A Delhi court on Friday (February 27) discharged former Chief Minister Arvind Kejriwal, former Deputy Chief Minister Manish Sisodia and 21 others accused in a Central Bureau of Investigation (CBI) case linked to the Delhi government’s 2021-22 excise policy.
The order brings to a close, at the trial stage, one branch of proceedings over a policy that began as a regulatory reform exercise. It would later lead to parallel investigations by central agencies, arrests of senior political leaders, and litigation across multiple courts.
Here is a recap of the liquor policy case, the investigation, the allegations against the AAP leadership, and how the discharge in the CBI case may affect the other case by the ED.
What was the Delhi Excise Policy?
The Delhi Excise Policy 2021–22, implemented in November 2021, marked a structural overhaul of liquor trade regulation in the National Capital Territory.
Earlier, retail sales operated through a mixed system of government-run and private outlets under controlled pricing. The new policy shifted to a fully privatised model. The Delhi government exited sales, the city was divided into licensed retail zones auctioned to private operators, and licensees were granted greater commercial flexibility in pricing and promotions (subject to regulatory oversight).
The policy also redesigned the supply chain. Manufacturers were barred from acting as wholesalers, and retailers were required to procure stock only from independent wholesalers — a measure intended to prevent vertical integration across production, distribution and retail.
The stated objectives were to increase excise revenue, standardise distribution across municipal wards, and curb illegal liquor sales through zonal licensing. The policy remained in force from November 2021 until July 2022, when it was withdrawn amid disputes over licensing conditions, shop locations and regulatory approvals.
So, how did the investigation begin?
The case arose out of a report submitted by Delhi Chief Secretary Naresh Kumar to Lieutenant Governor (LG) Vinai Kumar Saxena in July 2022. It flagged alleged procedural irregularities in the formulation and implementation of the policy, questioning whether certain decisions bypassed required approvals and resulted in undue benefits to private licensees.
The report said “arbitrary and unilateral decisions” taken by Sisodia in his capacity as Excise Minister had resulted in “financial losses to the exchequer” estimated at more than Rs 580 crore. Following the report, the LG recommended a CBI probe.
Two parallel investigations followed: CBI case under the Prevention of Corruption Act and the Indian Penal Code, examining alleged abuse of official position and criminal conspiracy, and an Enforcement Directorate (ED) investigation under the Prevention of Money Laundering Act (PMLA) into whether alleged illegal gains constituted proceeds of crime.
Under Indian law, money-laundering proceedings depend on the existence of a predicate offence that generates the illegal proceeds — in this case, the corruption allegations investigated by the CBI.
Notably, since money laundering proceedings under the PMLA are linked to an underlying scheduled offence, the discharge in the CBI case may significantly affect the ED’s case, though its continuation will depend on the status of the predicate allegations in further proceedings.
What did investigators allege?
Investigating agencies alleged that changes introduced during policy formulation were tailored to benefit specific liquor wholesalers and retailers.
The CBI invoked offences including criminal conspiracy, cheating, destruction of evidence, and provisions of the Prevention of Corruption Act relating to unlawful pecuniary advantage.
According to the prosecution, certain policy decisions departed from established administrative procedures, including revisions to licence fee structures and financial conditions after the tender process, relaxation of obligations granted to licensees, and approvals allegedly issued without following prescribed decision-making channels.
Investigators argued that these measures resulted in undue financial gains for private entities and losses to the public exchequer.
A key allegation concerned restructuring wholesale margins and eligibility criteria. The prosecution claimed that reduced turnover requirements and fixed distributor margins enabled selected entities to secure licences and recover alleged upfront payments through assured commercial returns.
The investigation also referred to a draft cabinet note containing adverse legal opinions that was allegedly not placed before decision-makers at the final approval stage.
AAP leaders denied wrongdoing, maintaining that the policy was a legitimate administrative reform approved through cabinet procedures.
What were the allegations against Sisodia and Kejriwal?
Sisodia, who held the excise portfolio, was described by investigators as a central decision-maker during policy formulation.
The prosecution alleged that policy drafts were modified during deliberations of the Group of Ministers, wholesale margins were fixed to financially benefit selected distributors, and eligibility criteria were altered to enable certain entities to qualify for licences.
Investigators examined communication records and financial transactions to establish links between policy decisions and alleged payments routed through intermediaries. Sisodia was arrested by the CBI in February 2023 — almost exactly three years ago — and later by the ED in the money-laundering case. His defence argued that decisions were taken collectively by the cabinet and that no evidence showed receipt of illegal gratification.
Kejriwal was not named in the original CBI FIR but was implicated during later stages of the investigation. The ED said in court that the AAP chief was the “kingpin and key conspirator of the Delhi excise scam”. Kejriwal, the ED said in its remand application, “was involved in the conspiracy…to favour certain persons and…in the demanding kickbacks from liquor businessmen in exchange of favours”.
He was also “involved in the use of proceeds of crime…in the Goa election campaign of the AAP of which he is the…ultimate decision maker”, the ED said.
The prosecution alleged that political leadership provided high-level direction linked to the policy’s implementation and that intermediaries sought financial contributions from sections of the liquor trade in exchange for favourable policy provisions.
Investigators further alleged that funds generated through the alleged conspiracy were routed through hawala channels and used for election-related expenditure.
Kejriwal denied the allegations, stating that investigators failed to produce direct evidence linking him to any bribe or monetary transaction. He was arrested by the ED in March 2024 and later by the CBI in June 2024 while already in custody.
AAP convenor and former Delhi Chief Minister Arvind Kejriwal and former Deputy CM Manish Sisodia on Feb 27, as the Rouse Avenue court in Delhi discharged both in the Delhi Excise policy case. (AAP/ANI Photo) 
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