ON FEBRUARY 27, 2026, the Court of Shri Jitendra Singh, Special Judge (PC Act) (CBI), (MP/MLAs Cases), Rouse Avenue Court, passed an order discharging all 23 accused persons in the Delhi Excise Policy scam case, including Delhi’s former chief minister Arvind Kejriwal. The case was under CBI’s investigation, which had filed five chargesheets, including a main chargesheet and four supplementary chargesheets.
However, the Special Judge found that the evidence adduced in the chargesheets did not inspire “grave suspicion” against the accused, hence failing to establish a prima facie case.
‘If there is suspicion, but not grave suspicion, Court is empowered to discharge accused’
Relying on the law laid by the Supreme Court in Tuhin Kumar Bishwas @ Bumba v. State of West Bengal (2025) the Special Judge emphasised that a strong suspicion must be based on material capable of becoming evidence, absent which an accused can be discharged.
The order was passed at the stage of framing charges under Sections 227/228 of the erstwhile Criminal Procedure Code. While Section 228 of the Code provided the procedure for the “framing of charges”, Section 227 provided for “discharge”. The Section states that if, upon considering the record of the case and the evidence presented therewith, and after hearing the accused and the prosecution, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasoning for doing so.
To put this in context, the hearing at this stage is only a preliminary hearing, and the arguments presented by the parties are merely opening arguments. The court is, at this stage, not required to undertake a detailed evaluation of the evidence or to test its probative value. The occasion for that comes later, when the trial begins. At this stage, the court is only required to determine whether a prima facie case to proceed with the trial is made out, based on the material presented before it.
The case was under CBI’s investigation, which had filed four chargesheets, including a main chargesheet and four supplementary chargesheets.
The Special Judge has stated that since cross-examination and defence rebuttal are not part of this stage, the Court proceeds on the premise that the prosecution material is prima facie true and uncontroverted. However, while following Sajjan Kumar v. Bureau of Investigation (2010), the leading judgment of the Supreme Court on the scope of Sections 227 and 228, the Judge clarified that the law did not require the Court to act as merely a post office or a mouthpiece of the prosecution. Rather, it required it to apply its judicial mind to the record to assess whether the material, taken at face value, discloses the essential ingredients of the alleged offence and raise grave suspicion, as distinct from a mere suspicion.
Citing other precedents of the Supreme Court, the Judge further clarified that “ground” under Section 227 of the CrPC is not a ground for conviction, but rather a ground for putting the accused on trial. And if two views are possible, one of which gives rise only to suspicion rather than grave suspicion, the Court is empowered to discharge the accused without proceeding with the trial.
To do so, the Court has to sift the material produced by the prosecution to determine whether there is sufficient ground to proceed with the trial. If the proposed evidence, even if fully accepted, cannot show the commission of the offence, then it is sufficient ground not to proceed with the trial (see M.E. Shivalingamurthy v. CBI, Bengaluru (2020)).
‘No criminal liability for bonafide policy decisions’
The Court has held that a substantial part of the prosecution evidence relies on internal filings and policy deliberations, which do not constitute incriminating material nor do they indicate dishonest intention or an overt criminal act.
“The mere fact that a policy may not have yielded the expected result cannot, in the absence of substantive evidence, be elevated to criminal culpability,” the Court has held, while further noting that criminal law cannot be invoked to punish administrative actions which were confined to policy formulation and implementation undertaken in the ordinary course of governance. It has also opined that private individuals making lawful profits under such policies is normal.
Distinguishing between a critique of policy wisdom or an administrative lapse masked as an allegation and an evidence-backed allegation indicating corruption or conspiracy, the Court has held that economic and administrative decisions taken in good faith cannot be criminalised in the absence of clear prima facie material disclosing mala fides, quid pro quo, or abuse of office.
From the perspective of criminal liability, the Court has divided policy formulation cases into three broad categories: first, where the allegations pertain to a violation of the statutory mandate or procedure; second, where formal procedural compliance is used to mask mala fide intent; and third, involving bona fide policy decisions unaccompanied by evidence of corruption.
While the Court noted that the criminal liability will arise in the first category only when the prosecution prima facie demonstrates deliberate and conscious bypassing of mandatory procedure, along with material indicating dishonest intention, and in the second category, when the cogent and independent material placed on record prima facie demonstrates a conscious design to confer undue advantage upon specific private parties, it has held that in the third, which in its opinion is the most common category, the criminal liability will not arise since such policy decisions are protected as bona fide exercise of administrative discretion.
