The probe into the alleged irregularities in the implementation of the Delhi Excise Policy 2021-2022 (DEP-21/22), commenced on the recommendation of the then Lieutenant Governor of Delhi, V.K. Saxena, following which the CBI registered FIR No. RC0032022A0053 at PS CBI/ACB, New Delhi, on August 17, 2022, with Sh. Praveen Kumar Rai, Director, Ministry of Home Affairs, cited as the Complainant.
The principal charge-sheet dated November 24, 2022, was filed on November 25, 2022, and four supplementary charge-sheets were filed over a period of nearly two years (27 months, to be precise), from April 2023 to July 2024, with Arvind Kejriwal named only in the fourth and final charge-sheet in the matter.
The Trial Court examined the documents placed on record with the charge-sheets and heard extensive arguments from both sides from November 25, 2022 to February 12, 2026, and reserved the matter for order, which was pronounced on February 27, 2026. The Trial Court found the case of the prosecution so completely lacking in merit that, rather than proceeding with the trial, the Trial Court discharged all 23 accused in the matter by a detailed 549-page order, along with a 48-page Annexure recording in detail the submissions made by the counsels representing the CBI and the Accused.
Not only that, in a thumping indictment of the Investigation Officer (IO), the Trial Court, relying on the Supreme Court judgment in Gajoo v. State of Uttarakhand (2012) 9 SCC 532, recommended appropriate departmental proceedings, holding that “the course consistent with the duty of the Court is not merely to discount the tainted investigative material, but also to recommend initiation of appropriate departmental proceedings against the erring investigating officer for framing A-1 as an accused in the absence of any material against him, so that accountability is fixed and the institutional credibility of the investigative machinery is preserved” (Para 475).
Prosecution’s Case
The Prosecution’s case, in brief, was that the policy was “pre-conceived” and “tweaked” to favor a specific group of liquor businessmen (referred to by the CBI as the “South Group”), and key changes such as abruptly raising the wholesaler profit margin from 5% to 12% and relaxing eligibility criteria to incorporate turnover requirements were to benefit specific entities like M/S Indospirits. And for these favourable provisions, the “South Group” had allegedly paid approximately INR 90–100 crores in “upfront money” as illegal gratification to the Aam Aadmi Party (AAP) through intermediaries.
The Prosecution also alleged that INR 44.54 crores of the alleged bribe money was moved through hawala channels to Goa to fund the AAP’s 2022 Assembly Election campaign. In this entire corrupt exercise, the key figures were allegedly Arvind Kejriwal (A-18), Manish Sisodia (A-8), Vijay Nair (A-3) and K. Kavitha (A-17), along with others who had facilitated and assisted the three as far as to be criminally liable as co-conspirators.
Arvind Kejriwal (A-18) allegedly assured support to the liquor business in exchange for funding and directed stakeholders to coordinate with K. Kavitha (A-17), with Manish Sisodia (A-8) steering the policy changes, creating “fabricated” public feedback to support the new model, and destroying electronic evidence (mobile phones), and Vijay Nair (A-3) allegedly functioning as the primary intermediary between the Delhi government and the private liquor lobby.
Trial Court Finds No Merit
At the stage of Framing of Charge, the Trial Court places the case of the prosecution at its best, assuming that all facts cited are proved, and no document or witness is successfully impeached by the defence, with all witnesses cited testifying exactly on the same lines as taken in the statements recorded under Section 161 (Section 180 of BNSS) and Section 164 (Section 183 of BNSS) forming part of the chargesheet. And it is only and only if the case of the prosecution is so utterly weak that even at its best and strongest it fails to meet the legal threshold of “grave suspicion” that the Trial Court moves to discharge the Accused because in such a case, conducting a trial is both a serious waste of judicial time and a travesty of justice. The Trial Court found this to be exactly such a case, meriting a discharge rather than a fruitless trial.
“To compel the accused to face the rigours of a full-fledged criminal trial in the stark absence of any legally admissible material connecting them to the alleged offences would not serve the ends of justice; it would instead constitute a manifest miscarriage of justice and an abuse of the criminal process, offending the most basic tenets of fairness and the rule of law,” ruled the Trial Court (Para 1077), addition further in a portion underlined for emphasis that “the investigation, when tested against the material collected by the agency itself, reflects a fundamental failure to properly appreciate, evaluate, or draw lawful inferences from the evidence and documents on record. As a result, the prosecution case is rendered legally infirm, unsustainable, and unfit to proceed any further in law. Stated differently, this Court records that the theory of an overarching conspiracy, so emphatically projected, stands completely dismantled when tested against the evidentiary record” (Para 1078).
