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Delhi High Court allows liquor vendor to bid for licence, assures refund in case of discrepancy

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The Delhi High Court has permitted a retail liquor vendor to participate in the tender process and return of the earnest money deposit made by him, in case he is not satisfied with the retail price fixed by the Excise Commissioner.

The Bench of Justice Vipin Sanghi and Justice Jasmeet Singh on Tuesday, while hearing a plea challenging the terms and conditions of tender notice floated by the Delhi Government on the basis of the New Excise Policy for 2021-22, granted time to the Delhi Government, among others, to file a detailed counter-affidavit.

The Bench observed: “It is stated by Dr Singhvi and Rahul Mehra, Senior Counsels for the respondent, on instructions, that so far as the petitioner is concerned, in case the petitioner is not satisfied with the fixation of MRP by the Commissioner and wishes to withdraw from the tendering process within three days of MRP being fixed, the respondents shall refund the entire earnest money deposit made by the petitioner in respect of bid.”

The matter was listed before the Bench of Chief Justice D.N. Patel and Justice Jyoti Singh; however, since the same did not assemble for the day, it was listed before the Bench led by Justice Sanghi.

The petitioner was represented by Senior Counsels Rajiv Nayar and Sandeep Sethi, while the Delhi Government was represented by Senior Counsels Abhishek Manu Singhvi and Rahul Mehra.

Mr Nayar informed the Court that the Delhi Government failed to furnish the criteria for the maximum retail price, which as per the terms of the tender, is to be subsequently fixed by the Excise Commissioner. This renders it uncertain for an interested bidder to estimate his profit margin and decide if it would be feasible to participate in the bidding process.

“You must know the rules of the game before the tender has started,” he said.

Mr Sethi submitted that the exercise of fixation of the retail price by the Excise Commissioner subsequent to the bidding process depends solely on the wisdom of the latter, who is not bound by the inputs given by the bidders.

“I can’t challenge his fixation…The Court will say you entered into the bargain on the basis. When there was no criteria, you did not insist on any criteria and you subjected yourself to any criteria being fixed….You can’t complain today,” said Mr Sethi, in furtherance of his arguments.

Per contra, Dr Singhvi submitted that a coordinate Bench of the Delhi High Court refused to grant any interim relief in a batch of similar matters listed before it.

The Delhi Government, in its counter-affidavit filed in pursuance of the previous order, stated that as per the tender conditions, after completion of tendering process, licensees will be given two weeks time to submit their inputs regarding the retail price.

Upon this, the Bench said the tender conditions leave everything to uncertainty and in this light, underscored: “You look at it from the point of view of a businessman whom you are wanting to make a huge commitment of. You want EMD of Rs 30 crore, apart from participation fee of Rs 10 lakh and then you want him to commit. Once you got his neck in your hand, then you say now we will determine. So, some Babu will determine that. Is this the way businesses done?”

Dr Singhvi responded that determination is transparent as the licensee gets an opportunity to give his suggestions; and keeping in mind these suggestions as also the prices at the neighbouring States, does the Excise Commissioner determines the price. So, it is a much more expanded and inclusive participatory process.

The Bench, however, was not pleased with this submission and termed it to be an ‘arbitrary’ exercise, on the ground that a businessman will not enter into such a huge commitment, without exactly knowing where he would land.

Mr Mehra submitted that an impression is being given as if it is arbitrary, when in reality it is not. He argued that the process is anticipated to boost revenue by more than Rs 2000 crore, which has shaken the status quo of a lot of people and this is the reason why such pleas are being filed before the court.

He further argued that the fixation of price by the Excise Commissioner is not something new, it happens year after year. The petition, he contended, is an attempt to stall the entire process at the eleventh hour.
In addition, he informed the court that Delhi imports liquor from other places as there is no manufacturing unit in Delhi.

As per the policy, the lowest price at any manufacturing unit within the bandwidth of the neighbouring States would be the price at which manufacturers would sell to the retailers. “This is a policy which is completely pro retailer and pro consumer,” he added.

The Bench, upon not being satisfied by the submissions advanced, expressed: “If you are so confident that your terms are very good and that people will whole-heartedly make a bid because they stand on a firm footing; and if according to you this tender is going to succeed in this way… therefore, you make a statement that you will return the EMD in case after determination of the price by the Commissioner the bidder is not satisfied.” The Bench, however, refused to extend the period for submission of e-bids for the tender.

Dr Singhvi agreed on refunding the EMD so long it is restricted to this particular petitioner. The matter is slated for August 27.

On the previous date, the Bench directed the matter to be listed before the Bench headed by the Chief Justice upon submission by Dr Singhvi that a batch of similar pleas challenging not only the new excise policy, but also the tender is question, is pending before the Bench of Chief Justice D.N. Patel and Justice Jyoti Singh.

The petition has been filed by Robin Choudhary through Advocate Medhavi Singh. The plea sought determination of criteria for fixation of MRP of liquor under the new tender regime, and to not give effect to the tender issued on June 28’2021 till fixation of criteria of MRP of liquor.

The plea said, “The petitioner being desirous of entering the fray for the tendering process, upon perusal of the Policy, 2021 was surprised to learn that the Tender and the Policy, 2021 have failed to adhere to mandatory stage of publishing the criteria for fixation of MRP of various categories/brands of liquor as mandated under Rule 54 (1) of the Delhi Excise Rules, 2010.

“In the interest of fair play and transparency by the Respondent state, it is only reasonable and logical that every bidder ought to have the entire financial criteria/formula/break-up available prior to submission of the bid in order to enable a prospective bidder like the petitioner herein to assess the commercial viability of his bid, whether or not to bid and to prepare a viable bid after having hard numbers/data/price of every brand that will be available for sale once the new regime commences.”

Also Read: Centre seeks time till September to frame guidelines for ex-gratia to kin of COVID-deceased

Till recently, liquor sale in Delhi was regulated in terms of the Delhi Excise Rules, 2010. However, on February 5, the Delhi Government constituted a committee of Group of Ministers (GoM) under the Chairmanship of the Deputy Chief Minister Manish Sisodia, and comprising ministers Kailash Gehlot and Satyendra Jain, to finalize a new excise policy for Delhi for the year 2021-22. Subsequently, a notification dated May 25’2021 was issued amending the Delhi Excise Rules, 2010. Pursuant to the report by the GoM, the new Excise Policy was introduced by the Delhi Government in June this year.

As per the new policy, Delhi is divided into 32 zones, comprising 27 liquor vends each, for the purpose of issuance of licences. On June 28, the Delhi Government floated a tender, inviting e-bids for grant of 32 zonal retail licences for 2021-22 through e-tendering process in the form of L-7Z/L-7V for sale of Indian and Foreign Liquor in the region of NCT of Delhi, on the basis of the newly approved policy.

To be eligible to participate in the bid, the applicant bidding for one zone is required to make an Earnest Money Deposit (EMD) of Rs 30 crore, and for one more zone, EMD of Rs 60 crore. As per the schedule of the tender, the submission of the e-bid was to take place between July 12 to 20, 2021.

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