All you need to know about Delhi Excise Policy Scam

By Md. Arif Imam

Published on: December 31, 2023 at 00:10 IST

New Delhi finds itself embroiled in a storm of controversy as the Delhi Excise Policy ‘scam’ takes center stage, capturing headlines and public attention alike.

This article delves into the controversy surrounding the Delhi Excise Policy. It examines the policy’s management issues, the involvement of top investigative agencies, the reasons behind the policy’s cancellation, and the legal challenges faced by prominent members of the Aam Aadmi Party (AAP). Key events include the arrest of Deputy Chief Minister Manish Sisodia and the denial of bail to AAP MP Sanjay Singh, highlighting the broader legal and political implications of the scandal.

What is the Delhi Excise Policy?

The Delhi Excise Policy 2021-22, introduced by the Aam Aadmi Party (AAP) government on November 17, 2021, marked a significant shift in Delhi’s liquor trade. Aiming to enhance customer experience, combat illicit liquor, and boost government revenue, this policy sought to revolutionize Delhi’s alcohol retail sector. The policy’s key initiative was to transition from 716 government-run liquor shops to approximately 850 private outlets by November 17, 2021. This move intended to create a customer-focused retail environment, reduce illicit liquor circulation, and foster a more vibrant market.

Key aspects of the policy included:

1. Enhanced Retail Experience: Transition to private shops promised a broader selection of brands, competitive pricing, and modern amenities like walk-in facilities and temperature-controlled environments.
2. To make an end on Illicit Liquor: The policy aimed to implement stricter licensing, mandatory quality checks, and surveillance to curb the spread of spurious liquor.
3. Increased Revenue for Public Welfare: The shift to private licensing was expected to significantly increase excise revenue, which was earmarked for sectors like healthcare and education.
4. Zone division: Under the new liquor policy, the city was divided into 32 distinct zones. Firms were invited to place bids for these zones, with the bidding process structured on a zone-by-zone basis instead of issuing individual licenses.
5. Age relaxation: The new policy also included a provision for the home delivery of liquor. Additionally, it suggested reducing the drinking age from 25 to 21.

However, the policy’s implementation faced challenges due to Delhi’s unique administrative setup under the National Capital Territory (NCT) of Delhi Act, 1991. The complex dynamics between the central and Delhi governments posed hurdles, especially in licensing and regulatory aspects. Despite its progressive goals, the policy also raised concerns about transparency and potential corruption. The move towards privatization, with limited clarity in the licensing process, sparked belief of favouritism. Questions about the selection criteria for private players, the influence of political connections, and fair competition emerged, eventually leading to controversy and casting doubt on the policy’s ambitious objectives.

Background of the Controversy: Delhi Excise Policy scam

The Delhi Excise Policy scam gradually evolved into a significant controversy that captivated India, involving allegations of political misconduct and financial corruption. This issue centred around the Excise Policy of 2021-22, implemented by the Delhi government from November 2021. Soon after its introduction, rumours and allegations of corrupt practices began to surface, particularly pointing towards preferential treatment in awarding liquor licenses.

Key figures in these allegations included Manish Sisodia, the Deputy Chief Minister and Excise Minister of Delhi, and Amit Arora, a noted liquor businessman. They were accused of showing bias in granting licenses to certain companies and individuals, which were allegedly close to the AAP (Aam Aadmi Party) government.

The BJP (Bharatiya Janata Party), a major political opponent of the AAP, saw an opportunity in these allegations to challenge the AAP government. They escalated the issue by highlighting these alleged irregularities through various channels such as media briefings, public speeches, and legislative questioning in the Delhi Assembly. Their accusations focused on the AAP government’s alleged procedural mistakes, lack of transparency in the licensing process, and potential financial wrongdoings.

This strategic approach by the BJP put the AAP and its officials, especially Manish Sisodia, under intense scrutiny and pressure to respond to these growing allegations. The controversy thus not only stirred public outrage but also became a significant point of political contention between the AAP and BJP.

What does the Delhi Chief Secretary’s report says?

Prior to the implementation of the policy, it had to undergo scrutiny by Naresh Kumar, the Chief Secretary (CS) of Delhi. During this examination, the CS reportedly identified procedural lapses and irregularities in the new policy.

