New Delhi: Delhi Chief Minister and Aam Aadmi Party (AAP) chief Arvind Kejriwal’s arrest under the Prevention of Money Laundering Act (PMLA) for his alleged involvement in the liquor scam was not illegal and satisfied the provisions of Section 19 of the anti-money laundering Act, the Delhi High Court ruled Wednesday.
As per the mandate of Section 19 of the PMLA, Kejriwal was informed about the grounds of his arrest in writing, the court held. The grounds of arrest, running into 28 pages, were supplied to him at the time of his arrest on 21 March at 9:05 pm.
Further, the arrest order was also in the format prescribed by the top court in a recent judgement related to PMLA proceedings. In that verdict, the top court had ordered that the authorised officer must record in the arrest order reasons to believe that the suspect in a PMLA case was guilty of an offence.
In a 106-page detailed judgement, Justice Swarana Kanta Sharma, without holding a “mini-trial” in the matter, dealt deeply with key aspects of the case, including statements of witnesses, approvers and material in possession of the Enforcement Directorate (ED). She also concluded that Kejriwal’s police remand too was justified as it sought to unearth more “layers of conspiracy”.
Justice Sharma admonished Kejriwal for avoiding the ED’s summons multiple times. As a result of his non-cooperation, the judge blamed him for delaying the trial vis-à-vis others such as former Delhi Deputy Chief Minister Manish Sisodia, who is already in jail in the case.
The judge debunked Kejriwal’s claim that his arrest on the anvil of the general election was not because of his alleged involvement, but was to defeat his right to participate in general elections.
Rather, she held, the material collected by the ED in relation to his role, both in personal capacity in formulating the Delhi excise policy 2021-22, demanding kickbacks from the South Group, and as national convener of AAP in utilisation of the proceeds of crime during Goa Elections 2022, necessitated his arrest.
She said it was necessary to confront him with the statements of witnesses, and digital evidence coupled with Kejriwal’s condition of not joining the probe.
The material in the ED’s possession the agency relied upon to defend Kejriwal’s arrest include statements of witnesses and approvers, entry register of the CM’s office, statement of hawala operators, statement of AAP candidate from Goa, survey workers, and managers, assembly managers who had worked with the party during the Goa polls, WhatsApp chats between several persons and other material collected through raids by the Income Tax (IT) department.
The entry register, the judge said, prima facie reflected Kejriwal’s personal involvement in framing the policy and demanding kickbacks in exchange for favours. Similarly, the statements relied upon by the ED reflected that kickbacks received from the South Group were utilised by AAP for funding the Goa elections.
Kerjriwal’s plea to treat two approvers – Raghav Magunta and Sarath Reddy – as credible witnesses was also discarded by Justice Sharma. The Delhi chief minister’s lawyers discredited Magunta on the ground that he had been given a ticket to contest the upcoming Lok Sabha elections from the BJP-led alliance at the Centre. As for Reddy, the recent disclosure on electoral bonds revealed that he had paid Rs 60 crore to the BJP.
However, in the court’s opinion, the arguments were of no concern to it, as it is required to apply law and evidence in the context placed before it. The statements, it said, cannot be questioned at this stage.
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Kejriwal remand not illegal
The court found no merit in Kejriwal’s contention that his arrest was based on old material gathered around October 2023, when the other co-accused were arrested.
The top court said it was incorrect to make such a statement since the ED had collected fresh evidence based on which it issued summonses to Kejriwal in March this year and conducted a search at his premises on 21 March. This included statements of AAP treasurer N.D. Gupta.
After going through the entire case produced before it, Justice Sharma’s bench held the trial court’s remand order was not a mechanical one, as was alleged by Kejriwal’s lawyers.
The ED had sought to exercise its right to interrogate him since he had to be confronted with a larger number of statements and other material evidence collected, as well as digital evidence, related to the alleged role attributed to the chief minister.
Therefore, the ED was not unjustified in seeking his remand as it had to “unearth more layers of the conspiracy” pertaining to the Delhi excise policy. Kejriwal’s failure to appear before the ED for recording his statement under Section 50 of PMLA also necessitated his custody, opined Justice Sharma. The agency, she said, was left with no other option but to seek his custody through remand from the court of law to make him join the investigation and answer the questions.
The judge countered Kerjiwal’s argument that he was arrested ahead of the Lok Sabha elections to defeat his right to participate in the democratic process. She said he was not summoned for the first time after the declaration of the general elections or when the Model Code of Conduct came into existence. But the first summons was sent to him in October 2023. It was Kerjiwal who chose not to join the investigation, but had replied to all the summons, the court said.
She even rejected his theory that he was not informed in which capacity he was being summoned, holding that under PMLA, the ED was not required to furnish such details to the summoned person.
