Kejriwal, Sisodia were acquitted in the CBI case. Now what happens to the ED case?

A Delhi trial court on Friday (February 27) discharged former Delhi Chief Minister Arvind Kejriwal and his former deputy Manish Sisodia, along with 21 others, in the Central Bureau of Investigation’s (CBI) case in the alleged liquor policy scam. The 598-page order is a shot in the arm for the Aam Aadmi Party leaders and the other accused in the case. However, one question that still remains is the fate of the Enforcement Directorate’s (ED) money laundering case in the alleged liquor policy scam. Does the CBI discharge have an impact on the ED case as well? We explain. ## How does a money laundering probe work? An ED case under the Prevention of Money Laundering Act, 2002, is often termed both a “standalone” offence and “linked to the predicate offence”. Essentially, this means that ED can begin an inquiry for alleged generation or use of “proceeds of crime” against a person even without a conviction in the predicate offence (underlying, primary crime that generates illegal proceeds). The predicate offence can be ongoing or undecided while ED establishes its case. In the alleged excise policy scam, ED had summoned Kejriwal even when he was not even named as an accused in the CBI case, arguing that money laundering is a standalone case. However, ED offences are essentially anchored to the predicate offence. It means that the ED case has to necessarily stem from a predicate offence. When a court discharges or acquits the accused, then the ED case cannot be sustained. ## What has the court said? The answer to this crucial question lies in the landmark 2022 ruling in Vijay Madanlal Chaudhary v. Union of India, in which the Supreme Court upheld the Prevention of Money Laundering Act and set out the law on money laundering. As per the ruling, ED cannot prosecute any person on “notional basis” or on the assumption that a scheduled offence has been committed, unless it is so registered with the jurisdictional police and/or pending enquiry/trial including by way of criminal complaint before the competent forum. Which means the ED case has to necessarily follow a predicate offence case. Therefore, as a corollary, once the predicate offence goes, the ED case also must go. In the ruling, the Supreme Court states that “if the person is finally discharged/acquitted of the scheduled offence or the criminal case against him is quashed by the Court of competent jurisdiction, there can be no offence of money-laundering against him or anyone claiming such property, being the property linked to the stated scheduled offence through him”. What happens next? CBI on Friday said it will immediately file an appeal in the High Court against the judgment of the trial court. Unless the trial court order discharging the accused is stayed, which is not usually done, the ED case cannot continue. The Supreme Court has consistently applied the Vijay Madanlal Chaudhary ruling to hold that once an accused is discharged or acquitted in the predicate offence, the money laundering cannot be sustained. Apurva Vishwanath is the National Legal Editor at The Indian Express, where she leads the organization’s coverage of the Indian judiciary, constitutional law, and public policy. A law graduate with a B.A., LL.B (Hons) from Dr. Ram Manohar Lohiya National Law University, Apurva brings over a decade of specialized experience to her reporting. She is an authority on judicial appointments and the Supreme Court Collegium, providing critical analysis of the country’s legal landscape. Before joining The Indian Express in 2019, she honed her expertise at The Print and Mint. Follow her insights on the intersection of law and governance on Twitter ... Read More