New Delhi: The Supreme Court judgment dismissing former Delhi government minister and Aam Aadmi Party (AAP) leader Manish Sisodia’s bail petition in the alleged liquor scam case has raised doubts over charges levelled against him by the Directorate of Enforcement (ED), which is probing the money-laundering angle in the case.
A bench led by Justice Sanjiv Khanna Monday pronounced its decision on Sisodia’s bail petition filed in connection with both the Central Bureau of Investigation (CBI) case under the Prevention of Corruption Act (PCA) as well as the ED case under the Prevention of Money Laundering Act (PMLA).
Though the bench did not delve “in depth and detail” into some legal questions arising in the matter, it did observe that there is “material and evidence” to “tentatively support” that 14 wholesale liquor distributors had earned excess profit of Rs 338 crore in a period of about 10 months, during which the new excise policy was in operation.
It extensively quoted the CBI chargesheet that alleged the excise policy was changed to facilitate and get kickbacks and bribes from wholesale distributors by enhancing their commission/fee from 5 percent under the old policy to 12 percent under the new one.
But with regard to charges specifically against the AAP leader, the court discussed four pertinent points, finding that the allegations of bribe money being paid to Sisodia were debatable.
On the assertion that Rs 2.2 crore was paid as bribe to Sisodia through a middleman, the court said this was not a charge or allegation made in the CBI’s chargesheet. Hence, it observed, it may be difficult to regard the alleged payment as “proceeds of crime” under the PMLA.
It went on to say that the complaint filed with the ED alleging that a kickback of Rs 100 crore was actually paid by the liquor group (South Group) is “somewhat a matter of debate”.
The bench also observed that the ED had relied on evidence and material that Rs 45 crore — allegedly from the proceeds of crime — had been transferred through hawala to fund the AAP campaign for the Goa assembly elections in 2022.
However, the court noted that AAP, a juristic person, was not being prosecuted under the PMLA. The ED, it said, has also not argued that Sisodia is vicariously liable in terms of the PMLA.
Fourth, the court observed that the ED’s contention that “generation of proceeds of crime is itself ‘possession’ or ‘use’ of the ‘proceeds of crime’, prima facie, appears to be unclear and not free from doubt in view of the ratio in Vijay Madanlal Choudhary (supra).” The Vijay Madanlal Choudhary judgement, delivered last year, upheld the sweeping powers of the ED under the PMLA.
The bench also said that the ED’s allegation that “generation” (of unaccounted wealth) amounts to possession, and that the expression “possession” includes constructive possession, is not assured.
Also read: ‘Rs 100 cr kickbacks, cartels & Facetime call with Kejriwal’: ED chargesheet in liquor scam case
Defining ‘possession’ of proceeds of crime
The ED had relied on an earlier SC verdict in the Mohan Lal vs State of Rajasthan case, which held that the expression “possession” consists of two elements: “First, it refers to the corpus or the physical control and the second, it refers to the animus or intent which has reference to exercise of the said control.”
Drawing reference from the narcotics law, the bail order in Sisodia’s case said that a person is said to possess control over the substance when he knows the substance is immediately accessible and exercises dominion or control over the substance.
“The power and dominion over the substance is, therefore, fundamental,” said the bench. Hence, the ED’s argument about constructive possession would apply only if the criteria of dominion and control were satisfied.
“If the proceeds of crime are in dominion and control of a third person, and not in the dominion and control of the person charged under Section 3, the accused is not in possession of the proceeds of the crime,” the court said. Section 3 of PMLA describes the offence of money laundering.
Further, it added, “It would be a different matter, when an accused, though not in possession, is charged for use, concealment or acquisition of the proceeds of the crime, or projects or claims the proceeds of crime as untainted property.”
As for Sisodia’s involvement, the bench said, prima facie, there is lack of clarity, as there was no specific allegation of his involvement, direct or indirect, in the transfer of Rs 45 crore to AAP for the Goa elections.
The court also took note of the fact that the ED never urged and argued before the court that the new liquor policy “is vitiated on the ground that retail vends had to be and were auctioned”.
“Normally, auction and allotment to the highest bidder would be fair and beneficial for revenue generation, though in certain circumstances allotment by other modes may be fair and better,” the court observed, without going deeper into this aspect.
Liquor distributors’ ‘illegal gain’
However, the bench said that there is one clear ground or charge in the complaint under the PMLA that is free from perceptible legal challenge and the facts, as alleged, “are tentatively supported by material and evidence”.
The bench recapitulated the allegations, which, according to the agencies, established an offence under the PMLA as well as the anti-corruption law.
The ED had contended that while Rs 70 crore had been collected from the liquor distributors as a one-time licence fee, Rs 338 crore had accrued to them following the enhancement of their commission from 5 percent under the old policy to 12 percent in the new scheme.
This, according to the agency, the court observed, “would constitute proceeds of crime and “were acquired, used and were in possession of the wholesale distributors who have unlawfully benefitted from illegal gain at the expense of the government exchequer and the consumers/buyers”.
It also noted that the CBI’s chargesheet under the Prevention of Corruption Act includes offences for unlawful gains to a private person at the expense of the public exchequer.
While not giving relief to Sisodia, the court pointed out that the prosecution had assured it that the trial in the case would be completed in six to eight months. It added that the former minister would be at liberty to move a fresh bail application if the trial is protracted and proceeds at a snail’s pace in the next three months.