Narrative of Motivated Policy Tinkering to Benefit the Co-Accused Fails Judicial Scrutiny
The prosecution alleged that the policy draft dated 19.03.2021 with wholesale profit margins raised from 5% to 12% was prepared at the behest of one of the beneficiary accused, Abhishek Boinpally (A-4), a Hyderabad-based businessman and a director of Ananth Traditions Pvt Ltd., and was routed through Vijay Nair (A-3), identified as the former communication in-charge of the Aam Aadmi Party by the prosecution, to Manish Sisodia (A-8), suggesting that the enhanced margin was inserted at the behest of the so-called “South Group” to facilitate the recoupment of the alleged upfront payments of INR 90-100 crore in bribes made by the said South Group to the Aam Aadmi Party through the intermediaries.
But the problem is that the original draft, dated 15.03.2021, prepared by the Excise Department and circulated internally, left the margin open-ended and provided only for a 5% minimum distribution fee. In fact, the policy specifically said, “There will be no cap on distributor margin set by the Govt. and brands can individually set that with their chosen distributor.” This means that the document relied upon by the prosecution to show that the margin was hiked from 5% to 12% itself does not support the prosecution’s reading of it.
Thus, the Trial Court noted, “What emerges, therefore, is not a transition from a fixed 5% to 12%, but a transition from no cap (with a 5% minimum) to a standardised 12%. The first draft did not prescribe a 5% ceiling; it prescribed only a floor” (Para 203).
If the conspiracy was geared towards maximising recoupment of bribes through enhanced profit, it did not sit well with the draft supposedly manipulated for the purpose at the instance of the beneficiaries, for the draft replaced an uncapped negotiable margin with a fixed 12%, thus narrowing discretion. “The suggestion that a group would design a framework disadvantageous to its own alleged objective renders the theory internally inconsistent,” said the Trial Court (Para 204), and concluded thus: “On a plain reading of the two drafts, the hypothesis of conspiracy, built upon an alleged increase from 5% to 12%, does not withstand textual scrutiny” (Para 205).
Similarly, the allegation that the turnover requirement was enhanced at the behest of the so-called “South Group” to eliminate competition does not fly either, because the conspiring entity for whose benefit the threshold was introduced itself found it hard to meet it. “The material placed before the Court indicates that M/S Indospirit Marketing Private Limited (M/S IMPL) struggled on the turnover criterion and was unable to satisfy even the reduced benchmark of 150 crores in the final policy,” the Trial Court noted (Para 207) before concluding that “a clause that renders the supposed beneficiaries ineligible cannot, on its face, be described as a provision crafted exclusively for their benefit” (Para 207).
The policy changes alleged by the prosecution to have been made to benefit certain businesses were simply regular decisions taken in the public interest, with due protocol followed. Right or wrong, beneficial or not, the prosecution failed to place anything to show that the supposedly manipulated policy favoured private profiteering over the valid objectives of the policy.
LG’s Secretariat Records Contradict Prosecution’s Manipulation Theory
The prosecution’s case was that the Excise Policy was unilaterally manipulated for the benefit of the “South Group” by A-8 (Manish Sisodia) to incorporate the 12% hike in profit margin and the qualifying threshold of 150 crore. However, the contemporaneous records of the LG’s Secretariat show that the LG was actively engaged in the deliberative process for the purpose of formulating the policy through regular administrative and constitutional channels.
Secretary to the Lieutenant Governor, Smt. Ankita Mishra Bundela (PW-87), corroborates the institutional engagement, stating that “the proposed excise policy was deliberated in detail in the LG Secretariat and the apparent deficiencies in the policy were discussed with Hon’ble LG in multiple meetings along with the officers of the LG Secretariat”, and clarifies: “I also state that informal discussion notes were prepared by the LG Secretariat for the discussion. However, as far as I remember, such notes for discussion, being informal, are generally not kept on record” (Para 252).
