ED Withheld Materials Favoring Kejriwal, Witness Statements Extracted Through Coercion & Inducement: Singhvi To Supreme Court

While arguing Delhi Chief Minister Arvind Kejriwal's plea challenging his arrest by the Enforcement Directorate (ED) in the Delhi Liquor Policy case, Senior Advocate Dr Abhishek Manu Singhvi on Tuesday (April 30) accused the agency of withholding materials favoring Kejriwal and questioned the circumstances under which the statements claimed to be inculpatory were recorded.

The matter was being heard by a Bench of Justices Sanjiv Khanna and Dipankar Datta. For a detailed report on the case background and earlier proceedings, click here.

Today's proceedings were centred on Singhvi arguing certain legal points and taking the court through witnesses' statements. He submitted that the ED did not produce before Court the statements of its star witnesses which exculpated Kejriwal and the same are concealed as "unrelied upon documents".

Singhvi on witnesses' statements

Primarily, Singhvi took the court through the statements of 5 persons - Magunta Sreenivasulu Reddy (MSR), MSR's son Magunta Raghava Reddy, P Sarath Chandra Reddy, Buchi Babu and C Arvind. His contentions regarding each are summarized below:

♦ MSR: He is an erstwhile Member of Parliament from YSR Congress, forced to make statement against Kejriwal in lieu of his son Raghava Reddy's bail. His first statement was recorded in March, 2023, but the same was ignored by ED. Owing to his son's continued incarceration, MSR finally broke down after 5 months and gave statement implicating Kejriwal on 16-17 July, 2023. A day after this statement, Raghava Reddy, who was arrested on February 11, 2023, was granted interim bail on ED's no-objection.

Further, the statement is entirely hearsay, as MSR says K Kavitha (BRS leader) told him something, he told the same to his son, and then his son met Kavitha. There is not a word about Kejriwal or anything to invoke Section 3 PMLA.

♦ Raghava Reddy (MSR's son): He made 5 statements (1 before arrest and 4 after arrest) in which Kejriwal is not implicated, but the same have been suppressed by ED. He was arrested on February 11 and granted interim bail on July 18, 2023 after his father (MSR) made statement implicating Kejriwal. Raghava followed his father's footsteps due to mental trauma and made a statement against Kejriwal on 26-27 July, 2023, whereafter his bail was made absolute (on August 10, 2023).

ED opposed Raghava's bail plea when his wife tried to commit suicide as well as appealed against the grant of interim bail to him when his grandmother was in ICU. However, later when he implicated Kejriwal, the agency gave no-objection. In October, 2023, Raghava was infact granted pardon and is now contesting as a candidate in Lok Sabha elections himself.

There is no case under Section 3 PMLA based on his statements.

♦ Sarath Reddy: He made 11 statements not implicating Kejriwal (2 before arrest and 9 after arrest), but they have been concealed and suppressed by ED. The statements made by him on April 25 and 29 (2023) are contrary to the statements made before arrest on September 9 and 16 (2022).

After 9 days of giving statements implicating Kejriwal in April, 2023, he was granted bail on medical ground - for back pain. Ultimately, pardon was also granted.

ED opposed his bail plea when it was sought in relation to his wife's cancer treatment, but not when he sought the relief for his own back pain.

The statement stated to be implicating is an "innuendo" and lacks specificity (dates, address).

He purchased Electoral Bonds for the ruling BJP government through company Aurobindo Pharma, after his arrest.

♦ Buchi Babu: His statement is complete hearsay and cannot be accepted as relevant. It was given in CBI custody, to escape ED arrest. He is the only member of South group who has not been arrested by ED despite being accused in CBI case.

♦ C Arvind: His statement does not connect Kejriwal to proceeds of crime. If a person states that a file was given to a Minister in presence of Chief Minister, it is not enough to implicate the Chief Minister under Section 3 PMLA.