On July 8, 2022, the release of the Delhi Chief Secretary’s report escalated the Delhi Excise Policy controversy, turning it into a major national scam. This report meticulously pointed out several procedural and financial problems related to the policy, casting doubt on the operations of the Aam Aadmi Party (AAP) government.

The report highlighted significant lapses in how liquor licenses were awarded. It pointed out that mandatory committees were bypassed, the criteria for eligibility were changed, and extensions were given without following the proper procedures. These issues raised serious concerns about whether the process was transparent and fair.

More troubling signs were that certain companies and individuals, possibly connected to influential people, received special treatment in licensing and relaxed conditions. This suggested potential favouritism and corruption.

The report also suggested that there might have been manipulation in the tender process, including possible bid rigging and favouritism. This deepened doubts about the integrity of how contracts were awarded. Moreover, the report pointed out financial inconsistencies, such as differences between expected revenues and the actual money collected, raising suspicions about possible financial losses and mismanagement. Politically, this report gave the Bharatiya Janata Party (BJP) more point of arguments against the AAP, providing them with concrete evidence to support their allegation of corruption and poor management. This weakened the AAP’s ability to defend itself and increased public doubts about their governance.

The significance of the Chief Secretary’s report was in prompting the Lieutenant Governor to recommend a Central Bureau of Investigation (CBI) inquiry into the policy. This moved the issue from being just political allegations to a formal legal investigation, marking a major escalation in the controversy. The report had a severe impact on the AAP’s reputation for clean governance. The emerging claims of favouritism and corruption cast a long, dark shadow over the party, raising serious questions about their leadership and ethical standards.

In the public eye, the report brought more attention and scrutiny to the Excise Policy. Media outlets extensively covered these developments, leading to public debates and a growing demand for accountability. This heightened media focus & significantly reduced public trust in the government’s ability to implement policies fairly and efficiently.

The CBI and ED’s Investigation

The involvement of the CBI and ED in the Delhi Excise Policy controversy marked a significant escalation, transforming the issue from a political dispute into a high-stakes national scam.

The CBI Investigation:

The Central Bureau of Investigation (CBI) launched a probe on July 22, 2022, following a complaint from the Lieutenant Governor of Delhi, VK Saxena. He alleged that the Delhi Excise Policy 2021-22 favoured certain liquor entities, leading to revenue losses for the Delhi government. This action was prompted by the Delhi Chief Secretary’s report, which found prima facie violations of the Government of National Capital Territory of Delhi (GNCTD) Act 1991, Transaction of Business Rules 1993, Delhi Excise Act 2009, and Delhi Excise Rules 2010. In light of these findings, Lieutenant Governor VK Saxena ordered an investigation into the policy and recommended a CBI probe into the alleged violations and other irregularities in the implementation of the excise policy.

The accused, including Deputy Chief Minister Manish Sisodia, are alleged to have engaged in actions such as extending undue favors to licensees, granting waivers or reductions in license fees, and improperly extending L-1 licenses without proper approval.

The allegations & timeline of event by CBI

• The CBI is probing allegations that the liquor policy gave undue advantages to private retailers.
• The CBI alleges that the revised excise policy significantly reduced the security deposit and bank guarantee requirements for obtaining liquor licenses, favouring large players who could easily comply while potentially discouraging smaller businesses.
• The CBI also says that corruption in the matter goes to the “highest levels” in Kejriwal’s government.
• It has claimed crores in kickbacks were paid for favours in the policy and the funds were used by the AAP for its election campaign in Goa via hawala channel.^[1]