How did the Court assess prosecution’s evidence on bribe, kickback allegations?
The Court then went on to deal with allegations of bribes, upfront payments, or kickbacks. It held that in such cases, the prosecution material must disclose the following four things:
A prima facie demand/arrangement/payment and its linkage to an official act;
A discernible quid pro quo;
A nexus between the alleged gratification and the policy clauses or file outcomes; and
Material connecting the accused to such influence, beyond assumptions arising from the existence of file notings or the eventual policy outcome.
The Court held that while file movement and policy documentation may provide context, they cannot substitute the requirement of prima facie material indicating corrupt intent.
Although the Court accepted that criminal conspiracy is more generally inferred from surrounding circumstances and rarely by direct evidence, it, however, held that the difficulty in proving conspiracy does not dilute the threshold. The Court reiterated that rather than mere conjecture or suspicion, the material on record should inspire confidence in the existence of a “grave suspicion” of a conscious agreement to commit an illegal act or to achieve a lawful object by illegal means.
The Court held that while file movement and policy documentation may provide context, they cannot substitute the requirement of prima facie material indicating corrupt intent.
Placing reliance on the judgment of the Supreme Court in State of Karnataka v. L. Muniswamy & Ors (1977), the Court observed that it has to guard itself against being carried away by the prosecution’s tightly knit presentation alone, which is often arranged to support a predetermined conclusion, and must instead test whether the record discloses a consistent and legally sustainable theory.
Discussing further, the Court has held that if the prosecution has sought to rely substantially on circumstantial evidence, the settled principles governing such evidence must be applied, which entails:
The circumstances relied upon must be fully established;
They must be consistent only with the guilt of the accused;
They must exclude every reasonable hypothesis of innocence; and
The chain must be so complete as to leave no reasonable ground for a conclusion consistent with innocence.
The Court held that the proposition that conspiracies are “hatched in secrecy” cannot be stretched to justify diluting the standards in policy-related prosecutions where the process is typically documented and traceable. It further held that to avoid “secrecy” from becoming a rhetorical explanation rather than a legally sustainable inference, the prosecution must show how institutional procedure was subverted pursuant to a prior meeting of minds.
To bring home this proposition, the Court held that the prosecution material must, at the prima facie threshold, disclose:
The identity of the alleged conspirators – who agreed with whom;
The content of the alleged agreement – what precise illegal act or means was agreed upon;
The temporal and causal linkage – when such agreement was formed and how subsequent acts were in furtherance thereof; and
The exclusion of innocent hypotheses – how the circumstances relied upon are incompatible with lawful, neutral, or institutional explanations.
‘Accomplice evidence is inherently unsafe’
The Court has observed that a distinguishing feature of the charges was the overly strong reliance placed upon the uncorroborated statements of the approvers (co-accused who becomes a public witness in exchange for pardon) and the co-accused, recorded under Section 306(4) read with Section 164 of CrPC, to inculpate individuals and establish the prosecution’s narrative.
The allegations against Kejriwal and Kalvakuntla Kavitha, a former Member of Legislative Council from Telangana-based Bharat Rashtra Samiti also arrested in the case, for instance, were almost entirely built on the statements of Magunta Sreenivasulu Reddy, an MP with Telugu Desam Party, and approvers Raghav Magunta and Dinesh Arora, all of whom were involved in the impugned transactions. Similarly, the key charges against Narender Singh, a former Excise Department official accused of overlooking procedural violations, and Vijay Nair, AAP’s communications-in-charge, stemmed from Arora’s statements.
The Court has observed that, based on judicial experience, accomplice evidence has consistently been regarded as inherently unsafe. To support this contention, the Court has relied on the judgment of the Supreme Court in Ravinder Singh v. State of Haryana (1975) where the Supreme Court has characterised an approver as “a most unworthy friend, if at all”, and emphasised that a witness who has bargained for immunity must affirmatively establish his credibility.
For this purpose, the Supreme Court has laid down the two-fold test: first, the approver’s statement must implicate himself and present a natural, coherent, and probable account of events; secondly, once this threshold is crossed, his statement implicating others must inspire reasonable assurance of guilt.
