HC refuses to stay Delhi govt’s order prohibiting hefty discounts on liquor

Denying interim relief to a group of liquor vendors, the court of justice V Kameswar Rao also said that the government’s contention that the excise commissioner was within his rights to intervene is not “perverse”

The Delhi high court on Tuesday refused to stay a decision of the Delhi government prohibiting any discount or rebate on the MRP (maximum retail price) of liquor in the national capital and said it agreed with the government’s submission that the stipulation of competitive pricing in the Delhi excise policy was being “misused” by liquor licence holders “for gains”.

People outside a liquor shop near Delhi’s Sadar Bazar after the reduction in its prices on February 16. (ANI)

Denying interim relief to a group of liquor vendors, the court of justice V Kameswar Rao also said that the government’s contention that the excise commissioner was within his rights to intervene is not “perverse”.

On February 28, the Delhi excise commissioner had issued an order discontinuing any discount or rebate on the MRP of liquor, saying such discounts have led to crowding at stores as well as promoting unhealthy market practices.

Defending that decision, the Delhi government earlier told the high court that the licensees were misusing the discount provision in its excise policy, to offer 50% or more discounts, which would distort market forces, create monopoly and promote alcoholism.

However, the petitioners contended that people are rushing to neighbouring cities for cheap liquor, thus causing them losses to the tune of crores of rupees daily.

“The intent of the stipulation is to have a level playing field for all licensees. To sell a bottle of liquor free of cost is not healthy competition, but anti-competitive, which is clearly impermissible,” justice Rao said, a day after he reserved orders on a bunch of applications seeking a stay on the government’s February 28 order.

In a 23-page judgment on Tuesday, Rao said only 10 licensees have come forward to challenge the government order, even though other licensees are also bound by the February 28 order.

Earlier, opposing the pleas, the Delhi government had said liquor shops have sold 24.5 million litres of liquor in February 2022 — almost double the average monthly sale of 13.2 million liters in 2019-20 — a spike, which it attributed to heavy discounts.

Giving the sales figures for earlier years, the government said in 2018-19, the average monthly sales was 13.6 million litres, while the same was 13.2 million litres in 2019-20.

The government further said it cannot rule out the possibility of illicit hoarding, black marketing and interstate movement of liquor. It also said the consumption pattern cannot increase manifold overnight as a person will not start drinking double their usual capacity.

Senior advocates Abhishek Manu Singhvi and Rahul Mehra, for the Delhi government, said during Monday’s hearing that this was a responsible government showing extreme restraint. The senior counsels said that since cheapest liquor was being sold in Delhi under the new excise policy, some people had started “bootlegging”.

Senior advocates Mukul Rohatgi and Sajan Poovayya, who represented several petitioners, on Monday argued that the Delhi government order was passed without any jurisdiction and was “perverse and arbitrary”. Poovayya contended that 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.

“When an order is passed by the commissioner, it has to be tested on merits of what the order contains,” he said, adding that the moment there is an MRP system, the dealers have the freedom to give discounts under the excise policy.

The government said consumption was more or less following a uniform trend in December and January. It added that a few licensees “having huge financial wherewithal” started giving 50% or more discounts from their approximate retail margin of around 60%-65%, and lured people to buy more liquor than required for personal consumption.

Appearing for the Delhi government, senior advocate Abhishek Manu Singhvi said “Delhi cannot become a city for promoting drunkenness through the measure of discount”. The government also told the court that Delhi has become an “export centre” for cheap liquor to various states in the country.

The court, while dismissing the stay applications, said it will hear the main petitions on March 25.