Additional Secretary to Hon’ble LG, Ajay Kumar (PW88), says in his statement that Deputy CM, Manish Sisodia, placed a note on the file on “20.05.2021, in which he mentioned seven points to be incorporated in the draft Excise Policy in pursuance of discussions among Hon’ble LG, Hon’ble CM and Dy. CM”, and in the same note “asked Secretary Finance to prepare a proposal for the Cabinet incorporating the seven changes and marked the file to the Secretary Finance. Thereafter, fresh approval of the Council of Ministers was taken on the Cabinet Note and on 21.05.2021, Dy. CM noted in the file that “suggestions made by Hon’ble LG, in our meeting with him, have been approved by the Council of Ministers” and sent the file to CM, who marked the file to Hon’ble LG on the same day, i.e., 21.05.2021. On 24.05.2021, I as Additional Secretary to the Hon’ble LG noted in the file that “Hon’ble LG has been apprised” and sent the file to Secretary to CM for further necessary action” (Para 256).
The Trial Court embeds the scanned copy of the relevant file notings on Page 122 of the order, which form part of the documents placed before it as D-138. Of these seven suggestions, Suggestion 1 pertains to reducing the turnover threshold from INR 250 crore to INR 150 crore, whereas Suggestions 2, 3, 4, 5, and 6 are about minimum carpet area for Super Premium Vends, broadening participation in the tender process, preventing brand pushing and carteling, introducing net worth criteria for retail licensees, and guaranteeing licence renewability, none of which have any obvious benefits for the “South Group”.
Suggestion 7 removes ministerial discretion to “make minor changes” necessary for implementation, which was earlier allowed by the Cabinet Decision, and says that “since the policy is exhaustive, no such authorization is required” and further provides that for any amendment, the matter be placed “before the Council of Ministers at the time of implementation.” So, Suggestion 7 curtails discretion and tightens governance rather than loosening it. But the prosecution focused its allegation of manipulation on Suggestion 1, the 150 crore threshold.
As for the 150 crore threshold, the second draft GoM report dated 19.03.2021, which was allegedly prepared and supplied by the “South Group”, sets the turnover criterion at INR 500 crores per year for the preceding five years, which is much higher than both INR 250 crore and INR 150 crore. So, the prosecution made two mutually contradictory allegations in saying that the 500-crore threshold was introduced to exclude competition to benefit the group, and the reduction to 150 crores was also to benefit the same group. “Such diametrically opposite assertions erode the credibility of the conspiracy theory,” the Trial Court observed (Para 286).
Furthermore, M/S Indospirit, for whose benefit the threshold was allegedly manipulated, could not meet even the 150-crore eligibility criterion. “If the reduction to 150 crores had been specifically engineered to favour that entity, it is difficult to explain why it failed to qualify under the very condition allegedly tailored for its benefit,” the Trial Court said (Para 287).
The Trial Court takes issue with the position taken by the LG (PW-86) in his statement that he did not make any “suggestions” regarding policy clauses or commercial parameters, as it runs contrary to the “contemporaneous and authenticated records” of his own office maintained in due course. Besides, since the notings form part of the official governmental records maintained in the regular course, they are public documents under Section 74 of the Indian Evidence Act, 1872 (IEA), and as such “attract the statutory recognition contemplated under Section 35”, the Court said (Paras 265-266).
Since the genuineness of the file notings was not under challenge and the law accords primacy to the document over oral statement, “the statement of the Hon’ble LG disputing the seven suggestions, in the face of the contemporaneous official record, cannot therefore prevail in law over the contents of the document,” said the Trial Court (Para 270).
The Bribery Allegations Find No Evidentiary Basis
The prosecution’s case was that the policy was unilaterally manipulated at the instance and to the advantage of the “South Group” in exchange for kickbacks. As discussed above, the statements of the witnesses and the documents placed on record failed to establish that the policy changes were manipulatively made, having been made through the regular consultative process at the highest level of the Executive. The prosecution also failed to show that the allegedly manipulated policy changes exclusively or especially benefited the “South Group”. The third aspect to be established was that the manipulation was made in exchange for illegal gratification.
To substantiate the bribery allegations, all the prosecution had was the statement of the approvers, and loose, unbound, and unpaginated “pauti” documents (marked as D-series exhibits), produced through Angadia witnesses. “None of these documents are shown to be bound, paginated, contemporaneously maintained, or part of any continuous or regularly kept ledger in the ordinary course of business,” the Trial Court observed (Para 1003).
And in loose sheets and detached papers did not rise to the probative value under Section 34 of the Indian Evidence Act, as authoritatively settled by the Supreme Court in V.C. Shukla v. State (Delhi Administration), (1998) 3 SCC 410, wherein the Apex Court ruled that loose sheets or scraps of paper could not be termed a ‘book’ for the purpose of the provision, and “even correct and authentic entries in books of account cannot without independent evidence of their trustworthiness, fix a liability upon a person” because the provision demands independent corroboration by stipulating that “such statements shall not alone be sufficient to charge any person with liability.”
