Delhi HC dismisses pleas to stay order prohibiting discount; says selling liquor free not healthy competition

The Delhi High Court perused the government's order and said it revealed the authorities have highlighted that the grant of discount has led to market distortions.

Published: 08th March 2022 08:50 PM  |   Last Updated: 08th March 2022 08:50 PM   |  A+A-

Delhi High Court

Delhi High Court (File Photo | Shekhar Yadav, EPS)


NEW DELHI: To sell a bottle of liquor free of cost is not healthy competition but anti competitive, which is clearly impermissible, the Delhi High Court said on Tuesday while dismissing pleas seeking to stay the Delhi government decision prohibiting any discount or rebate on the MRP of liquor in the national capital.

The high court agreed with the submission of Delhi government counsel that any stay on the Delhi excise commissioner's February 28 order discontinuing any discount or rebate on the Maximum Retail Price (MRP) of liquor shall lead to distortions in the market and the subsequent consequences.

The court dismissed the interim applications which were filed by various liquor licence holders in their petitions challenging the February 28 order and said prima facie the commissioner's decision is not perverse.

"This court is of the prima facie view that in the facts of this case and the position of the Rules, Article 14 (of the Constitution) shall not come into play. Further, it is only ten licensees, who have come forward to challenge the impugned order as against other licensees, who have also been granted licence for sale of liquor, and are also bound by the impugned order," Justice V Kameswar Rao said.

The court noted the submission of Delhi government's counsel that there can be a reasonable discount but not in the manner sought to be given by the petitioners which has the result of predatory pricing for possible short term monetary gains, distortions in the market, alleged hoarding and inter-state transportation of liquor.

"He highlighted the above features on the basis of the statistics, which do indicate prima facie that the grant of concession/rebate or discount has resulted in a steep increase in the sales of liquor in the month of February, 2022 as compared to the sales in the month of December, 2021 in certain zones, as against a miniscule rise in other zones.

"He stated that the stipulation is being mis-utilised for gains. The intent of the stipulation is to have a level playing field for all the licensees. To sell a bottle of liquor free of cost is not healthy competition, but anti competitive, which is clearly impermissible," the court said.

The counsel for the petitioners had contended that the government's order has to be tested on the basis of what has been stated therein and the authorities cannot be allowed to supplement the reasons, which are not part of that order, through its counter affidavit.

The court perused the government's order and said it revealed the authorities have highlighted that the grant of discount has led to market distortions.

"In the counter affidavit, the respondents in conformity with the above stand have given the statistics / figures to highlight the market distortions, which have led to increase in sale of liquor in certain zones as against others and alleged hoarding, inter-state transportation of liquor etc. In other words, the counter affidavit cannot be said to be supplementing the reasons, which were not part of the impugned order," it said.

The judge said, “In view of my above discussion, this court is of the view that the prayer as made for by the petitioners in these applications cannot be granted...The applications are dismissed. The aforesaid is only a prima facie view. List these writ petitions for hearing on March 25.

The Delhi government has opposed the pleas while contending that the discounts were giving rise to bootlegging activity.

The petitioners' advocates had argued that the Delhi government's order was passed by the concerned authority without any jurisdiction and was perverse and arbitrary and once the tender is called for and licences are issued, it is not open for the authorities to make changes in the tender conditions in that excise year unless there is a change in the law.

The Delhi government, in its affidavit in response to the pleas by several liquor licence holders against the prohibition, has said that promotion of responsible drinking and prevention of illicit trade of liquor is the primary objective behind its order prohibiting any rebate or discount by liquor retailers and that it did not intend to make discounting a tool to encourage unhealthy competition and market distortions.

In February, some retailers "started giving huge discounts/offers on the MRP of liquor ('buy one, get one and 'buy one, get two' etc)" and "banners and hoardings were put up by the licensees" to lure the customers with freebies which resulted in huge crowds gathering outside the liquor vends leading to adverse law and order situation, the government has asserted.

The petitioners' grievance was that even though the applicable excise policy and the tender expressly permit a grant of discounts by the retail licensees, the Delhi government on February 28 prohibited the discounts without giving them an opportunity to be heard.

The commissioner's order referred to reports of large crowds at liquor stores as well as unhealthy market practices as the reason for the discontinuation of the discounts and said that the vendors are indulging in promotional activities which are prohibited under the Delhi Excise Act.

In the plea filed by Bhagwati Transformer Corporation and others, the liquor licence holders contended that the actions of the authorities are arbitrary, disproportionate, discriminatory, and violative of their fundamental rights under Article 14 of the Constitution.


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