The Excise policy, implemented on November 17, 2021, was crafted based on recommendations from an expert committee. Its primary objectives were to boost government revenues and dismantle the influence of the liquor mafia, curbing black market activities. This policy introduced a significant shift, as it initiated open bidding for 849 liquor vends, which were subsequently awarded to private companies. To ensure fairness, the city was divided into 32 zones, each granted a maximum of 27 vends, and the bidding process took place zone by zone.

With the implementation of this new excise policy, the city government's involvement in the liquor business ceased entirely. The government relinquished control over liquor sales in the capital. Despite the government's assertion that the policy aimed to ensure equitable distribution of liquor vends across the city, it faced criticism from various social, educational, and religious groups. The timing of its introduction, amid the challenges posed by the second wave of the Covid pandemic, exacerbated the situation for the Delhi government. Consequently, the policy was rolled back in July 2022, and the previous liquor policy was reinstated.

The controversy

The controversy surrounding the liquor policy began when allegations emerged, suggesting that the AAP government had granted unwarranted financial benefits to liquor licensees long after the tenders had been awarded. These actions were alleged to have resulted in substantial losses to the government's treasury. The Central Bureau of Investigation (CBI) initiated an inquiry into these allegations, focusing on potential advantages provided to private retailers.

The CBI has gone further, asserting that corruption in this matter implicates high-ranking officials within the Kejriwal-led government. They have alleged that substantial kickbacks amounting to crores were exchanged for favourable treatment under the policy, with these funds purportedly finding their way into the AAP's election campaign in Goa the previous year.

Adding to the controversy, a report dated July 8, 2022 from the Chief Secretary of Delhi indicated apparent violations of various regulations, including the GNCTD Act 1991, Transaction of Business Rules (ToBR) 1993, Delhi Excise Act 2009, and Delhi Excise Rules 2010.

In response to this report, Delhi Lieutenant Governor VK Saxena took decisive action, ordering an inquiry into the Delhi Excise Policy 2021-22. His recommendations, made on July 22, 2022, included urging the CBI to investigate potential breaches of rules and misconduct during the implementation of the excise policy.

Manish Sisodia’s arrest

The report made damning allegations, asserting that Manish Sisodia, the Minister In-charge of the Excise Department, not only took but also executed significant decisions and actions. These actions were deemed to be in clear violation of statutory provisions and the officially notified Excise Policy, which carried substantial financial implications. The report contended that these decisions were motivated by the sole objective of benefiting private liquor barons, in exchange for financial gains that reached individuals at the highest levels of government, culminating with Minister Manish Sisodia himself.

In August 2022, the Central Bureau of Investigation (CBI) filed an FIR in a special court, citing allegations that crores of rupees had been purportedly disbursed to close associates of Sisodia by Sameer Mahendru, the proprietor of Indospirits. Mahendru had been intricately involved in irregularities during the formulation and implementation of the excise policy.

The arrest of former Deputy Chief Minister Manish Sisodia represents one of the most significant developments in this ongoing matter. Sisodia was taken into custody by the CBI on February 26, as part of its investigation into alleged irregularities related to the framing and implementation of the Excise Policy of the Government of the National Capital Territory of Delhi. Subsequently, in the following month, Sisodia was arrested once again, this time by the Enforcement Directorate, which was probing allegations of money laundering in the same case.

South Group

In its inaugural prosecution complaint presented to the court, the ED has alleged that Vijay Nair, the head of communication for the Aam Aadmi Party (AAP), received kickbacks totalling ₹100 crore on behalf of AAP leaders from what has been referred to as the "South Group," a term used in statements provided by various individuals during the investigation.

The CBI identified prominent figures within the South Group, including Sreenuvasula Reddy, his son Raghava, and Kavitha.

Arun Ramachandra Pillai, a businessman, was apprehended by the ED on suspicions that he was one of the three primary representatives associated with BRS MLC K Kavitha.

In addition to Pillai, two other representatives linked to Kavitha were reported to be Abhishek Boinpally, the proprietor of a beauty salon chain, and Chartered Accountant Gorantla Butchibabu.

Kickbacks – money paid to somebody illegally in return for work or help

The investigative agency also revealed that, as part of their agreement, the South Group made advance payments to AAP leaders through Vijay Nair in the form of kickbacks. In return for these kickbacks, the South Group gained unrestricted access, received undue privileges, and acquired shares in established wholesale enterprises and multiple retail zones, surpassing the limits stipulated by the policy, as outlined in the CBI's charge sheet.

To recoup the kickbacks, the South Group's partners were granted a 65 percent ownership stake in Indo-Spirits, in collaboration with Sameer Mahendru, the company's proprietor. Nair orchestrated this partnership arrangement with the assurance of granting Indo-Spirits the wholesale business of Pernod Richard.

According to the investigative agency, the South Group manipulated Indo-Spirits' shares through deceptive practices, concealment, and the use of proxies.