accepted."

5. Was Document Given To Council Of Ministers Same As The One Found On Sisodia's Computer? 

The discussion then routed to a draft note of March 15, 2021. As per the ASG, the draft note found from Sisodia’s computer, capped the profit margin for wholesalers at 5%. However, the final draft of GoM given by Sisodia had an increased margin of 12%. In this regard, Justice Khanna remarked–

"There is an apparent factual inaccuracy. The document is prepared on 15th at 11.27. It is not changed. Noone has met Manish Sisodia till 15th from the liquor group. So your argument in that regard is wrong. It is factually incorrect. Please take instructions from the investigative agency- whether the document given to the council of ministers was the same as the document found in computer on 15th or different?"

6. How Was The Kick back Given?

This was followed by Justice Khanna questioning how the kick back was given. The probe agencies had alleged that Sisodia granted liquor licences to some South leaders in lieu of kickbacks to the tune of Rs 100 crore. Justice Khanna asked–

"How do you say that the kick back was given? That's entirely on the basis of approver statements."

ASG Raju responded by stating that–

"Indospirit was not getting the wholesale- there were some complaints against the partners of Indospirit etc so they were not eligible to get wholesale. Manish Sisodia intervened and said that immediately all those complaints be removed...There is a Mahadev liquor wholesaler. He was pressurised to walk out...they were closed without any show cause notice. The moment they gave up the license, all those things were cleared."

7. How Did Money Flow From Liquor Group If Nothing Came To Sisodia?

The next question posed by Justice Khanna to the ASG was–

"As per your case no money has come to Manish Sisodia...so how did the money flow from the liquor group? You have taken two figures 100 crores and 30 crores. Who paid them this? There can be so many people paying the money- not necessarily connected to liquor."

He added–

"Where is the proof? Dinesh Arora(an approver) himself is the recipient. Where is the evidence? Except for statement of Dinesh Arora is there any other evidence?"

While the ASG conveyed that all activities were carried out under cover, the bench did not seemed convinced. Justice Khanna further stated– 

"You have to establish a chain. The money has to flow from the liquor lobby to the person. We agree with you that it's difficult to establish the chain because everything is done under cover. But that's where your competence comes in..."

8. How Will Sisodia Be Brought Under PMLA ?

Regarding allegations under the PMLA Act, Justice Khanna stated–

"Manish Sisodia is not involved in all this. Vijay Nair is there but Manish Sisodia is not in this part. How will you bring him under money laundering act? The money is not going to him. In case it is a company with whom he is involved, then we have vicarious liability. Otherwise the prosecution falters. Money laundering is entirely a different offence...We have to show that he is in possession of that property. You will have to go to the exact wording of the section and show how will you bring him in."

The bench added that PMLA dealt with process or activity connected with proceeds of crime and not "generation". Justice Khanna further added–

"He has not got the possession, somebody else has. It's not acquisition by him, it is acquisition by someone else. Use is by someone else. Projecting is by someone else...Generation is not a part of it. Concealment is a part of it. Possibly you can bring it under concealement, I don't know. That's why I said- Abetment is separate, vicarious liability is separate, principal offender may be someone separate."

When ASG Raju submitted that Sisodia was instrumental in generation of the proceeds of crime, Justice Khanna reiterated that generation itself was not an offence under Section 3 of the PMLA.

The ASG pressed his point and stated– "He is involved in a process or activity which is connected to the proceeds of crime."

However, Justice Khanna stated–

"When you give bribe, you're involved in the activity connected to the proceeds of crime. Suppose, let's assume, ultimately no money is passed on. Will PMLA trigger? What triggers in PMLA is proceeds of crime PMLA will be triggered after proceeds of crime are given or paid. You have to connect the person concerned with the proceeds of crimes, directly or indirectly. Abetment, it may be. But as a principal offender it will be a different situation."

The matter will now be taken up on October 12, 2023.

Also from today's hearing : 'Not To Implicate Anyone' : Supreme Court Clarifies 'Why Political Party Not Made Accused' Query In Delhi Liquor Scam Case