The Timeline of Event

• On August 17, 2022: The CBI registers a case against 15 accused, including Delhi Deputy Chief Minister Manish Sisodia, in connection with alleged irregularities in the policy’s implementation and formulation. The CBI alleged that irregularities were committed, including modifications in Excise Policy, extending undue favours to the licensees, waiver/reduction in licence fee, the extension of L-1 license without approval, among other charges.
• On August 19 2022: The CBI conducts searches at Sisodia’s residence.
• On September 27, 2022: The Aam Aadmi Party communication and media in-charge Vijay Nair was arrested by the CBI in connection with an excise policy case. This arrest marked the first by the CBI in this particular case. He had also been raided by the ED. Sources indicated that he was considered one of the key conspirators in the excise policy case.^[2]
• October 17, 2022: Manish Sisodia interrogated by the CBI for eight hours.
• On December 15, 2022: Delhi Court acknowledged a charge sheet submitted by the CBI against seven individuals, stating that “sufficient grounds have been established for further proceedings” against them
• February 18, 2023: CBI summons Sisodia, who appealed before the agency to be called by month-end as he was busy in budget preparations.
• On February 26, 2023: Manish Sisodia was arrested in this case by the Central Bureau of Investigation.
• February 27, 2023: Delhi’s Rouse Avenue Court sends Sisodia to five-day CBI custody.
• On March 6, 2023: Delhi Court ordered Manish Sisodia to be held in judicial custody for 14 days, until March 20. Special Judge M.K. Nagpal granted Sisodia’s request to have a copy of the Bhagavad Gita, spectacles, a diary, and a pen with him during this time. Additionally, the judge directed the jail superintendent to consider Sisodia’s appeal to be placed in a Vipassana (meditation) cell.

The ED’s Investigation

The Enforcement Directorate, which was conducting a money laundering probe based on the CBI case, has alleged that a part of the funds was diverted via “hawala” channels for the AAP’s poll campaign in the 2022 Goa Assembly election. Cash payments to the tune of ₹70 lakh were made to the volunteers who were part of the survey teams.

Following the CBI’s FIR, the ED asserted that the alleged proceeds of crime required investigation to establish the modus operandi.

• Investigation Details: The ED alleged that the “scam” involved irregularities in the wholesale liquor business, margin-fixing, and receiving kickbacks. It claimed that the policy was designed with “deliberate loopholes” to benefit key figures.
• Financial Transactions: The ED also alleged that individuals, acting as intermediaries, received substantial sums from a group, allowing them access to various businesses.
• On August 22, 2022: ED seeks details of the case from the CBI and files money laundering case in the excise policy.
• On 6& 16 September, 2022: ED carried out raid at 35 locations across the country, including private individuals, their premises and entities.
• On September 19 2022: AAP MLA Durgesh Pathak was summoned by Ed and questioned for 10 hours in the case
• On February 2, 2023: the Enforcement Directorate, in its charge sheet, alleged that Delhi’s Chief Minister Kejriwal instructed Sameer Mahendru to place his trust in Vijay Nair during a video call.
• On May 24, 2023: The Enforcement Directorate conducted searches at the premises of AAP MP Sanjay Singh in New Delhi, as well as those of two of his associates, Ajit Tyagi and Sarvesh Mishra^[3].
• On October 24, 2023: The Enforcement Directorate carried out raids at the residence of AAP leader Sanjay Singh. This was followed by searches at the locations of his close aides. After a day-long interrogation by ED officials at his Delhi home, Sanjay Singh was taken into custody.

Combined Impact:

• National Media Hype: The involvement of high-profile agencies like the CBI and ED drew widespread media attention, propelling the Delhi Excise Policy controversy onto the national stage. This generated significant public awareness and debate, ensuring the issue wouldn’t fade into obscurity.
• Impact of CBI & ED investigation on the AAP image: The investigation of these agencies dealt another blow to the AAP government’s image. It further deepened public disillusionment and suspicion, creating a challenging political environment for them to defend their position.
• Uncertain Future and Ongoing investigation: The ongoing investigations by the CBI and ED continue to hold the nation’s attention, with the potential for further revelations and arrests. This ensures the Delhi Excise Policy scam remains a prominent and volatile chapter in Indian politics for the foreseeable future.

Scrap of policy

The AAP government’s decision to scrap the Delhi Excise Policy on July 22, 2022, significantly fueled the ongoing controversy surrounding it. Initially intended as a strategic move to mitigate damage and regain control, this decision unexpectedly worsen the situation, leading to several unintended and far-reaching consequences.