Section 114, Illustration (b) of the Indian Evidence Act, recognises that an accomplice is ordinarily unworthy of credit unless corroborated in material particulars. The Court has noted that even though Section 133 of the Act declares that a conviction founded on an uncorroborated accomplice statement is not illegal, Illustration (b) to Section 114 governs the manner in which such evidence is to be appreciated.
To this effect, the Court has relied on the judgment of the Supreme Court in Bhiva Doulu Patil v. State of Maharashtra (1963), which holds that Section 133 lays down a rule of law, whereas Illustration (b) embodies a rule of prudence. The Court held that corroboration, therefore, is not a matter of indulgence but a practical necessity.
The Court has also expressed concern about the re-recording of statements of co-accused revealing new allegations under Section 161 of the Code after judicial confessions under Section 164 had already been recorded. Citing judgments of the Delhi High Court in Asit Mukherjee v. State (2024), and of the Allahabad High Court in Dharmendra and Ors v. State of U.P (Criminal Misc Bail Application Nos 31695, 20006 and 30288 of 2021 passed on 01.10.2021), the Court said that such a practice ‘cannot be encouraged’.
‘Excise Policy case stands discredited in its entirety’
Analysing the material placed on record, including the statements of nearly 300 prosecution witnesses, including that of the approvers, and deconstructing the chain of circumstantial evidence in the light of the law set straight in the above discussion, the Court has held that the prosecution failed to place any material indicating that the impugned excise policy was “manipulated, altered, or engineered” to confer any unlawful advantage upon the South Group or, in fact, any other private individual.
It has further held that the Excise Policy case, as sought to be projected by the CBI, is “wholly unable to survive judicial scrutiny and stands discredited in its entirety”.
To the contrary, the Court has noted that the policy was consistent with the Delhi Government’s purported objective of tackling monopolisation in the liquor market. It was the outcome of a consultative and deliberate exercise, undertaken after engagement with relevant stakeholders, and it adhered to the procedure established by law. The Court has further observed that the policy was drafted in accordance with the administrative legal framework and there was no foul play in the short-lived policy’s implementation.
The Court has also noted that even though there was no statutory or constitutional obligation mandating the obtaining of suggestions from the Lieutenant Governor, the material on the filings demonstrates that such suggestions were sought, examined and incorporated. The Court has thus opined that the procedural integrity of the policy-making process stands affirmed from the documentary record itself.
Crediting the investigating agency for relying on the statement of its own witnesses even when it ran contrary to the prosecution’s foundational allegations, the Court has held that the cumulative effect of that very evidence “demolishes, rather than supports, the case sought to be built”.
The Court has further held that compelling the accused to face the “rigours of the full-fledged trial” in the sheer absence of any legally admissible material connecting them to the alleged offences would not serve the ends of justice; it would rather constitute a “manifest miscarriage of justice and an abuse of the criminal process, offending the most basic tenets of fairness and the rule of law.”
In this regard, the Court has held that –
“The investigation, when tested against the material collected by the agency itself, reflects a fundamental failure to properly appreciate, evaluate, or draw lawful inferences from the evidence and documents on record. As a result, the prosecution case is rendered legally infirm, unsuitable and unfit to proceed any further in law. Stated differently, this Court records that the theory of an overarching conspiracy, so emphatically projected, stands completely dismantled when tested against the evidentiary record.”
Furthermore, regarding the allegations of bribery, the Court has observed that the entire alleged chain of payments rests predominantly on the so-called pauti entries of Angadia firms, documents which are inadmissible in law, and on uncorroborated approver-like statements. The Court has thus held that these infirmities are “not peripheral; they strike at the very root of the prosecution case and render it unsustainable even at the threshold stage.”
Background
The case pertained to the now-withdrawn Delhi Excise Policy 2021 (DEP-21/22), which concerned the regulation of the supply of liquor from out-of-state manufacturers. The DEP-21/22 was drafted with the intent of countering the increasing monopolisation in the liquor market and fundamentally differed from the previous excise policy. The old excise policy permitted manufacturer-linked or independent L-1 wholesalers with direct supply to Hotels, Clubs, and Restaurants (HCR), allowing a flexible distribution chain. The new policy disallowed manufacturers from being L-1 wholesale suppliers, mandating supply through independent L-1 wholesalers operating in specifically demarcated zones. It further channelled all sales to HCR and consumers only through retail vendors.
