NEW DELHI: On February 27, 2026, the Rouse Avenue Court delivered a verdict that sent shockwaves through the Indian political corridor. By discharging former Delhi Chief Minister Arvind Kejriwal, former Deputy CM Manish Sisodia, BRS leader K. Kavitha and 21 others, the court effectively dismantled a multi-year investigation that had redefined Delhi’s governance and paralyzed the Aam Aadmi Party’s (AAP) top leadership.
The Rouse Avenue Court’s ruling marks a major legal and political victory for Kejriwal and AAP, coming nearly two years after his arrest and following prolonged incarceration of key leaders.
The Delhi Excise Policy Case: What Was It About?
In November 2021, the Delhi government introduced a new excise policy aimed at revolutionizing the liquor trade. The objective was to end government-run liquor stores, replace them with private retailers, and stop the “liquor mafia” by ensuring an equitable distribution of shops across the city. The policy aimed to reform liquor retail by reducing the number of vends, introducing a uniform excise duty, curbing black marketing, and boosting government revenue through private participation.
However, the policy became the center of a firestorm in July 2022 when Delhi Chief Secretary Naresh Kumar submitted a report to Lieutenant Governor (LG) V.K. Saxena, alleging “procedural lapses” and “undue benefits” to liquor licensees. The report claimed that the policy resulted in a loss of over ₹580 crore to the exchequer.
The Central Bureau of Investigation (CBI) alleged irregularities, including undue favours to certain private liquor cartels (allegedly linked to a “south lobby”), policy tweaks to benefit specific players, and kickbacks exceeding ₹100 crore allegedly flowing to AAP leaders. The Enforcement Directorate (ED) probed the money-laundering angle under the Prevention of Money Laundering Act (PMLA). The policy was scrapped in July 2022 after a report by the Lieutenant Governor flagged lapses. AAP has consistently maintained the case was politically motivated to target opposition leaders ahead of elections.
The Allegations: The ‘South Group’ and Kickback Theory
The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) alleged that the policy wasn’t just a governance failure but a “criminal conspiracy.” The central agencies claimed:
•The South Group: A lobby of liquor businessmen and politicians from South India (including K. Kavitha) allegedly paid ₹100 crore in kickbacks to AAP leaders.
•Policy Tweaking: The profit margin for wholesalers was increased from 5% to 12% to facilitate these kickbacks.
•Election Funding: The agencies alleged that the bribe money was used to fund the AAP’s election campaigns in Punjab and Goa.
In court, Arvind Kejriwal was described as the “kingpin and key conspirator” by the ED, while Manish Sisodia was accused of taking “arbitrary and unilateral decisions.”
Timeline of the Investigation, Arrests, and Bail
September 4, 2020: The Delhi Government constitutes an expert committee to reform the liquor trade.
November 17, 2021: The Delhi Excise Policy 2021-22 is officially implemented. It ends government-run liquor stores, handing the entire retail sector to private players.
July 8, 2022: Chief Secretary Naresh Kumar submits a report to LG V.K. Saxena, alleging “gross violations” and “undue benefits” to licensees.
July 22, 2022: LG Saxena recommends a CBI probe into the policy’s formulation.
July 31, 2022: The Delhi Government officially withdraws the Excise Policy 2021-22 and reverts to the old regime.
August 17, 2022: The CBI registers an FIR naming Manish Sisodia and 14 others.
August 19, 2022: CBI conducts a massive raid on Manish Sisodia’s residence.
August 22, 2022: The Enforcement Directorate (ED) registers a separate money laundering case based on the CBI FIR.
February 26, 2023: After eight hours of questioning, the CBI arrests Manish Sisodia.
February 28, 2023: Manish Sisodia resigns from the Delhi Cabinet while in custody.
March 9, 2023: The ED arrests Sisodia in Tihar Jail for money laundering.
October – December 2023: The ED begins issuing a series of summons to Arvind Kejriwal, which he skips, calling them “politically motivated.”
March 15, 2024: The ED arrests BRS leader K. Kavitha in Hyderabad and brings her to Delhi.
March 21, 2024: After the High Court refuses interim protection, the ED arrests Arvind Kejriwal at his residence.
May 10, 2024: The Supreme Court grants Kejriwal interim bail to campaign for the Lok Sabha elections.
June 2, 2024: Kejriwal surrenders at Tihar Jail after his interim bail expires.
June 26, 2024: The CBI officially arrests Kejriwal while he is already in judicial custody for the ED case.
August 9, 2024: In a major relief, the Supreme Court grants bail to Manish Sisodia, noting he had been in jail for 17 months without a trial.
May 2025: The trial court orders the CBI to provide a list of all “unrelied-upon documents” to the defense, signaling a shift in the court’s patience regarding the agency’s delays.
February 12, 2026: The court reserves its order on whether to frame charges against the 23 accused.
February 27, 2026: Special Judge Jitendra Singh discharges all 23 accused, including Arvind Kejriwal, Manish Sisodia, and K. Kavitha. “The court has dismissed all charges and discharged all accused… as the evidence presented lacked a factual foundation,” the judge stated.