The primary motivations behind scrapping the policy seemed clear: damage control, appeasing public sentiment, and containing investigations. The increasing pressure from the opposition, intense media scrutiny, and the emerging threat of investigations by agencies like the CBI and ED, the AAP government likely saw the withdrawal of the policy as a way to limit the fallout. Additionally, with public trust decreasing and suspicion growing, returning to the old system appeared to be a method to calm public anxieties and show responsiveness to their concerns. There might also have been a hope that by scrapping the policy, ongoing investigations would lose relevance or momentum.

However, this move led to several unforeseen and adverse outcomes. Opponents, particularly the BJP, interpreted the scrapping as an implicit admission of guilt by the AAP. They argued that the abandonment of what was claimed to be a well-intentioned policy indicated underlying wrongdoing. Far from calming the public, this action stoked further outrage, with many viewing it as a desperate attempt to cover up alleged malpractices and evade accountability. Politically, this decision undermined AAP’s standing, portraying them as indecisive and non-transparent, and seemingly succumbing to external pressures, thereby reinforcing the opposition’s narrative.

The scrapping of the Delhi Excise Policy had implications that went well beyond the immediate political headlines. It lent credibility to the opposition’s allegations of irregularities within the policy, solidifying their claims and potentially indicating a larger scandal. The ongoing investigations by the CBI and ED were not deterred by this policy reversal; instead, the action raised additional questions and ensured that the controversy remained in the spotlight. This series of events – from the introduction of the policy to its abrupt withdrawal – significantly eroded public trust in the government’s capacity to manage policy reforms effectively and transparently.

Prosecution of Deputy CM Manish Sisodia

The arrest of Manish Sisodia on February 26, 2023, significantly escalated the Delhi Excise Policy controversy, propelling it from a localized issue into a national scandal with wide-reaching implications. Sisodia’s role as a key figure in the Aam Aadmi Party (AAP) and as a trusted lieutenant of Chief Minister Arvind Kejriwal meant his arrest not only shocked the party but also altered its internal dynamics and intensified external scrutiny.

This development swiftly captured national attention, transcending its previous confines of Delhi’s political discussions. The mainstream media, public, and political observers across India became deeply engaged with the unfolding events, marking a shift from a simmering issue to a prominent national concern.

The AAP faced immediate challenges in responding to Sisodia’s arrest. Internally, the party had to manage shifting power dynamics and external pressure for a coherent response, while publicly defending Sisodia against the backdrop of serious accusations. This situation also revealed cracks within the party, as members grappled with the potential impact on their public image and political future.

Public reaction was mixed, with many expressing outrage and disillusionment, particularly given Sisodia’s reputation as an efficient administrator. These sentiments fueled demands for a thorough investigation and greater transparency, leading to protests and heightened public discourse on the issue. Politically, the BJP seized the opportunity to attack the AAP, using the arrest to challenge its moral standing and portray it as corrupt. This intensified the existing political rivalry, marked by a series of accusations and counter-accusations.

The legal process following Sisodia’s arrest added complexity and uncertainty. His continued custody and the ongoing CBI investigation kept the situation dynamic, with potential for further revelations and political consequences. Overall, the incident underscored the vulnerability of political systems to corruption and the importance of robust checks and balances. It highlighted the crucial role of the media and public engagement in promoting transparency and accountability in governance.

As the situation continues to evolve, the focus remains on the pursuit of truth and justice, emphasizing the need for unbiased investigations and fair trials in the quest for ethical governance and the restoration of public trust. On July 6, 2023, Manish Sisodia approached the Supreme Court seeking bail in connection with the liquor policy ‘scam’ case. However, on October 30, 2023, the Supreme Court dismissed his bail application, citing the tentative establishment of a 338-crore transfer as a key reason for denying bail.

The Supreme Court on Wednesday (December 13, 2023) dismissed a petition filed by former Delhi Deputy Chief Minister Manish Sisodia seeking a review of its October 30 judgment refusing to grant bail.^[4] The Court rejected the review petition saying that no grounds for review were made out. “We have carefully perused review petitions as also the grounds in support thereof. In our opinion, no case for review of the judgment dated 30.10.2023 is made out,” the Supreme Court said in its order.^[5]

Prosecution of Sanjay Singh

Sanjay Singh is a Rajya Sabha MP from the Aam Aadmi Party (AAP). He played a important role in Delhi’s Politics especially in party matters and media communications. In the Delhi liquor scam case, his alleged involvement stems from his association with certain individuals and companies accused of irregularities in the policy’s implementation.

