"Can't Promote Drunkenness Through Discounts": Delhi Govt Defends Decision To Prohibit Concessions On Liquor MRP

Defending its decision to prohibit the grant of discounts or concessions by retail licensees on MRP of liquor in the city, the Delhi Government on Thursday told the High Court that the national capital cannot become a city for "promoting drunkenness through discounts".

Justice V Kameswar Rao was hearing a plea filed by five private players holding valid L7Z licenses challenging the order dated February 28, 2022 passed by the Department of Excise, Entertainment and Luxury Tax of the Delhi Government.

The petition is filed in the backdrop of the new Delhi Excise Policy approved in June last year by the Delhi government for the year 2021-2022. This policy sets out the framework for various aspects pertaining to the liquor business.

Consequent to the excise policy being approved, the Delhi Government had floated tenders for zonal licences for retail vends of Indian and foreign liquor. The petitioners participated in the tenders floated and had emerged as the successful bidders for different zones within the city.

During the course of hearing today, Senior Advocate Mukul Rohatgi representing the petitioners argued that the impugned order was passed without any jurisdiction and was perverse and arbitrary in nature.

Senior Advocate Abhishek Manu Singhvi, appearing for the Delhi Government on advance notice, argued before the Court that the policy was being misused over and over again by attracting and alluring people by "unreasonable and strange discounting policy."

"The Government found that Delhi cannot become a city for promoting drunkenness through the measure of discounts. This was being misused over and over again by attracting and alluring people by unreasonable and strange discounting policy," Singhvi argued.

He added that while the Delhi Government was not against discounts, however, the step became pertinent when it was found that humongous discounts were being given, there was an attempt by few people "with deep pockets" to monopolise the system.

He therefore urged the Court not to stay the operation of the impugned order.

The Court has issued notice on the plea and has directed the Delhi government to file its reply by tomorrow evening. The case is fixed for hearing on March 7.

The plea avers that the discounts were permitted and the licensees were giving and adopting discounts. According to the petitioners, the same was based on arrangements as licensees could enter into with L1 licensees, and that the same was free market and fair competition principles in operation.

However, it is the petitioners' case that without any opportunity of hearing and in a completely impermissible manner, the Delhi Government had passed the impugned order prohibiting the grant of discounts or rebates and concessions.

"For that no opportunity of being heard was given before withdrawing commercial clauses having impact on civil rights of licensees. There has been total breach of natural justice," the plea states.

It adds, "For that the impugned decision of the Respondent completely take away the Petitioners 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. 'Clauses' such as to give discounts formed an essential part of the new Excise policy scheme. Hence, the impugned to discontinue/withdraw an important clause, is in complete contradiction to the letter and spirit of the Excise Policy."

Accordingly, the plea sought quashing of the impugned order.

Case Title: BHAGWATI TRANSFORMER CORP. AND ORS v. GOVERNMENT OF NCT OF DELHI