The statements of the Angadia witnesses could not help the prosecution because the witnesses only sought to explain or interpret the pauti notings. The witnesses “do not depose to any contemporaneous act of payment, receipt, delivery, or conscious handling of cash by the accused, independent of those writings,” the Trial Court noted (Para 1012).
Besides, Angadia witnesses, like most other witnesses, were not neutral observers but were either accomplices or abetters within the meaning of Section 107 of the IPC.
In V.C. Shukla, the Supreme Court rejected a similar attempt of the prosecution, holding that such statements, at best, established the reliability of the entries in respect of the maker or recipient alone, but did not operate as independent corroboration against third parties.
So, with the pautis being of no independent evidentiary value, and the pauti witnesses’ testimony being incapable of independently verifying the source or destination of the alleged payments, as the testimonies were nothing but oral descriptions of the contents of the pautis, the money trail was nothing more than a trail tied to nobody at either end.
Trial Court Takes Exception to the Method of Investigation
The Trial Court took serious exception to the way the investigation was conducted and found that “the investigation appears to alter its focus mid-course and proceeds in an ever-expanding sweep, seemingly driven by the question of who all can be brought within its fold” (Para 1062). The Trial Court found that the roving inquiry launched by the investigation agency did not confine itself to the alleged offences, as it should have.
Further, the Trial Court frowned upon the practice of granting pardon to and making an approver of “a principal or first-degree participant in the alleged offence” because, the court noted, “the jurisprudential rationale underlying the approver mechanism is that a participant of comparatively lesser culpability may be pardoned to expose graver criminality,” but where an equal participant in crime is insulated and other accomplices are proceeded against on the strength of his statement, “the investigative process itself becomes inherently suspect” (Para 1070).
For instance, approver Dinesh Arora (PW-20), is projected as a key conspirator who allegedly facilitated and actively participated in the offence in question, and then became an approver against other accused persons. “Justice is not served when culpability is re-engineered to suit investigative convenience rather than determined on the basis of objective truth,” the Trial Court observed (Para 1070).
The statement of Dinesh Arora (PW-20) was repeatedly taken multiple times over a period of more than a year, and several times even after securing a pardon on the promise of a “full and true disclosure”, and each time, there were new elaborations and refinements, which was “ostensibly to fill gaps, improve the prosecution narrative, implicate additional accused, or artificially weave missing links in the chain of circumstances,” the Trial Court notes (Para 1091).
Interestingly, Dinesh Arora (PW-20), the principal approver and a key conspirator who claimed to have the complete knowledge of the entire “conspiracy”, and who gave seven separate statements under Section 161, relied upon by the prosecution, and who assigned roles to several accused persons, did not mention Arvind Kejriwal (A-18) in any of his statements. The Trial Court notes this and observes: “There appears no reason why, if any involvement of A-18 existed within his knowledge, the same would not have been disclosed. His silence in this regard assumes significance and further weakens the case sought to be made against A-18” (Para 508).
The Trial Court notes that “the only material relied upon to indicate any linkage between A-17 and A-18 is the statement of PW-225” (Para 871), and the material is a single line in the statement. “The prosecution seeks to connect A-18 mainly on the basis of one sentence in the statement of the witness, namely PW-225 Magunta Sreenivasulu Reddy: “Thereafter, he told me that Ms. K. Kavitha, daughter of Shri K. Chandershekhar Rao, the then CM of Telangana would be contacting me in this regard” (Para 477).
No money trail, no other witness testimony, and no other document, just this one sentence forms the basis of complicity of A-18 (Arvind Kejriwal). And this sentence comes two years after the registration of the FIR and forms part of the fourth and final chargesheet in the matter.
In striking contrast, Dinesh Arora (PW-20), who is admittedly a key conspirator and a participant in the alleged scam, gets pardoned and becomes an approver, whereas Kejriwal, who has nothing against him except a single sentence in the statement of a largely unreliable witness with no independent corroboration, becomes an accused and spends months on end behind bars.
The Trial Court notes a pattern that makes the investigation look like what can only be called a choreographed exercise, which is completely at loggerheads with the objectives of criminal investigation, prompting adverse findings against the investigation.
The discharge order is extraordinary at several levels, but over and above everything, it’s an unusual display of independent judicial thinking, upholding settled principles of evidentiary law and preventing the legal process from becoming punishment.
Originally published as Cover Story in Lawyers Update, May 2026 Issue (Vol. XXXII, Part 5).
