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Booze Bonanza

In February, retail liquor vendors in Delhi offered hefty discounts to exhaust their stocks by the end of March, when licenses will be renewed. This led to liquor stores in several areas witnessing long queues of drinkers. The matter has now reached the Delhi High Court.

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Justice V Kameswar Rao of the Delhi High Court is hearing a batch of petitions moved by retail liquor licensees challenging the order issued by the Excise Commissioner prohibiting discounts or rebates or concessions on the Maximum Retail Price (MRP) of liquor in the national capital. Defending the decision to stop discounts or rebates by retail liquor vendors, the Delhi government apprised the Court that the giving of huge discounts by liquor vends was an attempt by a few to “monopolize” the whole system. “The government found, as a policy measure, that Delhi could not become a city for promoting drunkenness through the measure of discounts. This was being misused over and over again by attracting and luring people by absolutely unreasonable and strange discounting policies. It was also used as a measure of monopolizing,” submitted Senior Advocate Abhishek Manu Singhvi on behalf of the Delhi government.

The petitions were filed in the backdrop of the February 28 order issued by the Delhi Excise Commissioner discontinuing any discount or rebate or concession by retail license holders after witnessing long queues at outlets offering discounts on liquor. “As a result of the discounts being offered by the licensees through their retail vends, there are instances reported of large crowds gathering outside the liquor stores leading to law and order problem and causing inconvenience to local population of an area,” said the excise department, while calling for initiating penal action against the licensees found acting in contravention of the order.

In its affidavit filed in response to the plea by several liquor license holders against the prohibition of offering discounts, the Delhi government submitted that the promotion of responsible drinking and preventing the illicit trade of liquor is the primary objective behind its order prohibiting any discount or rebate on sale of liquor. “The promotion of responsible drinking and preventing the illicit trade of liquor is the primary objective of the Delhi Government. The ethical and social responsibility is paramount and consumers should not be lured to get into illicit and illegal liquor trafficking and hoarding liquor beyond the permissible limit,” read the affidavit filed by the Assistant Commissioner, Department of Excise.

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It was further submitted that the act of giving huge discounts and luring customers with freebies by certain retail licensees has resulted in huge crowd gatherings outside the liquor vends, leading to adverse law and order situation, particularly in the backdrop of the pandemic which necessitates the following of social distancing norms. Further, it resulted in the purchase of liquor by people beyond their normal consumption capacity for hoarding or bootlegging purpose.

The Delhi government alleged that the offering of discounts also led to distortions in the market inasmuch as the same is in violation of the intent and mandate of the Excise Act and the new excise policy which aims at promoting healthy competition and consumer choice in the market. “There was no intent on the part of the Government to make discounting a tool of encouraging unhealthy competition and distortions in the market, which was the situation that was developing during the recent round of discounting being offered by some of the licensees,” the affidavit mentioned.

During the course of the earlier hearing on the interim relief sought by these retail license holders, while contending that rules of the game cannot be changed mid-way, senior advocates Mukul Rohatgi and Sajan Poovayya, who represented the bunch of petitioners, argued that the order prohibiting discounts is perverse, arbitrary, and passed by the concerned authority without any jurisdiction inasmuch as the policy as well as the tender conditions itself specifically permits the issuance of discounts. Poovayya submitted that once the tender has been called for and licenses thereof have been issued, it is not open for the authorities to make changes in the tender conditions in that particular excise year unless there is a change in the law.

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Senior Advocate Rahul Mehra, representing the Delhi government, told the Court that a responsible government cannot be a “mute spectator” to bootlegging, predatory pricing system and attempt by a few to create monopolies in the market. He added that the government will not step in when the business is being carried out in a fair and transparent manner, but once any bootlegging activity was resorted to, it was incumbent upon the government to step in.

With the Court’s refusal to stay the operation of the Excise Commissioner’s order as an interim measure, the ban on liquor discounts still continues. The matter is slated for hearing on March 25. The new excise policy was approved by the Delhi government in June, last year. Subsequently, tenders were floated for zonal licences for retail vends of Indian and foreign liquor.

The petition was filed by advocates Sanjay Abbot, Tanmaya Mehta and Honey Uppal on behalf of five private players who emerged as successful bidders for different zones within the city. The petitioners alleged that the impugned order is arbitrary, discriminatory and violative of Article 14 of the Constitution inasmuch as no opportunity of being heard was given. The primary contention of the petitioners is that when the liquor policy and the tender conditions expressly permit grant of discounts by the retail licensees, no power vests with the Excise Commissioner to alter the policy mid-way and change the rules of the game once the game has begun. “The rules of the game cannot be changed after the game has begun. Power to amend the tender does not exist after the bids are finalized and licenses issued,” the petition said.

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To buttress the claim, the attention in the petition was drawn to Clause 4.1.9 (viii) of the policy as well as Clause 3.5.1 of the tender, which states: “The licensee is free to give concession, rebate or discount on the MRP.” Claiming that the freedom to give discounts formed an essential part of the new excise policy scheme, the petition averred: “The impugned decision of the respondent completely takes away the petitioner’s right to take business decisions with regards to discounts/concessions/rebate which the petitioners were otherwise empowered to take under the new Excise policy and tender documents.”

“The decision of Respondent of passing the impugned order after taking huge license fees, leaves the Petitioners high and dry because the Petitioners had decided to participate in the bidding process only after relying on the clauses of the tender. Therefore, prohibition of discounts contrary to clauses of the tender and of the excise policy, amounts to impermissibly changing the essential nature of the policy and it would cause huge losses to the Petitioners”

-the petition said. The booze bonanza may have stopped but the debate rages on.

—By Banshika Garg and India Legal Bureau

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