With CBI arrest, Kejriwal will now have to fight a two-front legal battle, experts say

What is the difference between CBI and ED case against Kejriwal?

Delhi Chief Minister Arvind Kejriwal must wage a two-pronged legal battle against the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) to secure his release from custody, legal experts said.

“The CBI and ED cases emanate from the Delhi Excise Policy. While the ED had earlier arrested Mr Kejriwal on the accusations of money laundering, the CBI case is a bit different, focusing on the accusation of corruption. Mr. Kejriwal will be required to secure bail in both cases separately,” said Soayib Qureshi, Partner, PSL Advocates & Solicitors

On June 26, the CBI arrested Kejriwal in connection with his role in the liquor policy case, while he was in ED custody for the same case. A Delhi court remanded him to three-day CBI custody the same evening.

CBI’s arrest came shortly after the Delhi High Court stayed Kerjiwal’s bail order in the ED case. Kerjwial is now expected to appeal against the high court’s order in the Supreme Court. However, since the CBI has now arrested Kejriwal, he will have to file a fresh bail plea in the trial court and fight it again until the Supreme Court.

What is the difference between the CBI and ED cases?

Both the CBI and ED are investigating the alleged liquor policy scam. In March 2021, the AAP government announced a slew of changes in the liquor excise policy. Apart from lowering the drinking age from 25 to 21, the government also proposed the establishment of five “super-premium” vends, which would offer the best liquor brands and a high-end walk-in experience.

However, in July 2022, Sisodia, the then excise minister and deputy chief minister, stated that the department would revert to the ‘old regime’ of the excise policy for six months until a fresh policy was implemented. The rollback came amid allegations of corruption and favouritism in granting liquor licences.

“Investigation of ED and CBI operate in different realms. While ED investigates the money laundering aspect, the CBI investigates it from a perspective of corruption by public officers,” said Ankur Mahindro, Managing Partner, Kred Jure.

The ED’s jurisdiction to investigate the liquor policy scam is restricted to money laundering and the use of proceeds of crime, i.e., the Prevention of Money Laundering Act (PMLA), 2002 (PMLA). The ED comes under the finance ministry, while the CBI comes under the home ministry.

For the ED to investigate a case, there must be a ‘predicate offence’. A predicate offence is an illegal activity that forms the foundation of money laundering. For example, in money laundering, an illicit act of tax evasion or obtaining money through kickback by manipulating a governmental scheme can be construed as a “predicate offence,” as the illegal proceeds generated from these activities are laundered.

Thus, the ED’s powers are restricted to investigating money laundered as a result of a crime, not the crime itself.

ED alleges that the proceeds of the liquor policy scam were used to fund the Aam Aadmi Party’s (AAP) campaign for the 2022 Goa legislative assembly election. ED named Kejriwal the ‘kingpin’ of the crime as he must definitely have been aware of the kickback the party and its leaders were earning as the convener of AAP.

The CBI, however, is investigating the liquor policy scam itself, not how the money from the scam was laundered or used. The CBI alleges that Arvind Kejriwal is one of the main conspirators of the liquor policy scam and should, hence, be confronted with the evidence they have against him.

Thus, while the ED investigates offences of money laundering as a result of a crime, the CBI investigates the crime itself.

Megha Sharma, lawyer at Delhi HC, said, “Interestingly, an acquittal in CBI’s case will end all the chaos for Kejriwal as there will be no case for him to answer in PMLA. Be that as it may, Kejriwal will have to apply for separate bail for the CBI case as it is for separate proceedings which will be held in a separate Court.”

Since CBI’s arrest is a separate case in itself, a Supreme Court ruling in Kejriwal’s favour in ED case will not lead to his release in CBI case.

“Since arrest by CBI is a separate cause of action, so even if Hon’ble Apex Court declares the arrest of Mr. Kejriwal by ED as illegal, it will not have any impact on arrest by CBI. For CBI case, Kejriwal has to file fresh bail application before the trial court at Rouse Avenue District Court,” said Tushar Agarwal, a lawyer at the Supreme Court of India.

Bail in ED case Vs Bail in CBI case:

“Unlike the ED case, where stringent conditions exist for the grant of Bail, in the CBI case, the grant of Bail will be looked at from a different perspective by the court. The court will consider whether Mr.Kejriwal will be at a flight risk or can tamper with evidence. The grant of bail will be a rule in the CBI case, which otherwise in the recent trend appears to be an exception in the ED case,” Qureshi said.

Getting bail in an ED case can be very challenging when compared to getting bail in a CBI case. To get bail under the PMLA, an accused must satisfy a ‘twin conditions’ test. The twin conditions are:

• There should be prima facie satisfaction that the accused has not committed the offence.
• He is not likely to commit any offence while on bail