Hyderabad/New Delhi:

In a major development in the Delhi liquor policy case, BRS leader K Kavitha has been arrested by the Enforcement Directorate in Hyderabad and is being taken to Delhi, top sources have told NDTV.

Ms Kavitha is a Member of the Legislative Council (MLC) in Telangana and the daughter of Bharat Rashtra Samithi chief and former chief minister K Chandrashekar Rao. She was questioned in the case last year, but had skipped two summons this year. 

The Supreme Court, which had granted the BRS leader immunity from interrogation till Wednesday, adjourned the hearing on her petition against the agency’s summons in the case on Friday. The next hearing will be on Tuesday. 

The arrest, hours after her house was raided by the agency, comes weeks ahead of the Lok Sabha polls and on a day that the Congress government in Telangana completes 100 days. Prime Minister Narendra Modi is also scheduled to hold a roadshow in the Hyderabad suburb of Malkajgiri this evening.

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.”

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.

The ED’s Case

The Enforcement Directorate has claimed that Ms Kavitha was part of a lobby called the ‘South Group’, which played a key role in the alleged Delhi liquor policy scam. 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. 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, who also acted as proxies for some of the members.

According to the ED, the Delhi liquor policy 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 Rs 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 Rs 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.

Agency Summons

Ms Kavitha had been questioned in 2022 and 2023, but had not appeared after being summoned by the Enforcement Directorate in January and the CBI in February this year.

The BRS leader has said in the past that she had done nothing illegal, and accused the BJP of using the ED for political gains. The Congress, on the other hand, had claimed that the BJP was going easy on Ms Kavitha before the Telangana Assembly elections last year, hinting at an understanding between the parties.

Charges of misusing the central agencies have been levelled against the BJP by several opposition parties, including the AAP. Two AAP leaders – Manish Sisodia and Sanjay Singh – are already in jail in connection with the case while Delhi Chief Minister Arvind Kejriwal is under the ED’s lens and has skipped multiple summons.