February 28, 2026: The CBI announces it will immediately challenge the discharge in the Delhi High Court, calling the ruling an “oversight of critical evidence.”
Why the Case Collapsed: The Court’s Scathing Critique
In a detailed judgement of nearly 600-page, Special Judge Jitendra Singh dismantled the prosecution’s narrative, point by point. The court’s findings highlighted three major failures:
1. Lack of Material Evidence: The court noted that there was no digital or documentary evidence linking Kejriwal to any conspiratorial meetings. “The central conspiratorial role against [Kejriwal] cannot be sustained,” the Special Judge stated.
2. Unreliable Approvers: The case relied heavily on “approvers” (accused persons who turned witnesses). The court found their statements contradictory and noted that the CBI had failed to include crucial original statements in the chargesheet.
3. Institutional Process vs. Conspiracy: The judge ruled that the excise policy was the result of a “consultative and deliberative exercise” involving multiple government departments and had been approved by the LG himself.
In a detailed order, the court held there was “no prima facie case” against any accused and “no overarching conspiracy or criminal intent in the excise policy”.
Key observations and quotes from the judgment:
•The chargesheet suffered from “internal contradictions, striking at the root of the conspiracy theory” and was based on “conjecture rather than concrete evidence.”
•“The prosecution case doesn’t stand scrutiny… Serious allegations must be supported by admissible evidence.”
•The policy was framed through “institutional safeguards” with no evidence of wrongdoing.
•The court criticised the CBI’s reliance on approver statements, calling it improper to grant pardon and then use statements to “fill gaps” and implicate others.
•It recommended a departmental inquiry against the CBI Investigating Officer for wrongly implicating certain public servants.
The court further criticized the agency for using phrases like “South Group” without evidentiary basis, calling the prosecution’s theory a “speculative construct resting on conjecture.”
The judge concluded: “Accordingly, Accused Nos 1-23 are discharged of all the offences alleged against them.”
This is a rare discharge at the charge-framing stage, effectively ending the CBI trial unless overturned on appeal.
CBI’s Appeal and Implications for the Parallel ED Case
Hours after the order on February 27, the CBI moved the Delhi High Court challenging the discharge, arguing that the trial court “ignored several aspects of the investigation” and did not consider the material adequately.
The ruling has direct and severe implications for the ED’s money-laundering case (which names AAP as an accused for the first time, along with 40 others). Under PMLA, the money-laundering offence is not standalone; it depends on a valid “predicate” or scheduled offence (the CBI case). As the Indian Express reported, citing the Supreme Court’s 2022 Vijay Madanlal Chaudhary judgment: “If the foundation crumbles, the superstructure must necessarily fall.”
If the discharge order is not stayed by the High Court, the ED case is likely to collapse or face quashing petitions. Accused can now move courts seeking closure of the ED proceedings as well.
Kejriwal and AAP’s Reactions
An emotional Arvind Kejriwal broke down in tears while addressing the media outside the court.
He said:“We have always said the truth prevails… They slapped a false case on us but the court said that we are fiercely honest.”
“I am not corrupt… God is with us… Truth has won.”
He also threw a political challenge: “I challenge PM Modi to hold fresh polls in Delhi; and if BJP wins over 10 seats, I will quit politics.”
AAP leaders celebrated with band-baaja and described the verdict as a “victory of truth over political vendetta.” The party sees this as a major morale booster after its 2025 Delhi election loss.
BJP Spokesperson Sudhanshu Trivedi remarked, “The lower court has acquitted them due to lack of evidence. This is a technical issue because it is also true that hundreds of SIM cards and phones were destroyed as evidence.” Conversely, Punjab Chief Minister Bhagwant Mann stated that the verdict “vindicated the party’s stand that central agencies were reduced to mere puppets.”
Broader Implications for Kejriwal, AAP, and Politics
For Kejriwal personally, the clean chit restores his image as an anti-corruption crusader and provides a strong platform for political revival. Legally, he is now free from the shadow of the biggest case against him.
For AAP, the discharge of its top leadership comes as a shot in the arm. It strengthens the party’s narrative of being targeted by central agencies and could help in rebuilding ahead of future elections (including any potential early Delhi polls).
Politically, the episode revives questions about the timing and conduct of high-profile probes against opposition leaders. The court’s sharp remarks on the CBI probe add to the discourse on institutional credibility.
Current Status and Next Steps:
CBI appeal is now before the Delhi High Court; the next hearing will determine if the discharge is stayed.
ED case remains technically active but is on extremely weak footing.
Kejriwal and Sisodia are fully discharged in the CBI matter and are expected to seek formal closure/quashing in the ED proceedings.
This verdict does not close the chapter entirely due to the pending appeal, but it represents a decisive judicial rejection of the conspiracy theory that dominated headlines for nearly four years. The coming weeks in the Delhi High Court will decide whether this clean chit stands or faces further legal challenge.
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