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Delhi Liquor Scam: The Scam of 2022

IN February 2023, Delhi's Deputy Chief Minister Manish Sisodia was arrested and accused of providing undue benefits to liquor vending licensees.

On July 8, 2022, the Chief Secretary sent a report to Sisodia, who heads the excise department, asking for a reply to his questions. A copy of the report was also sent to Delhi Chief Minister Arvind Kejriwal and L-G Vinai Kumar Saxena on the same day. The chief secretary also informed the EOW about the alleged illegalities, cartelisation, and monopolies in the liquor trade, and asked it to investigate.

Central idea:

  • A Delhi court has remanded a member of Rajya Sabha in Enforcement Directorate (ED) custody in the Delhi excise policy Scam.
  • This has created a big furore among people over the alleged involvement of a hardliner political party which was established solely to fight political corruption.

What is Delhi liquor scam:

The Delhi Liquor Scam, also called LiquorGate, is an alleged political scandal concerning the Delhi Government, which paved its way through the introduction of Delhi's Excise Policy from 2021 to 2022. This policy brought in private firms and enterprise companies into the retailed liquor sectors. The allegations involve favor to the owners and shareholders of private sectors, waivers and reduction of license fee and creation of numerous licenses to all the new incoming enterprises, with the exchange of bribery. This policy mainly focused on moving out the retail sector, and making way to large private sectors and firms.

How it started:

  • In July last year, Lieutenant Governor VK Saxena had recommended a CBI investigation into Delhi Excise Policy 2021-22 after a report by Delhi chief secretary established prima facie violations of various acts and rules in addition to "deliberate and gross procedural lapses" to provide "undue benefits" to liquor licensees. The excise department is headed by Sisodia.
  • Another allegation was that the excise department in its 8 November 2021 order revised the formula of the calculation of rates of foreign liquor and removed the levy of import pass fee of Rs 50 per case on beer without approval of the L-G and the Cabinet, thus making it cheaper for retailers causing loss of revenue to the state exchequer. The chief secretary, according to the TOI report, also found lapses in the process of awarding a license for two liquor vends in each ward.

The governme
nt also said that it would eliminate the liquor mafia, and enhance consumer experiences visiting new outlets. The private liquor shops were allowed to provide discounts on MRP to attract customers, and were also given provision to deliver liquor until 3 AM. This bill was further sent to the Lieutenant Governor's sign and approval, which was passed by the governor with certain conditions on unauthorized areas set.

Details of the Scam:

  • Allegations:
    • Illegal Sale: There were allegations of illegal sale and purchase of liquor during the lockdown period when liquor shops were closed.
    • Fake Permits: Reports suggested the use of fake permits and licenses to carry out these illegal transactions.
    • Violations: Violations of excise rules and regulations were also reported, including sales without proper documentation.
  • Key Players:
    • Excise Department Officials: Several officials from the Delhi Excise Department were implicated in the scam.
    • Liquor Shop Owners: Some liquor shop owners were alleged to be involved in the illegal sale of liquor during the lockdown.
  • Modus Operandi:
    • It was reported that during the lockdown, when liquor shops were closed, illegal liquor sales were carried out using fake permits and documents.
    • The scam involved the sale of liquor at higher prices than the market rates due to the limited availability during the lockdown.
  • Impact:
    • The scam led to a loss of revenue for the Delhi government, as the illegal sales did not contribute to legitimate tax collections.
    • It also highlighted loopholes and shortcomings in the enforcement of excise laws and regulations.
  • Investigation and Arrests:
    • Government Action:
      • The Delhi government ordered a high-level investigation into the matter to uncover the extent of the scam and identify those responsible.
      • The investigation was aimed at identifying the chain of people involved in the illegal sale and purchase of liquor.
    • Arrests:
      • Several arrests were made in connection with the scam, including officials from the Delhi Excise Department.
      • The arrests were part of the government's efforts to hold accountable those involved in the illegal activities.

Brief Overview of Corruption in India

  • Extent of Corruption: India has consistently ranked high on global corruption indices.
  • Causes of Corruption:
    • Weak legal and regulatory frameworks
    • Lack of transparency and accountability in governance
    • Complex bureaucratic procedures that breed opportunities for rent-seeking behavior
    • Socio-economic disparities and unequal access to resources
    • Political patronage and collusion between politicians, bureaucrats, and businesses
  • Impact on Society and Economy:
    • Impedes economic development and growth by distorting markets, deterring investment, and diverting resources away from productive sectors.
    • Exacerbates poverty and inequality by perpetuating a system of patronage where access to basic services and opportunities is often determined by one's ability to pay bribes or connections.
    • Undermines public trust in institutions and erodes the rule of law, leading to a cycle of cynicism and apathy among citizens.
    • Hinders effective delivery of public services such as healthcare, education, and infrastructure, leading to substandard outcomes and perpetuating socio-economic disparities.

