In a significant development, the Supreme Court on Friday granted interim bail to Delhi Chief Minister Arvind Kejriwal in the money laundering case initiated by the Enforcement Directorate concerning the now-scrapped Delhi Excise Policy [Arvind Kejriwal v. Directorate of Enforcement].

A Bench of Justices Sanjiv Khanna and Dipankar Datta noted that certain legal questions raised by Kejriwal in his plea challenging his arrest require consideration by a larger bench of the top court.

Accordingly, while referring these questions to a larger bench, the Court decided to release Kejriwal on interim bail.

"Given that right to life is concerned and since the matter is referred to a larger bench, we direct Arvind Kejriwal to be released on interim bail," the Court ordered.

Kejriwal was arrested by the ED on March 21 in a case alleging that Aam Aadmi Party (AAP) leaders, including Manish Sisodia and others, conspired to create loopholes in the Delhi Excise Policy of 2021-22 to benefit certain liquor sellers. The investigation agencies claimed that the funds generated from this scheme were used to finance the AAP's election campaign in Goa.

In its order today, the Court emphasized that the legal question regarding the "necessity to arrest" under Section 19 of the Prevention of Money Laundering Act (PMLA) needs to be reviewed by a larger bench of the top court.

Section 19 of the Prevention of Money Laundering Act (PMLA) stipulates that if the Enforcement Directorate (ED), based on the material in its possession, has reason to believe that any person has committed an offense punishable under the PMLA, it may arrest such person.

Senior Advocate Abhishek Manu Singhvi, representing Kejriwal, argued that the material the ED is now citing to justify Kejriwal's arrest was not available at the time of his arrest and was produced subsequently.

"Every material on ground of arrest predates July, August 2023. All this evidence was in Sisodia case...So what was new in Arvind Kejriwal case?...Evidence is all prior to August 2023," Singhvi had said.

Singhvi also argued that there should be a "necessity to arrest" as a precondition for arrest under Section 19 of the PMLA.

On the other hand, Additional Solicitor General SV Raju argued that the ED is not required to provide the incriminating material it has against an accused at the time of arrest.

"The reason to believe (that an accused has committed an offence) is the material before him (the ED officer). In criminal law, they are not entitled to any copy before the chargesheet is filed... otherwise, evidence will be tampered with and witnesses will be threatened," ASG Raju said.

The Court observed that the mere "need to interrogate" a person does not imply a necessity to arrest them.

The Court noted that whether "need and necessity" are formal parameters for arrest and whether these can be read into Section 19 requires examination by a larger bench.

Despite being granted bail in the ED case, Kejriwal will continue to remain in jail as he is also in custody in a case initiated by the Central Bureau of Investigation (CBI).