Justice Sharma also thrashed the CM’s plea for ignorance about the case in which he was being summoned. She accepted that Kejriwal as a head of state had a busy schedule and many events and meetings to attend. However, he was aware of the summonses that were sent to him and also had knowledge about the case “as many of his co-accused persons” were in judicial custody in the same case.
‘Kejriwal did not challenge summons but gave written replies’
“Therefore, to say that he did not attend to the summons since he did not know why he was being summoned has no merit,” she said.
Justice Sharma quoted a recent Supreme Court judgement in which it was held that persons who are summoned for questioning are bound to respond either personally or through an authorised agent and are required to state the truth to dismiss Kejriwal’s claim that he had joined the investigation since he had replied to summons issued against him.
In his arguments, Kejriwal denied non-compliance on his behalf. According to him, he had joined the ED probe as he responded to each summons in writing.
But in the court’s view, replying to summonses was not equivalent to joining the investigation as there was no such procedure prescribed in the law. Moreover, the judge observed, that the replies sent to the ED were counter-questioning the investigating agency about its intent and authority to summon him to join the investigation in a pending case, which could not have been done by way of a reply, but only through a court order.
She said Kejriwal cannot be treated differently for being a chief minister or given the privilege of a special protocol, which an investigating agency does not follow. The court refused to lay down two different categories of law, one for common citizens, and the other for a person in power or in public office.
The judge further noted that Kejriwal himself had never challenged the nine summonses issued over a period of six months. In case he was aggrieved by the summonses or wanted the ED to interrogate him by extending special facilities by virtue of him being a sitting CM, then he should have approached the court of law.
She said Kejriwal “must have been aware” of the impending Lok Sabha election dates and would have known that he would get busy and not be able to join the investigation. Despite this, he neither joined the investigation nor challenged the summonses issued to him since October 2023.
Notably, he did not prefer any pre-arrest bail in the case, even though in one of his replies to the ED, he expressed his apprehension about the agency wanting to arrest him.
AAP an ‘association of individuals’
Justice Sharma accepted the ED’s argument that Section 70 of PMLA was applicable in the present case and AAP would fall within the ambit of the anti-money laundering law under the definition of “association of individuals.”
She quoted the Representation of the People’s Act to hold that a political party meant an “association of a body of individuals”.
The ED has claimed that being the main driving force behind AAP, Kejriwal was, at the time of the commission of the PMLA offence, in charge and responsible for the party or “company”. He, therefore, shall be deemed to be guilty of offences punishable under the law. The CM, it said, was intrinsically involved in the entire conspiracy of the Delhi excise policy case wherein the proceeds of crime were used in the election campaign of AAP for the Goa polls.
The statement of witnesses and Kejriwal’s replies to the ED prima facie make it clear that Kejriwal was responsible for the party’s conduct as well as business, the court said. Hence, he would also be liable for the affairs of the party so as to attract Section 70(1) of the PMLA which imposes vicarious liability on a person managing the affairs of the company facing money-laundering charges.
But the court did concede that Kejriwal would have the right to counter this at the appropriate stage, which is when the trial begins, to establish he had no knowledge of the contraventions taking place or that he had exercised due diligence to prevent the alleged omissions.
‘Non-recovery of proceeds of crime of little importance’
Given that the statements of witnesses, including hawala operators and approvers, corroborated the ED’s investigation on AAP having received kickbacks from the South Group, which was spent on Goa elections, the absence or non-recovery of proceeds of crime in such circumstances can be of little value or importance, the judge said.
Money, she added, already stands spent, as per the statements of those on whom the money was spent and those who gave the money as well as those through it was sent.
Justice Sharma pointed out the top court’s judgement in Manish Sisodia’s bail order to say the excess profit earned by the distributors due to the increase in margin from 5 percent to 12 percent, as enumerated in the policy, was proceeds of crime.
She refused to accept Kejriwal’s submission that statements of witnesses cannot be relied upon, saying Section 50 under which they were recorded has been upheld by the court.
Since the ED has yet to file a formal complaint vis-à-vis Kejriwal in the case, Justice Sharma gave weightage to these statements to hold that a strong prima facie case of money laundering can be made out against the CM for now.
The ED has alleged the now-scrapped excise policy was formulated to provide monetary benefits to some AAP politicians and the accused “formed a cartel” with the “South Group” controlled by Telangana chief minister’s daughter K. Kavitha and YSRCP MP Magunta Srinivasulu Reddy among others. Kavitha is also in jail.
The group gave kickbacks of approximately Rs 100 crore to Vijay Nair (AAP media in-charge) in exchange for favours and undue benefits to them in the liquor business in Delhi, the agency has claimed.
(Edited by Tikli Basu)
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