Supreme Court Denies Bail to Manish Sisodia in Delhi Excise Policy Case: Manish Sisodia vs. Central Bureau of Investigation (30 October 2023)

Introduction

Date of the Judgment: 30 October 2023

Citation: 2023 INSC 956

Judges: Sanjiv Khanna, J., S.V.N. Bhatti, J.

Can an individual accused of corruption and money laundering be granted bail while facing serious charges? The Supreme Court of India recently addressed this question in the case of Manish Sisodia, the former Deputy Chief Minister of Delhi, who sought bail in connection with alleged irregularities in the Delhi Excise Policy. The court, comprising Justices Sanjiv Khanna and S.V.N. Bhatti, examined the complexities of the case, focusing on the generation and handling of proceeds of crime. This judgment delves into the nuances of the Prevention of Money Laundering Act, 2002 (PML Act) and the Prevention of Corruption Act, 1988 (PoC Act), while also considering the fundamental right to a speedy trial.

Case Background

Manish Sisodia, the former Deputy Chief Minister of Delhi, is the appellant in this case. He is seeking bail in prosecutions arising from a case registered by the Central Bureau of Investigation (CBI) on 17 August 2022, and another case registered by the Directorate of Enforcement (DoE) on 22 August 2022. The CBI case involves offences under the PoC Act and the Indian Penal Code, 1860 (IPC), while the DoE case involves offences under the PML Act. The core allegation is that Sisodia was involved in irregularities in the formulation and implementation of the Delhi Excise Policy, which allegedly resulted in illegal gains for private individuals and entities at the expense of the public exchequer. Sisodia was arrested on 26 February 2023, in the CBI case and on 9 March 2023, in the DoE case. He is seeking bail on the grounds that the trial will take years, and that the evidence against him is weak.

Timeline

Course of Proceedings

The CBI has filed two charge sheets dated 24 November 2022 and 25 April 2023, naming Manish Sisodia as an accused for offences under Sections 7, 7A, 8, and 12 of the PoC Act, and Sections 120B, 201, and 420 of the IPC. The DoE filed a criminal complaint on 4 May 2023, against Sisodia for offences under Sections 3 and 4 of the PML Act. The arguments on charge have not yet commenced, and the trial is expected to take a considerable amount of time. Sisodia has been in custody since 26 February 2023, in the CBI case and since 9 March 2023, in the DoE case. He has sought bail on the grounds of prolonged incarceration and the weak nature of the evidence against him.

Legal Framework

The case primarily revolves around the interpretation and application of the following legal provisions:

• Section 3 of the Prevention of Money Laundering Act, 2002 (PML Act): This section defines the offence of money laundering. It states that anyone who directly or indirectly attempts to indulge, knowingly assists, or is involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use, and projecting or claiming it as untainted property, is guilty of money laundering. The explanation to this section clarifies that the process or activity connected with proceeds of crime is a continuing activity until the proceeds are no longer being enjoyed.
• Section 2(u) of the PML Act: Defines “proceeds of crime” as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property.
• Section 45 of the PML Act: This section deals with the conditions for granting bail in cases under the PML Act. It states that no person accused of an offence under this Act shall be released on bail unless the Public Prosecutor has been given an opportunity to oppose the application, and the court is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and is not likely to commit any offence while on bail.
• Section 7 of the Prevention of Corruption Act, 1988 (PoC Act): This section defines the offence of a public servant being bribed. It includes obtaining or accepting undue advantage with the intent to perform or cause performance of public duty improperly, or as a reward for the improper or dishonest performance of a public duty.
• Section 120B of the Indian Penal Code, 1860 (IPC): Deals with criminal conspiracy.
• Section 201 of the IPC: Deals with causing disappearance of evidence of offence, or giving false information to screen offender.

These provisions form the legal basis for the charges against Manish Sisodia and the arguments presented by both the prosecution and the defense.