The Court has observed that, based on judicial experience, accomplice evidence has consistently been regarded as inherently unsafe.
The case gained notoriety for roping in senior leaders of Aam Aadmi Party, including the erstwhile Chief Minister Arvind Kejriwal, the Deputy Chief Minister Manish Sisodia, and senior AAP member Vijay Nair as accused. It was being investigated by the Central Bureau of Investigation (CBI), which had taken over it in August 2022, following the registration of cases by the CBI in connection with alleged irregularities in the formulation and implementation of the DEP-21/22.
The chief allegation was that the accused persons– position holders in the then Delhi Government Cabinet, AAP members, and a group of liquor manufacturers and distributors termed as the ‘South Group’– conspired to formulate the DEP-21/22, which was tailored to generate illegal gratification for the government officials in exchange for an undue benefit extended to the South Group. The accused persons were therefore charged under Section 120-B, Sections 120-B, 420 and 201 of the Indian Penal Code (IPC), and Section 7, 7A, 8 and 12 of the Prevention of Corruption Act (PC Act).
Allegations about the involvement of the Aam Aadmi Party Leaders
The CBI had filed 5 distinct charge-sheets, indicting different accused at different stages. In the Main Chargesheet dated 24.11.2022, the CBI had arraigned Nair, the then GNTCD Excise Department Deputy Commissioner, Assistant Commissioner Kuldeep Singh and Narender Singh, respectively, along with four other private individuals involved in the liquor business. It was alleged that the aforementioned public servants facilitated an illegal quid pro quo agreement with the private individuals operating in the liquor market. Mr Nair, although not a public servant, was implicated in orchestrating this agreement by organising meetings and drafting the agreement terms. The agreement involved ‘upfront’ payments and subsequent shares of some percentage of profits made in exchange for assurances regarding the grant of L-1 Licenses.
The public servants were further accused for unduly hastening the grant of L1 licenses to M/S Indospirits by bypassing the statutory scheme and policy safeguards governing excise licensing. The CBI also alleged that complaints against the cross-funding and cartelisation involving M/S Indospirits and M/S KGRL were brushed aside and not properly dealt with. Mr Narender Singh was further arraigned for receiving illegal gratification of Rs. 30 lakhs from co-accused Sameer Mahendru, at the instance of Mr Nair.
The First Supplementary Chargesheet filed on 25.04.2023 added four new accused, including Mr Sisodia. From here onwards, the prosecution’s narrative consistently portrayed Mr Sisodia as the ‘principal architect and controlling force behind the alleged conspiracy’, inculpating him for spearheading the policy’s enactment and implementation. It was alleged that the policy’s formulation process, which was headed by Mr Sisodia, was distorted. It was held that expert recommendations were ignored, arbitrary changes were brought in under the charade of accommodating the Lieutenant Governor’s (LG) suggestions, fabricated public consultation emails supporting the new DEP-21/22 were sent, and licensees standards were set up that supposedly favoured the South Group.
The Second Supplementary Chargesheet, filed on 10.07.2023, alleged that an illegal gratification amounting to approximately ₹90–100 crores was paid to the involved government officials, part of which was routed through hawala/angadiya channels and used for political campaign expenditure, including the 2022 Goa Assembly Elections. The chargesheet named four additional accused for their purported role as conduits and cash handlers in the transfer, routing, and disbursement of the tainted funds.
The Third Supplementary Charge-sheet, filed on 06.06.2024, arraigned Ms Kavitha Kalvakuntla as a new accused. She was implicated as a key conspirator in the formulation of the Excise Policy (DEP-21/22). It was alleged that policy changes, such as the enhancement of mandatory wholesale margin and modification of eligibility criteria, were influenced through her associates.
The Fourth and the final Supplementary Charge-sheet, filed on 29.07.2024, proceeded against six new 6 accused for varying roles, including the erstwhile Chief Minister of Delhi, Arvind Kejriwal. It is alleged that on 16.03.2021, Mr Kejriwal had met Mr Magunta Sreenivasulu Reddy and directed him to coordinate with Ms Kalvakuntla and provide monetary funding to AAP in exchange for favourable provisions in the upcoming Excise Policy. Thus, the chargesheet also roped in Mr Kejriwal as an accused in the entire scheme.
Note: The author would like to thank Syed Raiyyan for his assistance for this piece.