ED faces tough questions from Supreme Court on linking Manish Sisodia to money laundering

"....We agree it is difficult to establish the chain because everything is done under cover… But that’s where your competence will come in," - says Supreme Court judge Justice Sanjiv Khanna, presiding over a bench that also comprised Justice S V Bhatti. At the receiving end of the questions was Additional Solicitor General S V Raju who appeared for the ED and CBI in the matter.

"You have taken two figures, Rs 100 crore and Rs 30 crore. Who paid them this? There can be so many people paying the money - not necessarily connected to liquor. Where is the proof? Dinesh Arora himself is the recipient. Where is the evidence? Except for the statement of Dinesh Arora, is there any other evidence," Justice Khanna asked. 

"The chain has not been fully established," the bench observed. 

“Where is the evidence? Dinesh Arora himself is the recipient… Except for the statement of Dinesh Arora, is there any other evidence?” Justice Khanna asked. 

Former Delhi deputy CM Manish Sisodia was arrested by the ED on March 9 this year, 12 days after he was held by the CBI on February 26.

The ED claims against Sisodia came under intense scrutiny of the court which warned that “this will fall flat” after “two questions in the cross-examination”  — it was hearing Sisodia’s bail plea and the proceedings will resume October 12.  

"You have to establish a chain, this doesn’t," the bench remarked.

Underlining that stringent requirements have to be fulfilled to trigger a charge under the Prevention of Money Laundering Act (PMLA), the Supreme Court Thursday questioned the Enforcement Directorate (ED) about the admissibility of its evidence to link AAP leader Manish Sisodia to a money laundering offence in the Delhi excise policy case and asked if it had any proof other than the statement of a co-accused-turned-approver against the former Delhi Deputy Chief Minister.  

Noting that “as per your (ED) case, no money has come to Manish Sisodia”, the bench asked, “So how did the money flow from the liquor group? You have taken two figures: 100 crores and 30 crores. Who paid them this? There can be so many people paying the money, not necessarily connected to liquor.”

“You have to establish a chain… This doesn’t fully establish,” Justice Khanna said. 

“You see, the money has to flow from the liquor lobby to the person. Both of us agree with you that it is difficult to establish the chain because everything is done under cover… But that’s where your competence will come in,” he said.

ASG Raju maintained that the chain had been established. “We have the statements. Every person in the chain is corroborating” the flow of money, he said.

At this, Justice Khanna asked: “Who corroborates that the money was paid by the liquor group?”  Referring to the transactions, he said Sisodia “does not seem involved. Vijay Nair (co-accused) is there, but not Manish Sisodia” and asked “how will you bring him under the money laundering Act?”

To the ASG’s submission that as per an approver’s statement, Nair was working on behalf of Sisodia, Justice Khanna asked, “Whose statement is that? That’s his opinion. Two questions in the cross-examination and this will fall flat. It’s an opinion, he’s not an expert. Expert opinion is different. It’s an inference drawn. His opinion does not matter. The court’s opinion matters.”

Raju said, “He is somebody who is connected to the Aam Aadmi Party… They had the GoM policy even before the policy was released. This shows that they had a role to play in the policy.”

The bench said, “The money trail either comes to his pocket, if it goes to someone else’s pocket, how will you…” and added that if the money was going to a company with which Sisodia was involved, “then we have vicarious liability. Otherwise, the prosecution falters”.

Justice Khanna said money laundering is a separate offence and five requirements must establish the charge. “How will you establish that in Manish Sisodia’s case?” The bench pointed out that the agency’s case against Sisodia was one of actual involvement in the process or activity connected with the proceeds of crime, and not one of mere attempt.

Justice Khanna inquired about the activity connected to the proceeds of crime that the agency was seeking to link Sisodia with.

The ASG replied it was the generation of money that became the proceeds of crime that he was linked with. “He is instrumental in generation…The question is, is he not directly or indirectly involved in illegal activity or process… when you make a policy that triggers bribes which acts as proceeds of crimes? Had you (Sisodia) put your foot down and not allowed the policy…,” Raju said.

Justice Khanna said it is not the generation but the sharing of the proceeds of the crime which is an offence under the PMLA.  “PMLA does not deal with generation. It deals with processes or activity connected with the proceeds of the crime. So, till the proceeds of the crime come into place, PMLA does not come into place,” he said.

He said “when a bribe is given, you are involved in the activity connected to the proceeds of crime” and asked “suppose… ultimately no money is passed on, will PMLA trigger? …PMLA will be triggered after proceeds of crime are given or paid. You have to connect the person concerned with the proceeds of crimes, directly or indirectly.”

But the ASG contended that “unless the money is generated, you can’t put it to use”.

Justice Khanna said that while it may be called abetment, it would not be as a principal offender and asked if abetment or conspiracy was part of PMLA.

Raju said abetment is assisting and is treated as the same offence.

The bench said the attempt would be before the offence was committed and wondered how it could be connected to proceeds of crime.