Arguments

Submissions on behalf of the Appellant (Manish Sisodia):

• Sisodia has been in custody since 26 February 2023 in the CBI case and from 9 March 2023 in the DoE case.
• The trial will take years due to the large number of witnesses (294 in CBI case and 162 in DoE case) and voluminous documents (31,000 pages in CBI case and 25,000 pages in DoE case).
• The new excise policy was adopted after due deliberation by the Council of Ministers in the larger public interest. The old policy had incentives to cheat, and the new policy aimed to maximize revenue and ensure transparency.
• The new policy was drafted transparently with comments from the public and recommendations from the Lieutenant Governor (LG).
• The allegation of a Rs. 100 crore kickback and its use for funding the Aam Aadmi Party (AAP) election campaign in Goa is a concocted story without legal evidence.
• Co-accused persons have been granted bail on the ground that there is no evidence to show that proceeds of crime were used for election purposes.
• Statements of co-accused and approvers are hearsay and were extracted under threat of arrest. Some co-accused have retracted their statements.
• The statements of Excise Department officers do not implicate Sisodia.
• Sisodia did not instruct the Excise Commissioner to expedite the clearance of Indo Spirit’s license, and interactions between private parties were independent.
• The allegation regarding destruction of cabinet file is exaggerated.
• The offense under the PML Act relates to the process or activity connected with the proceeds of crime, and not with the crime itself.

Submissions on behalf of the CBI and DoE:

• The new excise policy was a conspiracy to enable super-profits for wholesale distributors in return for kickbacks and bribes.
• The R.D. Committee Report recommending allotment of licenses through lottery was not followed by Sisodia.
• Public comments were prompted to influence the decision making process.
• Sisodia directed officials to prepare a cabinet note without the opinion of legal experts.
• The wholesale commission was increased from a minimum of 5% to a fixed 12% after meetings between the liquor group and Vijay Nair, a close confidant of Sisodia.
• A 36-page document with changes to the excise policy was prepared by the liquor group and handed over to Sisodia.
• The GoM did not meet between 15 March 2021 and 19 March 2021, and there were no discussions for increasing the wholesale commission from 5% to 12%.
• Sisodia was unable to explain the increase in commission from 5% to 12%.
• Sisodia used his influence for grant of wholesale license to Indo Spirit despite complaints of cartelization.
• The license fee for wholesale distributors was fixed at Rs. 5 crores, not based on turnover, to facilitate the liquor group.
• The new policy favored big wholesale distributors, who were required to pay a fixed license fee of Rs. 5 crores to the government, and were entitled to a fixed commission of 12% of the landed price.
• Mahadev Liquor was forced to surrender their license for not paying kickbacks.
• Pernod Ricard was directed to do business through Indo Spirit.
• The kickback of Rs. 100 crores was received from the liquor group and used by associates of Sisodia and other leaders of AAP, including in the Goa election campaign.
• Sisodia deliberately destroyed two mobile phones to prevent investigation.
• Dinesh Arora stated that he gave Rs. 2.2 crores to Sisodia for favorable changes in the new excise policy.
• The expression ‘possession’ includes constructive possession.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section, but the following questions were considered:

1. What is the scope and ambit of the constitutional protection under Articles 74 and 163 of the Constitution of India on the decisions taken by the Council of Ministers?
2. Whether on interpretation of Section 3 of the PML Act, ‘the act/process of generation’ or ‘the attempt to generate the proceeds of crime’ falls within the ambit of the expressions ‘assist’, ‘acquisition’, ‘possession’ or ‘use’ under Section 3 of the PML Act? If the answer is in affirmative, what are the legal consequences as per the Constitution of India, under the Code of Criminal Procedure, 1973, the IPC, and the General Clauses Act, 1897?
3. Whether a person can be prosecuted under the PML Act only when there is material to show that he has indulged or assisted in any activity/process of money laundering, albeit an activity/process different and separate from the scheduled offence?
4. Whether an accused, who allegedly has committed the scheduled offence, can be prosecuted under the PML Act, when the alleged prime accused and the beneficiary of the proceeds of crime, a juristic person, is not arrayed as an accused in the criminal complaint filed by the DoE?
5. Whether Sections 45 and 50 of the PML Act should be read down in view of the constitutional scheme and mandate of Article 20 of the Constitution of India?

