Delhi govt defends decision to prohibit discount on liquor

Senior advocates A.M. Singhvi and Rahul Mehra, representing the Delhi government, opposed the pleas by various liquor licence holders on the ground that the government stepped in only after coming to know that bootlegging was going.

Delhi has the cheapest liquor in the new excise regime, Mr. Mehra said, adding that when the government came to know that bootlegging was going on, it stepped in to prevent it. Mr. Singhvi said the discounting schemes were bringing arbitrage between Delhi and UP, Delhi and Haryana, and Delhi and Himachal Pradesh.

The High Court reserved order on the petitioners’ applications for interim relief to stay the decision, on the ground that it was causing them irreparable loss on account of the substantial decrease in their business.

The Delhi government, in its affidavit, 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.

The Delhi government said that while it had initially allowed concessions for healthy competition and promoting consumer choice, it was noticed that some people were buying liquor in bulk for hoarding or bootlegging. Also, the discounts being offered were not in the interest of the public.

The Delhi government’s affidavit was filed in response to a plea by several liquor licence holders against its order.

The government said that in February this year, some retailers “started giving huge discounts/offers on the MRP of liquor (‘buy one, get one and ‘buy one, get two’ etc)” to lure the customers with freebies, which resulted in crowds gathering outside the liquor vends leading to adverse law and order situation.

“There was no intent on the part of the government to make the discounting 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 licencees and hence was unsustainable and also not in the larger public interest,” the Delhi government said in the affidavit.

The petitioners – Bhagwati Transformer Corporation and others – contended that even though the applicable excise policy and the tender expressly permit a grant of discounts by the retail licencees, the Delhi government on February 28 prohibited the discounts without giving them an opportunity to be heard.

They also contended that the actions of the authorities are arbitrary, disproportionate, discriminatory, and violative of their fundamental rights under Article 14 of the Constitution.