The Bizarre Logic In Supreme Court's Judgment Denying Bail To Manish Sisodia

"Detention or jail before being pronounced guilty of an offence should not become punishment without trial” - one would think that this is an observation from a judgment which upholds personal liberty. But it is not. This is an observation made by the Supreme Court while denying bail to Aam Aadmi Party leader and former Delhi Deputy Chief Minister Manish Sisodia in the liquor policy scam case. Quite ironic.

The judgment delivered by a bench comprising Justices Sanjiv Khanna and SVN Bhatti was rich in platitudes, but short of relief.

The bane created by Section 45 of the Prevention of Money Laundering Act (PMLA) is that it forces the Court to undertake a preliminary examination of the evidence on record to ascertain if there is a prima facie case against the accused. The curious aspect in the Manish Sisodia case is that despite debunking most of the charges of the Central Bureau of Investigation(CBI) and the Directorate of Enforcement (ED) at a prima facie level, the Court denied him bail because certain private liquor wholesale distributors were found to have made gains due to the change in the excise policy, even though there is no finding regarding the exchange of kickbacks or loss to the public exchequer.

The Court raised doubts about the case of the ED that the liquor group paid kickbacks of Rupees 100 crores to Sisodia and his associates, by terming it “somewhat a matter of debate”.

The Court also said that there is no specific allegation about the involvement of Sisodia in the alleged transfer of Rs 45 crores out of the Rs 100 crores to the AAP for the Goa elections. In any case, since the AAP is not made an accused, Sisodia cannot be held as vicariously liable on this count, the Court held.

"..the assertion in the complaint filed with the DoE that kickback of Rs.100,00,00,000 (rupees one hundred crore only) was actually paid by the liquor group is somewhat a matter of debate. However, there is an assertion, and the DoE has relied on evidence and material, that a portion thereof, that is, Rs. 45,00,00,000 (rupees forty five crores only) was transferred through Hawala for the Goa election and used by AAP, a political party, which is a juristic person. AAP is not being prosecuted. The charge that the appellant – Manish Sisodia is vicariously liable in terms of Section 70 of the PML Act cannot be alleged and has not been argued"- Paragraph 12 of the judgment.

Next, the Court refused to accept the ED's allegation that an amount of Rs. 2.20 crores was paid as bribe to Manish Sisodia by Amit Arora, through middleman Dinesh Arora, since such an allegation is absent in the final report filed by the CBI in the predicate offence.

Also, the Court expressed doubts about the ED's proposition that taking bribe, by itself, would amount to the offence of money laundering. The CBI/ED's argument that Sisodia should be held to be in constructive possession of the alleged unlawful gains made by the wholesale liquor distributors also did not appeal to the Court(Para 16 of the judgment).

"Prima facie, there is lack of clarity, as specific allegation on the involvement of the appellant – Manish Sisodia, direct or indirect, in the transfer of Rs. 45,00,00,000 (rupees forty five crores only) to AAP for the Goa elections is missing."- Para 15

Reading so far, you would be definitely under the impression that Sisodia is getting bail. But, then came the twist in the tale. The judgment, which so far had been proceeding on a logical basis, suddenly nosedived into a different realm.

From paragraph 21 onwards, the judgment narrated the gist of the allegations in the cases of CBI and ED. The long and short of their cases is that the new liquor policy was framed following the lobbying by certain liquor groups with offer of kickbacks and that the wholesale liquor distributors made profits to the tune of Rs 338 crores as a result of the policy hiking their commission percentage from 5% to 12%.

The Court recorded the allegation of the CBI that the excess amount of 7% commission/fee earned by the wholesale distributors of Rs.338 crores constituted an offence defined under Section 7 of the Prevention of Corruption Act, relating to a public servant being bribed. The Court also took note of the ED's allegation that Rs.338 crores are "proceeds of crime.

The Court did not undertake any critical examination of these claims to ascertain if there is any prima facie case made out to deny bail on this country. Instead, the Court merely said that these are tentatively supported by material and evidence. After reproducing the allegations of the CBI and ED verbatim, the Court said :

“In view of the aforesaid discussion and for the reasons stated, we are not inclined to accept the prayer for grant of bail at this stage”.

Is there any prima facie finding that the gains made by the distributors have caused loss to the public exchequer? Is there any prima facie finding that Sisodia or his associates have received any kickbacks out of the gains made by the wholesale distributors? Is there any money trail found leading to Sisodia? The answer to all these questions is 'No'.

In fact, the tentative conclusion in the judgment does not square with its earlier observation that Sisodia cannot be held to be in constructive possession of the gains made by the liquor group.

During the hearing, the Court had observed that a policy change, without money consideration, was not illegal. Regarding an approver's statement that Vijay Nair was acting as an agent for Sisodia, Justice Sanjiv Khanna had commented, "Two questions in the cross examination and this will fall flat." In this regard, the bench had also noted that there was no other evidence except the statement of the approver(An approver's statement is treated as a very weak evidence in trial). Curiously, there is no discussion in the judgment on these aspects. 

If there is no exchange of bribe shown, should a Minister be implicated for bribery and money laundering merely because a policy decision taken by the Cabinet enabled private players to gain profits? This is the question which stares at us after reading the judgment.

The Court does not explain the need to keep the accused behind the bars although both the agencies have completed the investigation and filed final reports(prosecution complaint in ED's case). There is no discussion on the accused being a flight risk or possibilities of influencing the witnesses.  

After denying him bail, the Court made certain observations in the judgment regarding personal liberty, acknowledging the prolonged incarceration of Sisodia and allowing him liberty to apply for bail again after three months if the trial proceeds slowly. Given the history of criminal prosecution in the country, and in absence of unequivocal direction from the court, it is unrealistic to expect a major progression of the trial within three months, especially considering the huge volume of evidence and the high number of witnesses in the case.

The real concern of students of law is not the grant or denial of bail to Sisodia. Grant of bail falls within discretionary jurisdiction of the Court. But the discretion of denial of bail should stem from a logical progression of discussion on facts, prima facie case made out and appreciation of evidence. When the discussion of the Court itself suggests the lack of evidence for a possible conviction, whether the judgment acts as a good precedent to be followed by the courts in the country in bail matters is the question which puzzles every law student .

(The author is the Managing Editor of LiveLaw. He can be reached at manu@livelaw.in)