Additionally, the court also considered the issue of whether the increase in wholesale commission from 5% to 12% constituted proceeds of crime under the PML Act and an offence under the PoC Act.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

The Court also referred to the following legal provisions:

• Articles 74 and 163 of the Constitution of India: These articles deal with the role of the Council of Ministers in advising the President and the Governor, respectively.
• Section 3 of the Prevention of Money Laundering Act, 2002 (PML Act): Defines the offence of money laundering.
• Section 2(u) of the PML Act: Defines “proceeds of crime”.
• Section 45 of the PML Act: Deals with conditions for granting bail under the PML Act.
• Section 7 of the Prevention of Corruption Act, 1988 (PoC Act): Defines the offence of a public servant being bribed.
• Section 120B of the Indian Penal Code, 1860 (IPC): Deals with criminal conspiracy.
• Section 201 of the IPC: Deals with causing disappearance of evidence of offence, or giving false information to screen offender.
• Section 436A of the Code of Criminal Procedure, 1973: Deals with the maximum period for which an undertrial prisoner can be detained.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Vijay Madanlal Choudhary [CITATION]: The court relied on this case to clarify that a positive finding of guilt is not required for denying bail under the PML Act.
• Mohan Lal [CITATION]: The court discussed the concept of ‘possession’ as explained in this case, noting that it involves physical control and the intent to exercise self-control.
• Y. Balaji [CITATION]: The court referred to this case to discuss the three ‘p’s in Section 3 of the PML Act and to clarify that the offence includes both those who commit the predicate offence and third-party launderers.
• P. Chidambaram [CITATION]: The court referred to this case to emphasize that bail should not be denied in every case of economic offence.
• Satender Kumar Antil [CITATION]: The court referred to this case to emphasize that the right to a speedy trial is a fundamental right.
• Arnab Manoranjan Goswami [CITATION]: The court referred to this case to emphasize the importance of liberty and that detention should not become punishment without trial.

What weighed in the mind of the Court?

The Supreme Court’s decision to deny bail at this stage was primarily influenced by the following factors:

• The charge of conspiracy and kickbacks: The court acknowledged the serious allegations that the new excise policy was designed to facilitate kickbacks and illegalgains for private individuals and entities.
• The increase in wholesale commission: The court found that the increase in wholesale commission from 5% to 12% was a proceed of crime under the PML Act and an offence under the PoC Act.
• The destruction of mobile phones: The court noted that the appellant deliberately destroyed two mobile phones to prevent investigation.
• The seriousness of the charges: The court emphasized that the charges against the appellant were serious and involved economic offences, which have a significant impact on the public exchequer.
• The need to ensure a fair trial: The court acknowledged the right to a speedy trial but did not find it sufficient grounds to grant bail at this stage, noting that the trial is still at the stage of framing of charges.

Ranking of Points Emphasized by the Court

Ratio of Fact to Law

The judgment is a blend of factual analysis and legal interpretation. The court delved into the facts of the case, such as the formulation of the excise policy, the increase in wholesale commission, and the alleged kickbacks. However, it also engaged with legal principles, such as the interpretation of Section 3 of the PML Act, the concept of proceeds of crime, and the conditions for granting bail under the PML Act. The ratio of fact to law is approximately 60:40, with a greater emphasis on the factual matrix of the case.

Final Decision

The Supreme Court denied bail to Manish Sisodia at this stage. The court held that there were reasonable grounds to believe that the appellant was involved in the commission of an offence under the PML Act and the PoC Act. The court also noted that the trial is still at the stage of framing of charges, and that the case is still being investigated. The court emphasized that the right to a speedy trial is a fundamental right, but did not find it sufficient grounds to grant bail at this stage. The court left it open for the appellant to seek bail again after a substantial period of time has passed.

Flowchart of the Case