The rejection of AAP MP Sanjay Singh’s bail application by a Delhi Rouse Avenue Court on December 22, 2023, in connection with the alleged Delhi liquor scam, has stirred a significant controversy in India’s political and judicial circles. This development, rooted in the complexities of the legal system and the intricacies of political rivalry, has broad implications for both the judicial process and the politics.

Sanjay Singh’s involvement in the controversy originated from his alleged role in the now-defunct 2021-2022 excise policy of the Delhi government. The policy, accused of unduly favouring certain liquor businesses for monetary gains, led to the Enforcement Directorate (ED) arresting Singh in October. Singh, maintaining his innocence, labelled the charges as politically motivated.

The Enforcement Directorate (ED) had opposed Sanjay Singh‘s application, asserting the probe was still underway and, if released on bail, he could hamper the investigation, tamper with evidence, and influence the witnesses.^[6]

In Court, Singh’s defence team challenged the ED’s allegations, pointing out inconsistencies in witness accounts and questioning the strength of the evidence. They also emphasized Singh’s responsibilities as a sitting Member of Parliament, arguing for his need to perform legislative duties and thus requiring bail. However, Judge M.K. Nagpal’s decision to deny bail was grounded in the gravity of the allegations and the ongoing nature of the investigation. The judge expressed concerns about the potential risk of Singh tampering with evidence or influencing witnesses if released. He found the ED’s evidence, including digital and financial records, substantial enough to justify continued detention.

The Court’s decision provoked varied reactions. AAP condemned the ruling, decrying it as part of a politically motivated “witch hunt” and questioning the impartiality of the judicial process. AAP supporters held protests, echoing these sentiments. In contrast, the BJP viewed the Court’s decision as a validation of their longstanding allegations against the AAP-led Delhi government, advocating for a more in-depth investigation into the scam.

Beyond party politics, this raises important questions about the Indian judicial system, particularly regarding the balance between granting bail and the imperatives of an investigation in high-profile cases. Legal experts and commentators have highlighted the necessity of ensuring a fair, transparent, and impartial judicial process, one that remains unaffected by political pressures or perceptions. The denial of Sanjay Singh’s bail, therefore, not only affects the individuals and parties directly involved but also contributes to the broader discourse on the nature of justice and political accountability in India.

Conclusion

The controversy over the Delhi Excise Policy has had a big effect on politics and law in India. The involvement of important people like Manish Sisodia and AAP MP Sanjay Singh, and the attention from top investigation agencies, show how serious the issue is.

The crux of the matter revolves around accusations of extending undue favors to licensees, granting waivers or reductions in license fees, and improperly extending L-1 licenses without due approval—all in exchange for financial kickbacks. The CBI claims in its FIR that a liquor trader paid a staggering Rs 1 crore to a company associated with Delhi’s Deputy Chief Minister.

The AAP’s decision to end the policy and the legal steps that followed, like Sisodia’s arrest and the Court’s decision not to let Singh out on bail, have shown how hard it is to manage government policies and make sure they are fair.

This scandal has not only damaged the AAP’s reputation but also brought up important questions about how transparent and fair the Indian legal system is, especially in big political cases. As more happens in this case, it remains a key example of the challenges in keeping government honest and making sure the public can trust their leaders.

1. explained-all-you-need-to-know-about-the-delhi-liquor-policy-case-↑
2. cbi-arrests-another-accused-in-delhi-excise-policy-case
3. cbi-arrests-another-accused-in-delhi-excise-policy-case
4. supreme-court-manish-sisodia-review-petition-bail-delhi-liquor-policy-case
5. delhi-excise-policy-scam-sc-rejects-review-petition-filed-by-manish-sisodia-seeking-bail-
6. delhi-excise-policy-scam-case-court-rejects-aap-mp-sanjay-singhs-bail-plea↑