The Delhi high court on Tuesday dismissed a petition filed by French spirits major Pernod Ricard, challenging the refusal of the city government to renew its liquor sales license in the national capital. Justice Prathiba M Singh, ruling that the writ petition was not maintainable, directed Pernod Ricard India Pvt Ltd to seek recourse with the appellate authority under the excise law to address their grievance.
On April 13, the Department of Excise denied the liquor company’s L1 license application due to ongoing investigations regarding their alleged involvement in the Delhi excise scam.
In Justice Singh’s comprehensive 27-page verdict, she noted the gravity of the allegations against the petitioner company and its employees. These accusations cannot be simply disregarded, as they hold significance not only in the context of the liquor business and excise license but also strike at the core of corporate governance.
According to the court, the Licensing Authority expressed the view that the petitioner and its employees lacked good moral character based on the allegations against them. The allegations also revealed a criminal background due to ongoing criminal proceedings initiated by the CBI and ED. This criminal background would legally disqualify them from obtaining a license.
“In the case of a corporate entity like the Petitioner, whose employees are not claimed to have acted in their individual capacity and continue to remain in the employment of the Petitioner, the said allegations could not have been brushed aside by the Licensing Authority. Moreover, the allegations also reveal that the employees represented themselves to be acting for Pernod Ricard. The allegations go to the root of good corporate governance of a company like the Petitioner,” the court said.
“One of the Petitioner’s employees, Mr Manoj Rai, has been mentioned as one of the accused (in CBI FIR). However, he has not been arrayed as an accused in the charge sheet arising out of the FIR… In a supplementary complaint filed by the ED, Mr Binoy Babu, who is employed as a regional manager with the Petitioner, was named as an accused. In the said supplementary complaint, the Petitioner is also arrayed as an accused,” noted the court.
The court expressed its opinion that the current case necessitates a thorough examination of facts and does not fall within the realm of discretion that should be exercised under the writ jurisdiction. Therefore, the court granted the petitioner an opportunity to approach the appellate authority.
“The entire matter shall have to be thrashed out in a substantive appeal which is maintainable under Section 72 of the Excise Act, 2009. Therefore, the question whether or not the Petitioner is entitled for grant of L-1 licence under the provisions of Excise Act, 2009 and Rules therein is left open to be decided by the Appellate Authority,” the court said.
To ensure a fair hearing for the petitioner before the appellate authority, the court mandated the provision of all pertinent documents relied upon by the Licensing Authority.
The revised statement states that the appellate authority is required to provide the petitioner with an opportunity for an oral hearing. The petitioner must submit the appeal within a two-week period, and the appellate authority must issue a verdict within one month of the hearing.
Pernod Ricard India has been accused of providing financial assistance to certain retailers in Delhi to increase the presence of its brands. Allegedly, officials from the company offered bank guarantees as part of this arrangement.
In November of last year, Benoy Babu, an executive at Pernod Ricard, was apprehended by the Enforcement Directorate (ED) in connection with a money laundering investigation linked to the Delhi Excise Policy 2021-22, which has since been abolished.
The trial court previously stated that the oral and documentary evidence indicated that Babu played a pivotal role in the decision made by Pernod Ricard. This decision involved providing corporate guarantees amounting to INR 200 crore for loans obtained by other members of the cartel from HSBC Bank.
According to the trial court’s ruling, this action was deemed an investment aimed at acquiring dominance in the retail liquor industry and attaining the company’s highest market share in the sale of alcoholic beverage brands.
The money laundering case of the ED originated from an FIR filed by the Central Bureau of Investigation (CBI). The CBI registered the FIR following a recommendation by Delhi Lieutenant Governor V K Saxena, initiating an investigation into the matter.
The policy, initially implemented by the Delhi government on November 17, 2021, was later revoked in September 2022 following allegations of corruption.
Pernod Ricard stands as the second-largest wine and spirits company globally, boasting an extensive portfolio of more than 200 esteemed brands. Among these renowned labels are 100 Pipers, Chivas Regal, The Glenlivet, Absolut, Havana Club, and Jacob’s Creek. Pernod Ricard also takes pride in its ownership of esteemed Indian brands like Blenders Pride and Royal Stag.