Political Ramifications:

  • Corruption undermines the legitimacy of elected representatives and political institutions, eroding democratic principles and accountability.
  • Enables the consolidation of power among entrenched elites and political dynasties, perpetuating a cycle of impunity and entrenched interests.
  • Fuels public discontent and can lead to social unrest, protests, and political upheaval.

Political Fallout:

Opposition Allegations:

  • Opposition parties, including the Bharatiya Janata Party (BJP) and the Congress, accused the AAP government of negligence and corruption in the handling of the Delhi liquor scam.
  • They raised questions about the government's oversight of the Excise Department and its role in preventing illegal liquor sales during the lockdown.

Demand for Accountability:

  • Opposition leaders demanded a thorough investigation into the scam to hold accountable those involved, including government officials.
  • There were calls for the resignation of some AAP leaders, alleging their involvement or complicity in the scam.

Impact on AAP's Image:

  • Damage to Reputation: The Delhi liquor scam significantly impacted AAP's reputation, especially in terms of its claims of clean governance and anti-corruption stance.
  • Public Perception: The scandal led to public outrage, particularly among Delhi residents who were affected by the illegal sale of liquor at inflated prices during the lockdown. Some segments of the public questioned the AAP government's ability to maintain law and order and prevent such illicit activities.

Political Ramifications:
The opposition's relentless criticism and demands for accountability put pressure on the AAP government.

Steps Taken by AAP:
Assurance of Action:
  • AAP leaders, including Chief Minister Arvind Kejriwal, assured the public that strict action would be taken against anyone found guilty in the liquor scam.
  • The government emphasized its commitment to transparency and accountability in addressing the issue.
Investigation and Reforms:
  • The government's inquiry into the scam aimed to uncover the full extent of the wrongdoing and identify systemic flaws that allowed it to occur.
  • This scrutiny prompted discussions on potential reforms in the liquor distribution system and stricter monitoring of permits and licenses.
Raids from CBI
On 20 August 2022, the Central Bureau of Investigation (CBI) conducted raids on the Deputy CM Sisodia's residences to determine the series of accusations charged on the government relating to the liquor scam. Raid were also carried out on civil servants and officers related to this issue.

The Reserve Bank of India (RBI) took several steps in response to the Delhi liquor scam, primarily focusing on ensuring the stability of the financial system and addressing any potential impacts on the banking sector.

On 6 September 2022, the Enforcement Directorate (ED) carried out raids in 40 locations across the country. As per the officials these raids were carried out on the basis of FIR filed by the CBI, in which Manish Sisodia was named as accused.

Delhi excise policy:
The excise policy was aimed at revitalising the city's flagging liquor business and switching to a regime with a licence fee for traders. The policy promised swankier stores and a better buying experience as well. The policy also included some discounts and offers on the purchase of liquor for the first time in Delhi.

Due to alleged irregularities in the regime, Lieutenant Governor Vinai Kumar Saxena ordered a probe into the matter. The move led to the scrapping of the policy. The matter is currently being investigated by the Enforcement Directorate. In its sixth charge sheet filed in the case, the ED named AAP leader Sanjay Singh and his aide Sarvesh Mishra, and accused the party of using kickbacks worth ₹45 crore generated via the policy for its assembly elections campaign in Goa in 2022.

  • The scam had led to arrests and legal proceedings involving corruption allegations and procedural lapses.

  • Allegations of financial improprieties and irregularities in the policy's implementation have created a complex legal landscape.

  • The involvement of the Enforcement Directorate adds to the intricacies of the case, while ongoing investigations seek to establish the veracity of the allegations.

  • Overall, the Delhi liquor scam was a case of alleged illegal sale and purchase of liquor during the COVID-19 lockdown in 2020, involving fake permits, violations of excise laws, and arrests of officials and liquor shop owners. The investigation aimed to uncover the full extent of the scam and hold those responsible accountable.

  • The scam had led to arrests and legal proceedings involving corruption allegations and procedural lapses.

  • Allegations of financial improprieties and irregularities in the policy's implementation have created a complex legal landscape.

  • The involvement of the Enforcement Directorate adds to the intricacies of the case, while ongoing investigations seek to establish the veracity of the allegations.

  • Overall, the Delhi liquor scam was a case of alleged illegal sale and purchase of liquor during the COVID-19 lockdown in 2020, involving fake permits, violations of excise laws
Written By: Sneha Swami, College : Bhagat Phool Singh Mahila Vishwavidylaya Sonipat 

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