An alleged Delhi excise policy scam in 2021-22 under the watch of former chief minister Arvind Kejriwal, shredded his Aam Aadmi Party’s reputation of probity, sent its top leadership to jail and smoked them out of power in last year's assembly elections. Even the Comptroller and Auditor General concurred with the CBI probing the scam, as its report in 2025 quantified the loss to the exchequer as ₹2,002.68 crore. However, a special Delhi court recently discharged all accused in the CBI's case against Kejriwal and 22 others, without allowing it to reach the trial stage. The court reasoned that it found no prima facie evidence of conspiracy, bribery or policy manipulation.
What the court found
On February 27, Special Judge Jitendra Singh held that the prosecution had failed to place before it any material which, even prima facie, suggested that the policy was manipulated, altered or engineered to confer any undue or unlawful benefit upon any private individual or the South Group.On the contrary, the court found the policy to be the outcome of a consultative and deliberative exercise, undertaken after engagement with relevant stakeholders and in adherence to prescribed legal procedure. The judge noted that although there was no statutory or constitutional requirement mandating the obtaining of suggestions from the Lieutenant Governor, the file notings reflect that such suggestions were nonetheless sought, examined and incorporated.
The judge laid down a clear principle: once a policy is shown to be the product of deliberation, institutional scrutiny and procedural compliance, any subsequent attempt to attribute criminality to its implementation becomes "wholly untenable". In the absence of a tainted policy or demonstrably unlawful implementation, the prosecution theory is reduced to conjecture. The court was equally damning about the investigation itself, describing it as an attempt to stitch together disparate fragments to create an impression of a vast conspiracy, unsupported by legally admissible material.
Key accused Manish Sisodia
Manish Sisodia held the Excise portfolio when the policy was framed, making him the prime suspect. The prosecution projected him as the controlling force behind the alleged conspiracy and the central decision-making authority in matters of policy design, approval and implementation. But the court found that the case against him was built entirely on inferences. No evidence connected him to conspiratorial meetings, clandestine deliberations or alleged cash transactions. No incriminating documents were recovered from him and no financial trail linked to any transfer of funds. The attempt to connect him to money movement through another accused was held to be inadmissible inference, not proof.
Case against Kejriwal
The prosecution alleged that Arvind Kejriwal, as the then chief minister, occupied the apex position in the criminal conspiracy. Yet his name emerged for the first time only in the fourth supplementary chargesheet. The CBI sought to connect him primarily on the basis of a single sentence in the statement of witness Magunta Sreenivasulu Reddy, recorded on January 3, 2024 — to the effect that Kejriwal had told Reddy that co-accused K Kavitha would contact him.
The judge noted that this statement was allegedly made in the presence of 10-12 people, none of whom were examined or cited as witnesses. No document, file noting, electronic communication, financial transaction or digital evidence was produced to connect Kejriwal with any alleged policy manipulation or illegal gratification. Strikingly, Dinesh Arora, the prosecution's approver who claimed knowledge of the conspiracy from start to finish, had not attributed any role to Kejriwal, even as he assigned specific roles to several other accused.
The judge's remarks here were among the most pointed in the entire order. "Arrest and prosecution in such circumstances have implications beyond the individual. Public confidence in institutions is inevitably affected. If it is later found that such prosecution was unsupported by admissible material, the erosion of public trust is substantial," he observed.
Findings against K Kavitha
K Kavitha, daughter of former Telangana chief minister K Chandrasekar Rao, was alleged to have served as a political and strategic conduit for private liquor interests — acting in concert with members of the South Group and co-accused Vijay Nair, the AAP's former communication in-charge. The chargesheet alleged her involvement in facilitating an up-front payment of about ₹7,100 crore for the incorporation of favourable provisions in the policy, an indirect stake in wholesaler Indospirits through proxies, and proceeds of illegal gratification camouflaged as legitimate transactions, including a purported land deal of ₹714 crore and a CSR donation routed through an NGO linked to her.
The court, however, found the allegations to rest primarily on the statements of two witnesses, one of whom was an approver. The judge observed that when both witnesses, and others forming part of the same alleged chain, are relied upon to corroborate each other, the court must look for something outside that circle — independent documentary proof, a financial trail, electronic records. None existed, he argued.
"The fragility becomes more pronounced when each link is examined separately — date, place, mode of transfer, route of movement — whereupon the gaps become visible. The route of money is unclear. The timing does not align. The alleged recoupment precedes the very profits from which it is said to arise," the judge noted, while discharging her.
The approver problem
The court trained particular scrutiny on the manner in which the statement of approver Dinesh Arora came to be recorded. After his statement before a magistrate under Section 164 of the CrPC — on the basis of which he was granted pardon — his statement was recorded again under Section 161 on at least four further occasions, over nearly one-and-a-half years, until the last supplementary chargesheet was filed.
The court asked a pointed question: since pardon is granted on the premise of a "full, voluntary, and truthful disclosure of all material facts", why was the approver subsequently asked to repeatedly refine, expand or reshape the prosecution case? What was projected as complete disclosure had devolved into a series of incomplete and evolving versions.
What caused the court particular disquiet was an allegation introduced in the approver's last statement, recorded on October 17, 2023, about the delivery of Rs 1 crore to one Sarvesh Mishra, acting on behalf of AAP leader Sanjay Singh. Singh's name did not figure in the main chargesheet or in any of the four supplementary chargesheets. There was no allegation anywhere attributing any role to him in the formulation or implementation of the policy.
The court was unsparing: "The approver appears to have been projected as an all-encompassing source for the prosecution narrative, such that on one occasion he introduces an entirely new allegation, and on another, seeks to supply explanations to fill links that are otherwise conspicuously absent." If such practice were permitted without judicial scrutiny, the court warned, it would effectively normalise a method whereby an agency, after securing pardon on the premise of full disclosure, continues to re-record approver statements to fill gaps, improve the narrative, or rope in additional accused.
'South Group' label
The court also objected to the CBI's use of the term ‘South Group’ to describe a set of private liquor interests, noting that it found no foundation in law, corresponded to no legally cognisable classification and was alien to the statutory framework governing criminal liability. Notably, the prosecution narrative spoke of no ‘North Group’ or comparable categorisation. "Identity-based labelling, whether by ethnicity, nationality or regional origin, cannot be employed as a prosecutorial shorthand where such identity is irrelevant to the offence. Such labelling is not a mere irregularity of expression; it constitutes a constitutional infirmity capable of undermining the fairness of the proceedings themselves," the judge said.