In connection with the Delhi Liquor Policy case, the Delhi High Court stayed a lower court's (Vacation Judge) order granting bail to Arvind Kejriwal (The Chief Minister of Delhi) sending Mr. Kejriwal back to custody.

The Delhi High Court stayed the June 20, 2024 bail order of a lower court that granted bail to Arvind Kejriwal, which the Directorate of Enforcement (ED), challenged on the grounds that the lower court did not provide ED an adequate opportunity to present its case.

The High Court found that the lower court, presided over by a vacation judge, did not thoroughly examine the materials presented by both parties. The court noted that while the judge acknowledged the volume of documents, she also stated that she had considered all relevant arguments. This, the High Court found contradictory and indicative of a lack of due diligence.

Brief of the Original Bail in Trial Court.

The Trial Court decided to grant bail to Arvind Kejriwal based on the following primary grounds:

Lack of Direct Evidence: The court acknowledged that while the ED had presented allegations and suggested connections between Kejriwal and individuals involved in the alleged offenses, it had not provided direct evidence demonstrating Kejriwal's link to the proceeds of the crime. This lack of direct evidence played a crucial role in the court's assessment of the ED's case.

Consideration of Kejriwal's Background: The court took into account the arguments presented by Kejriwal's counsel, who highlighted his client's background as a prominent political figure. The court acknowledged previous rulings, particularly observations made by the Supreme Court in an order dated 10.05.2024, which noted Kejriwal's lack of criminal history and the potential impact of the ongoing investigation on his political standing. While acknowledging that these factors alone might not be the sole basis for granting bail, the court recognized the relevance of Kejriwal's background in the context of the case.

Assessment of the "Twin Conditions" of Bail: The court considered the "twin conditions" for bail under Section 45 of the PMLA. These conditions require the court to determine whether there are reasonable grounds to believe that the accused did not commit the offense and would not engage in further criminal activity if released on bail. While the source does not provide details about the court's specific reasoning regarding these conditions in relation to Kejriwal's case, and the fact that bail was granted implies that the court found the defense's arguments persuasive enough to satisfy these requirements.

Primary Grounds for Challenging the Impugned Order

The ED challenged the Impugned Order, in which the Vacation Judge granted bail to the respondent, on the grounds that:
Denial of Proper Opportunity to Present Case: The ED argued that the Vacation Judge denied them a proper opportunity to present their case, violating Section 45 of PMLA. Specifically, the ED claimed their oral prayer for a stay of the impugned order was rejected, disregarding settled legal precedents.
Additionally, the ED asserted that the Vacation Judge's acknowledgment of the volume of documents presented without detailed review suggests an inadequate opportunity to present their case.

Impugned Order Based on Irrelevant Considerations: The ED argued that the Vacation Judge's decision relied on irrelevant considerations while disregarding relevant ones. For example, the ED asserted that the Vacation Judge made a finding of mala fide conduct by the ED without justification, contradicting a previous judgment that found no such evidence. They further argued that the Vacation Judge relied on a legal precedent that was not applicable in the present case.

Failure to Address Key Arguments: The ED contended that the Vacation Judge did not adequately consider their arguments regarding the respondent's vicarious liability under Section 70 of PMLA. The ED asserted that the respondent should be held accountable for the actions of the Aam Aadmi Party (AAP), which allegedly benefited from proceeds of crime. The ED argued that this aspect of the case, despite being presented during the bail hearing, was not addressed in the Impugned Order.

Insufficient Consideration of Section 45 of PMLA: The ED argued that the Vacation Judge failed to consider the twin conditions for bail under Section 45 of PMLA, which the ED asserted are distinct from the provisions for bail under the Code of Criminal Procedure (CrPC). They claimed the Vacation Judge misinterpreted the relevant case law regarding Section 45. The ED argued that the court should have explicitly addressed these conditions and demonstrated their satisfaction regarding their fulfillment before granting bail.

Vicarious Liability: It was observed by the court that "5.4 Sh. S. V. Raju further argued that the Vacation Judge has not considered vicarious liability of the respondent as per section 70(1) of the PMLA as the political party i.e. Aam Aadmi Party (AAP) was also found guilty of money laundering being the beneficiary of proceeds of crime generated in Delhi Liquor Scam."

High Court's Observations in Staying the Bail

The High Court stayed the bail primarily because the judge failed to appropriately consider all the material provided by the Directorate of Enforcement (ED). The High Court determined that the judge did not adequately assess the submitted documentation and arguments, particularly in relation to the ED's claim of being unjustly denied the opportunity to present its case.

Specifically:
The High Court found the judge's statement that it was impossible to review thousands of pages of documents while simultaneously claiming to have considered all relevant arguments to be contradictory and indicative of a failure to properly review the presented evidence. The High Court stated its expectation that judges should thoroughly consider all pertinent information and refrain from issuing such contradictory statements in their orders.

The High Court found the judge did not sufficiently address the ED's assertions regarding the applicant’s potential vicarious liability under Section 70 of PMLA, especially in light of the ED's written argument detailing this claim.

The High Court also found that, while acknowledging the ED's arguments concerning the applicant’s potential violation of the "twin conditions" of bail as outlined in Section 45 of the PMLA, the judge failed to demonstrate proper consideration of these conditions in the Impugned Order.

Regarding the judge’s observation of the ED’s potential "mala fide" actions, the High Court noted that a coordinate bench had previously found no evidence to support this claim. The High Court emphasized that the judge should have acknowledged this prior ruling and exercised judicial restraint in attributing improper motives to the ED.

The High Court stayed the bail order to allow for a comprehensive examination of all presented arguments and evidence by the Roster Bench during the review of the main petition. The High Court clarified that its decision to stay the bail does not reflect an opinion on the merits of the petition itself.

Furthermore, the High Court pointed out that the lower court failed to adequately address the ED's concerns regarding the respondent's potential vicarious liability under Section 70 of the Prevention of Money-Laundering Act (PMLA). This section pertains to offenses committed by companies, with the respondent's political party, AAP, being implicated in the case. The ED argued that the lower court did not sufficiently address this aspect in its bail order.

The High Court clarified that this stay order does not constitute an opinion on the merits of the main petition filed under Section 439(2) of the Code of Criminal Procedure, which challenges the lower court's bail order. This matter is scheduled to be heard by the roster bench on July 10, 2024.

CORAM:HON'BLE DR. JUSTICE SUDHIR KUMAR JAIN
CRL.M.A. 18446/2024 (stay)
Order Date:25-06-2024