India, High Court of Delhi at New Delhi, 8 March 2022, WP (C) 3647/2022 and CM Appl. 10823/2022
Case overview
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Link to the full text of the decision
General Summary
The common case of the petitioners, as contended by their counsel, was a challenge to an order dated February 28, 2022, whereby the Commissioner (Excise) of the Department of Excise, Entertainment, and Luxury Tax, Government of NCT of Delhi, directed the L7Z licensees not to give a concession, rebate, or discount on the Maximum Retail Price of liquor and to strictly abide by Rule 54(3) of the Delhi Excise Rules, 2010. W.P.(C) 3647/2022. This was treated as the leading case and the facts in the writ petition are narrated here. In June 2021, the Delhi Government approved the new Excise Policy for the year 2021-22. This policy set out the framework for various aspects pertaining to liquor businesses for the year 2021-22. Consequent to the Excise Policy being approved, the Government of Delhi floated tenders on June 28, 2021, and August 13, 2021, for zonal licenses for retail of Indian and foreign liquor. The petitioners were private citizens who participated in the tenders and were successful bidders for different zones.
It is the contention of the petitioners that the power to grant discounts is an essential part of the new Excise Policy. Hence, the impugned order to discontinue/ withdraw an important clause of the Tender document and the Policy was in complete contravention of the Excise Policy.
It was held that any stay of the impugned order would lead to distortions in the market and subsequent consequences. The Court further held that the request of the petitioners in their applications could not be granted. The respondents were granted time to file detailed counter affidavits to the writ petitions within one week from the date of the decision with a rejoinder within one week thereafter. The applications were dismissed.
Facts of the case
The petition was filed challenging an order dated February 28, 2022, whereby the Commissioner (Excise) of the Department of Excise, Entertainment, and Luxury Tax, Government of NCT of Delhi, directed the L7Z licensees not to give a concession, rebate, or discount on the Maximum Retail Price of liquor and to strictly abide by Rule 54(3) of the Delhi Excise Rules, 2010.
In June 2021, the Delhi Government approved the new Excise Policy for the year 2021-22. This policy set out the framework for various aspects pertaining to liquor business for the year 2021-22. The Government of Delhi floated tenders for zonal licenses for retail of Indian and foreign liquor. The petitioner was a successful bidder.
According to the petitioner the Excise Policy expressly permitted granting a discount/ rebate/ concession by the retail licensees. Clause 4.1.9(viii) of the Excise Policy towards the tail end states that “The licensee is free to give concession, rebate, or discount on the MRP.”
It was the petitioner’s contention that, by the impugned order, the respondent completely removed the petitioner’s right to make business decisions regarding discounts, concessions, and rebates, which they were empowered to make under the new Excise Policy and as per the Tender document. In fact, the power to grant discounts was an essential part of the new Excise Policy. Hence, the impugned order to discontinue/withdraw an important clause of the Tender document was claimed to be in complete contravention of the Excise Policy.
Type of measure challenged
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Individual / collective enforcement
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Private collectiveDefendant(s)
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Reasoning of the deciding body
Concerning the issue that the respondents, in the impugned order, had changed the rules of the game which had already begun it was noted that the MRP had been fixed by the Commissioner (Excise) in exercise of the power vested in him, which mandated sale of liquor only at the price given, therefore the impugned order was justified.
On the matter of the effect of incorporation in the Policy/ Tender the stipulation enabling a licensee to give a concession, rebate, or discount, and whether the impugned order had the effect of precluding petitioners from doing so, it was highlighted that a reasonable discount was possible, but not in the manner sought by the petitioners, which would have the result of predatory pricing for possible short term monetary gains, distortions in the market, alleged hoarding, inter-state transportation of liquor etc. The intent of the stipulation was to create a level playing field for all licensees. To sell a bottle of liquor free of cost is not healthy competition, but anti-competitive, which was clearly not permitted.
On the issue that granting discounts may lead to market distortions, the Court agreed with the reasoning and statistics submitted that substantiated the fact that discounts can lead to market distortions which lead to an increase in the sale of liquor in certain zones against others as well as alleged hoarding, the inter-state transportation of liquor, etc.
With regard to the issue that the reasoning in the impugned order on the crowding of the liquor sales during COVID-19 led to law-and-order problems and caused inconvenience to the local people, the Court declared they were not germane to the request of the petitioners to permit discounts, though an appeal could not be accepted as the impugned order also highlighted market distortion.
The Court observed that Article 19(1)(g) of the Constitution of India was not applicable, as the right of the petitioners to carry out the trade of liquor sales through licenses was not contested by the respondents.
Conclusions of the deciding body
The claim was rejected, and the applications d is missed. It was held that any stay of the impugned order could lead to the aforementioned distortions in the market and subsequent other consequences. The Court further held that the request as made by the petitioners in their applications could not be granted. The respondents were granted time to file detailed counter affidavits to the writ petitions within one week from the date of the decision with a rejoinder within one week thereafter. The applications were then dismissed.
Fundamental Right(s) involved
Fundamental Right(s) instruments (constitutional provisions, international conventions and treaties)
Rights and freedoms specifically identified as (possibly) conflicting with the right to health
General principle applied
Balancing techniques and principles (proportionality, reasonableness, others)
The court applied the principle of reasonableness by agreeing that any stay of the impugned order could lead to distortions in the market and other subsequent consequences.
Impact on Legislation/Policy
The Government measure was upheld.
