Red-faced CBI faces Herculean task to revive liquor scam case in High Court

The Delhi Liquor Scam Case - 2021-22 has collapsed in the Court of Law. All 23 accused persons, including Aam Aadmi Party (AAP) supremo Arvind Kejriwal and his deputy Manish Sisodia, have been discharged from the case. The case arising from the scam crumbled even before it reached the stage of trial.

The outcome of the February 27 order has severe legal ramifications. The decision of the Rouse Avenue Court in New Delhi has left the Central Bureau of Investigation (CBI) red-faced, not only for the conclusion it arrived at but for the scathing remarks made against the agency and its investigating officer for framing an accused in the absence of material evidence.

The Special Court refused to frame charges against all accused persons, including those from the “South Group,” a term coined by the probe agencies (CBI and Enforcement Directorate) to describe a cartel of liquor businessmen, politicians, and their associates, primarily based in Telangana and Andhra Pradesh K Kavitha, a prominent politician from Telangana and the daughter of former Chief Minister K Chandrashekar Rao, was one of those who received relief in the alleged scam.

The demolition of the alleged scam at the first level of the judiciary, even before it was set for trial, has sent a shockwave through the Union Government and the CBI. Hours after the 598-page order was delivered, the agency officially stated its intention to seek a revision in the Delhi High Court.

A tough task lies ahead for the CBI to restore the case, in which the investigation was termed by Special Judge Jitendra Singh a “premeditated and choreographed exercise” rather than a fair investigation.

Further, a Herculean effort would be required on the part of the agency before the High Court to overturn the findings and observations of the Special Judge, who held that the probe agency failed to establish a prima facie case against any of the 23 accused. It was observed that the prosecution’s case was based on “conjecture rather than concrete evidence” and failed to meet the judicial standard of “grave suspicion” required to frame charges.

The trial court noted that the formulation of the excise policy was a consultative process and that there was “no overarching conspiracy or criminal intent” in the policy itself. It strongly criticised the CBI for repeatedly using the term “South Group” to describe a set of accused based on

their regional origin. The judge remarked that this nomenclature was “plainly arbitrary and unwarranted,” had no foundation in law, and posed a risk of regional prejudice.

The trial court raised serious concerns about the investigation’s reliance on witnesses who were granted a pardon to become “approvers.” The judge warned that using statements from approvers to fill gaps in the investigation is a “grave violation of Constitutional principles.” The judge noted significant “internal contradictions” in the voluminous chargesheet filed by the CBI, stating it lacked corroborating evidence or witness testimony.

The order has given a new lease of political life to Arvind Kejriwal, who was the Chief Minister when the new Excise Policy was formulated and came under judicial scrutiny. Since the court did not find any cogent material linking him to the alleged conspiracy, the AAP chief has received a much-needed opportunity to resurrect his image. The same applies to the then Deputy Chief Minister Manish Sisodia, as the judge held that there was no material on record to show his involvement, nor was any recovery of illicit funds made from him. The last four years have been eventful since the Delhi Excise Policy 2021-22 was implemented on November 17, 2021. It remained in force for just over eight months until it was officially withdrawn and the government reverted to the old regime on September 1, 2022. This happened as charges of corruption and kickbacks started emerging, centering on an alleged cartel from southern India known as the “South Group.”

Investigative agencies alleged that a group of businessmen and politicians (referred to as the “South Group”) paid Rs 100 crore in advance bribes to leaders of the AAP. This money was meant to ensure they received favorable terms under the new liquor policy, such as higher profit margins and licenses for multiple zones. Separately, a report submitted to the Lieutenant Governor by the Delhi Chief Secretary alleged that the new policy caused a massive loss of over Rs 580 crore to the Delhi government. The report claimed this happened because the Government lost revenue from license fees and granted undue benefits and waivers to private liquor companies.

Based on the Chief Secretary’s report, Lieutenant Governor VK Saxena, who assumed office on May 26, 2022, swung into action, initiating the investigation into the Delhi Liquor Policy case. Saxena recommended a CBI probe in July 2022, asserting that the policy was designed to benefit private liquor traders at the cost of the public exchequer. The case also gained momentum due to persistent allegations of a “multi-crore scam” raised by opposition parties, specifically the Delhi BJP and Delhi Congress, with the latter formally filing a complaint with the Delhi Police in June 2022.

Thus, the Special Court’s decision to discharge all 23 accused in the case represents a significant setback for the position taken by Saxena. In the circumstances, the Lieutenant Governor has limited direct legal capacity to act compared to the central investigative agencies. The Lieutenant Governor can continue to maintain that the Chief Secretary’s report established prima facie violations, even if the court found the criminal charges unsupported by evidence.

The Central Government’s role now is focused entirely on managing the legal fallout of the trial court’s decision. The discharge of high-profile opposition leaders like Kejriwal, Sisodia, and Kavitha from Telangana is a massive setback to the narrative of corruption promoted by the Central Government and the BJP.

 The CBI, which operates under the Union Ministry of Personnel, Public Grievances and Pensions, has immediately filed an appeal in the High Court. The Central Government will ensure the agency has all the necessary legal resources to fight the appeal and try to revive the case.

The Delhi Liquor Policy case has several implications for the general public, ranging from political stability to questions about justice and governance. For the supporters of AAP, this decision is seen as a major victory, vindicating their leaders and reinforcing the narrative that the charges were politically motivated. This may strengthen the party’s position in Delhi. For those who believed the corruption charges, the court’s harsh criticism of the investigative agency’s lack of evidence may lead to questions about the misuse of central agencies for political purposes.

The issues arising from the liquor scam have spurred significant legal drama, moving from the Special Court to the High Court and the Supreme Court over the last four years. Now, the discharge of the accused in no way means the case is closed.

The CBI’s appeal against the order of the Special Court will be heard in the High Court in the coming days (March 9). This means the case will remain in the public eye, and finality may take a long time.

Writer is a senior journalist covering legal affairs; Views presented are personal.