Why did Supreme Court dismiss Manish Sisodia’s bail plea?
The complaint also stated that there was no “logical correlation between the license fee increase and the profit margin increase” and that the excess profit margin could have been passed on to the consumers by reducing the retail price.
The Delhi government told the court that the 12% distribution fee was necessary to cover the higher level of investment required, setting up of quality checking system, etc as the license fee was increased from Rs 5 lakh to Rs 5 crore. It is on the basis of the increased profits earned by wholesalers because of the now-scrapped Delhi Excise Policy that the Supreme Court denied bail to Delhi’s former Deputy Chief Minister Manish Sisodia.
In denying bail to Sisodia, the apex court Monday said that the one “clear ground” in the Prevention of Money Laundering Act that was “tentatively supported by material and evidence” was the Rs. 338 crore “excess profit” earned by the wholesalers due to changes made in the policy.
Among the big changes in the policy were the exit of the government from the retail side of the business, the increase in the commission to wholesalers and redistribution of liquor shops to ensure better coverage.
Another modification – allegedly made part of the policy at the behest of outsiders who sought to reap benefits from it – was in regards to the creation of the post of Director, Wholesale Operation which the Cabinet note in regards to the policy was modified to include as per Whatsapp chats retrieved from the phone of one of the accused in the case.
According to allegations made by ED, wholesale distributors earned Rs 581 crore fixed fee because the commission (distribution fee) was increased from 5% in the previous policy to 12% in the newly-scrapped policy that is under investigation. This, according to the CBI and Enforcement Directorate’s submissions, Sisodia was “unable to provide any rational explanation for”. One of the other contentions made by the agencies was the reduction of VAT to a “mere 1%”.
The Delhi government told the court that the 12% distribution fee was necessary to cover the higher level of investment required, setting up of quality checking system, etc as the license fee was increased from Rs 5 lakh to Rs 5 crore.
The license fee earned by the government from wholesalers was Rs 70 crore. “The difference between the 12% minus 5% of the wholesale profit margin plus Rs 70 crore, it is submitted, would constitute proceeds of crime, an offence punishable under the PML Act. The proceeds of crime were acquired, used and were in possession of the wholesale distributors who have unlawfully benefitted from illegal gain at the expense of the government exchequer and the consumers/buyers,” the ED told the court.
ED’s complaint, filed in May this year, said, “One of the reasons given by Manish Sisodia is to compensate the wholesaler for increased license fee from Rs 5 lakh to Rs. 5 crore. During this policy period, 14 LI (wholesale) licences were given by the Excise Department, by raising the license fee… to Rs. 5 crore in the entire period of operation of the Delhi Excise Policy 2021- 22, the government has earned Rs. 75.16 Cr from the license fee… On the other hand the excess profit earned by the wholesalers during this period is to the tune of Rs. 338 Cr. (7% additional profit earned due to increase from 5% to 12%).”
The complaint also stated that there was no “logical correlation between the license fee increase and the profit margin increase” and that the excess profit margin could have been passed on to the consumers by reducing the retail price.
“Contrary to the claim that the policy was meant to benefit the public or the exchequer, it was rather a conspiracy to ensure massive illegal gains to a select few private players/individuals/entities,” the ED complaint said.
The ED also clarified that not all distributors may have committed an offence under PMLA and that the amount may have to be “watered down/lowered” to sales made by “delinquent” wholesalers.
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