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Kejriwal was walked out of jail on September 13 in the case.
Chief Minister Atishi will be fielded again from Kalkaji.
Kejriwal claimed there was widespread disorder and that people were afraid to leave their homes due to the rising crime rates in the national capital.
This is the third attack on me in the last 35 days, he said.
In his resignation letter, Kailash Gahlot pointed to the party's "grave challenges."
The Rouse Avenue court cited "delay in trial" and his "long incarceration" as reasons for the decision.
Despite a close contest in vote share, the BJP outperformed Congress, winning 48 seats out of 90.
Kejriwal also dared the BJP to conduct the Delhi Assembly elections along with those in Jharkhand and Maharashtra in November, asserting that AAP is ready for it.
Atishi said she would work for four months as the chief minister of Delhi like Bharat did by keeping Lord Ram's khadaun ( wooden slippers) on the throne.
Atishi is Delhi's third woman chief minister after Congress' Sheila Dikshit and BJP's Sushma Swaraj.
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