HC questions Chandigarh Admn’s failure to stop cartelisation in allotment of Liquor vends

The High Court of Punjab & Haryana has questioned the Chandigarh administration for its failure to stop cartelisation or trade monopoly in allotment of liquor vends in the excise policy for 2020-2021.

“..we are prima facie of the view that the action of the Chandigarh Administration in allotting more than 10 liquor vends to the same persons, who by formulating different companies applied for the tender process, is contrary to the purport & object to be achieved by clause 13 of the excise policy,” the bench of Justices Jaswant Singh & Ashok Kumar Verma said during resumed hearing of a petition challenging the policy.

The petition alleges that the administration’s policy is leading to “complete cartelisation & monopoly” of certain individuals through their firms. The excise policy does not promote free trade, as it states that for any brand of foreign liquor there shall be only five wholesale licensees, who shall further sell liquor to all the retail licensees. It had argued that the Union Territory should have capped the highest bid & draw of lots could have been introduced so that cartels may not jack up prices to bag contracts.

Same group got vends through 2 firms

The Court said that it has come to light that Bajaj Group has been allotted 15 liquor vends in the city, through 2 separate corporate entities: Bajaj Spirits Private Limited & Liquor World Venture Private Limited. The directors of both companies are the same. But excise officials have failed in performing their duties in complying with the conditions stipulated in clause 13, which says not more than one bid can be submitted by a company/firm/person for a particular licensing unit, & to curb the menace of cartelisation & monopolistic practices, a single person/entity is entitled for allotment of up to a maximum ten vends, said the bench.

The Court observed that this happened despite the fact that along with bids the firms were to submit photograph, proof, PAN card & list of all directors as with the registrar of companies.

“Once the directors running the company are same & still more than 10 liquor vends are allotted to the said persons, the purport & object to be achieved by imposing restriction under Clause 13 would be defeated,” adding that if persons are permitted to participate by formulating different entities, “we do not find any reason for imposing any restraint on any individual, as the same would be discriminatory in nature”.

The restrictions have to be made applicable across the board for everyone or none, the bench added, asking the Chandigarh administration to submit a response to some issues framed by it by Oct 27.

The administration has been asked to address whether clause 13 conditions were violated as the department failed to check credentials of all the directors of firms, how it allowed single person/ entity to participate through artificial barrier of bidding through different firms & whether it didn't amount to monopoly. It has also been asked to address if one person was allowed to bid through different entities, whether it didn't defeat the purpose for which restrictions were imposed. 

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