Singhvi also mentioned a 6th person in the context of Goa elections. ED's allegation, as per grounds of arrest, is that an AAP candidate received cash from an AAP volunteer for Goa elections. Singhvi averred that no offense under Section 3 PMLA is made out based on this. There is no mention of Kejriwal and receiving/not receiving of cash is at best an income tax offense.

After taking the court through the statements, Singhvi pled that they did not make out a case under Section 3 PMLA. Moreover, they were a result of inducements and pressures, as pointed out during the arguments. He urged the court to "read between the lines" as a "farce was going on" insofar as approvership was concerned.

The senior counsel also raised the issue of Vijay Nair being used to connect Kejriwal to the Delhi Liquor Policy case (as if the two are alter ego) by saying: "Vijay Nair on behalf of Arvind Kejriwal received kickbacks to the tune of 100 crores for a group? They have given definition of south group. How does it implicate in the conversion, use, projection, etc. of Section 3 Arvind Kejriwal? How? In the remotest way. Nair was arrested in November 2022, and I am arrested in March 2024...if I am the alter ego and you have this great evidence with you, you have taken November 2022-March 2024...no explanation".

Referring to the judgment in Manish Sisodia's case, Singhvi urged that ED is relying on the same set of documents and witnesses as in Sisodia; the case was summarized by the top court in that case, yet there was nothing about Kejriwal.

Other arguments addressed by Singhvi, including on legal aspects, were:

(i) 'Proceeds of crime' should be interpreted strictly, as possession of unaccounted property acquired by illegal means maybe actionable for tax violation, but not necessarily proceeds of crime;

(ii) Kejriwal's statement under Section 50 PMLA was not recorded by ED, prior to his arrest. The fact that he did not go to ED office on being issued summons cannot be an excuse. The non-recording of statement under Section 50 is unique to the cases of Sanjay Singh and Kejriwal, and indicates absence of major material in the prosecution case;

(iii) Stringent safeguards have been provided under PMLA to prevent vexatious arrests. ED should not be vindictive in approach and must act with highest degree of fairness;

(iv) Statement of an approver needs to be corroborated;

(v) To justify arrest under Section 19 PMLA, an officer must have "material in possession", on the basis of which "reasons to believe" can be recorded to the effect that arrestee is "guilty" of an offense under Section 4 PMLA;

(vi) At the stage of remand, court must apply its mind to both grounds of arrest and necessity of arrest.

Court observations

On hearing Singhvi's contention regarding "unrelied upon" documents, Justice Khanna observed that it is the call of an Officer under Section 19, not the court. The test employed by such officer is "subjective satisfaction on objective material" and there will be failure of objective criteria if material in possession is ignored.

To ascertain the time gap, the bench enquired as to when the Delhi Liquor Policy was implemented and on what date the Goa elections were held. In response, ASG SV Raju informed that the policy was finalized by July 5, 2021 and the elections were held on February 14, 2022. Though Singhvi tried to pitch in that the policy was approved by the LG on May 20, 2021, Justice Khanna replied that approval was a different thing.

Reiterating an earlier view expressed during hearing of Sanjay Singh's bail plea, Khanna J opined that prosecution under PMLA follows attachment proceedings (although no attachment process seems to have been carried out in Kejriwal's case) and criminal proceedings cannot be standalone. During Singh's hearing, the judge had underlined that PMLA proceedings are meant for forfeiture of money laundered and put the following hypothetical situation to Raju:

"If you treat PMLA as separate offense...suppose someone takes bribe, can we in terms of PMLA Act, require that that bribe amount should have been also made subject matter of attachment before invoking criminal proceedings?"

Singhvi (appearing for Singh) had contended at the time, "PMLA offense has to act on predicate offense. If you accept you are unable to attach, you accept you are unable to find. Therefore, there is no proceeds of crime". When he further pressed that "proceeds of crime" are anchor of the offense, Raju countered that even concealment was covered by PMLA.

It is worthwhile to mention that at the end of today's hearing, the bench posed 5 queries to Raju to be answered on the next date (ie Friday). The same are summarized in this report.

Case Title: Arvind Kejriwal v. Directorate of Enforcement, SLP(Crl) 5154/2024