Manas Dasgupta
NEW DELHI, Mar 15: In a major development in the Delhi liquor policy case, the Enforcement Directorate (ED) on Friday arrested in Hyderabad the Bharat Rashtra Samithi (BRS) Member of the Telangana Legislative Council (MLC) Kalvakuntla Kavitha under the provisions of Prevention of Money Laundering Act. She was being shifted to Delhi.
“In exercise of the power conferred upon me under sub section (1) of Section 19 of the PMLA, 2002 (915 0f 2003), I hearby arrest the said Kalvakuntla Kavitha at 5.20 p.m. and she has been informed of the grounds for arrest. A copy of the grounds for her arrest has been served upon her,” read a release by the Directorate of Enforcement official.
Ms Kavitha, the daughter of the BRS chief and former chief minister K Chandrashekar Rao, was questioned in the case last year, but had skipped two summons this year. The arrest, hours after her house at Banjara Hills in Hyderabad was raided by the agency, comes weeks ahead of the Lok Sabha polls and on a day that the Congress government in Telangana completed 100 days and the Prime Minister Narendra Modi holding a roadshow in the Hyderabad suburb of Malkajgiri.
Around noon on Friday, three vehicles of ED and IT teams reached the residence of Ms Kavitha. Her security staff was asked to stay out and staff phones have also been taken by officials, sources said.
During the day, at least 10 officers from both agencies from New Delhi had conducted searches in the presence of Kavitha, and her husband D Anil Kumar. Shortly after she was taken into custody, Kavitha’s brother and BRS working president K T Rama Rao, and her cousin T Harish Rao, reached her residence. Both got into an argument with ED officers, demanding to see a transit warrant.
According to the panchnama – a legal document regarding the arrest – “ED officers introduced themselves to Kavitha and showed her the search warrant… The systematic search of the entire premise was carried out by the search team… without causing any damage to the property. The search started at 1.45 pm and concluded at 6.15 pm. During the search proceedings, voluntary statement of Kavitha was also recorded… After due process of the law, she was arrested under Section 19 of PMLA, 2002 at 05.20 pm… Five mobile phones were seized.”
It further states, “Around 6 pm, around 20 persons who claimed themselves as Kavitha’s brother, lawyers and other persons entered the premises unlawfully. None showed their identity. A ruckus was created which delayed the proceedings… During the search proceedings no religious sentiments of anybody were hurt…”
The IT and ED had in the past issued notices to Kavitha to appear before them to record her statement, but she had appealed in the Supreme Court against the notices and refused to appear.
The ED is probing the allegation of Ms Kavitha’s involvement in the ‘South Group,’ which played a key role in the Delhi liquor policy scam that provided an exceptionally high profit margin both for wholesalers and retailers. The other members of the group, according to the agency, were Hyderabad businessman Sarath Reddy, YSR Congress Party MP Magunta Sreenivasulu Reddy and his son Raghav Magunta Reddy.
The ED has alleged in its charge-sheet that Kavitha was part of a ‘South Group’ that paid Rs 100 crore in kickbacks to the Aam Aadmi Party (AAP) leaders in exchange for undue benefits under the now-scrapped Delhi excise policy. Kavitha has denied the allegations, and described the ED notices as “Modi notices.” Three key AAP leaders – Manish Sisodia, Sanjay Singh and Vijay Nair – are already in jail in connection with the case. Sarath Reddy and Raghav Reddy have turned approvers in the case.
The agency has said that the group was represented in their dealings by businessmen Arun Pillai and Abhishek Boinpally, and a chartered accountant, Buchi Babu
According to the ED, the Delhi liquor policy of 2021-22 provided an exceptionally high profit margin of 12% for wholesalers and nearly 185% for retailers. Of the 12%, six was to be recovered from wholesalers as kickbacks for AAP leaders and the South Group allegedly gave ₹ 100 crore in advance to another accused, Vijay Nair, who was linked to the ruling party in Delhi.
In exchange, Nair allegedly promised the South Group a stake in the Delhi liquor business. Officials said the group was allowed to hold more retail licences than were permitted under the policy, and was also given other undue benefits.
One of the entities linked to the group was Indospirit, whose MD was Sameer Mahendru. Arun Pillai and Prem Rahul Manduri, another person linked to the group, had a 65% stake in the company, and Kavitha and the Reddys were partners via proxies, officials said.
They claimed Vijay Nair had asked Mahendru to give a stake in the company to Pillai and Manduri. In exchange, Indospirit was promised the wholesale business of Pernod Ricard, one of the largest liquor manufacturers, which has brands like Chivas Regal, Absolut and Jameson.
Nair, officials claimed, was working on behalf of then Delhi deputy chief minister Manish Sisodia – who is now in jail in the case – and Pillai has allegedly admitted to being Ms Kavitha’s representative in Indospirit.
During questioning, Buchi Babu allegedly admitted that the total amount paid through hawala channels in this deal was around ₹ 100 crore.
The officials alleged Kavitha used at least 10 phones between 2021 and 2022 to avoid leaving a digital trail. The ED has claimed she was an active participant in the scam and helped Pillai, Babu and others figure out how to conduct illegal business dealings.
On December 1, 2022, a team of CBI officers had recorded Kavitha’s statement at her Hyderabad residence. The next day, the CBI issued a notice to her under CrPC section 160 asking her to join the probe on December 6 in connection with its investigation into alleged corruption in the Delhi government’s now-withdrawn excise policy.
Kavitha, 46, finds herself in the eye of the storm after her party lost power to the Congress in the November 2023 Assembly elections. Kavitha, who was active in the Telangana separate state movement, plunged into electoral politics in 2014 after Telangana was formed, when she contested from Nizamabad Parliamentary constituency and won with a huge margin of 1,67,184 votes, defeating the Congress’s two-time MP Madhu Yaskhi Goud.
However, she failed to address growing anger among turmeric farmers, who were demanding a turmeric board to regulate prices. The BJP, which was trying to make inroads into Telangana, worked on this to its advantage, and in the 2019 elections, BJP’s Dharmapuri Aravind defeated her.
The unexpected loss was a huge setback to Kavitha, who dropped out of the public eye for a few months. In October 2020, she was elected as an MLC from Nizamabad and was re-elected in December 2021.
The Supreme Court, which had granted the BRS leader immunity from interrogation till Wednesday, also heard her petition against the agency’s summons in the case on Friday. The next hearing in the case will be on Tuesday.
In a video, Ms Kavitha’s brother and former Telangana minister KT Rama Rao can be seen confronting ED officials after he was asked how family members had entered the house.
Speaking to the camera, he names an official of the agency, holds up a document, and says, “Search is over and an arrest warrant is produced, and now she says family cannot come in. She also says that she has no transit warrant, she cannot produce before a magistrate but she wants to make the case (sic).”
Mr Rao goes on to accuse the officials of violating an undertaking the agency had given to the Supreme Court and says, “You are in serious trouble.” An ED official is heard telling him that legal remedies are available. ED sources said Mr Rao and other BRS members were obstructing the agency and videos also showed the agency’s cars being surrounded when they were leaving with Ms Kavitha.
Mr Rao has, however, claimed the family is cooperating with the agency. Terming the protest illegal, he said he and other senior leaders have asked party workers to remain peaceful and not prevent the arrest.