HC declares invalid provision in Punjab excise policy

The Punjab and Haryana High Court today declared as invalid a provision in Punjab excise policy 2016-17 for allotment of licence under a new category L-1A to entities which will only be allowed to buy liquor directly from breweries and distilleries.
A division bench comprising justices Ajay Kumar Mittal and Raj Rahul Garg held the sub clause (ii) of clause 2.14 in the excise policy for grant of L-1A licence as invalid and inoperative as it does not prescribe the manner and the method of licence issuance.
The court order came on a petition seeking quashing of the newly added Clause 2.14 for L-1A licence on the grounds that it arbitrary, illegal and against the provisions of the Punjab Excise Act, 1914 and the Punjab Liquor Licence Rules, 1956.

It contended that Excise department has no power or authority to add, delete or cancel any kind category of licence in the excise policy without amending the relevant Acts and the Rules.
It also sought a direction to the respondents to bring transparency in the procedure for allotment of L-1A licence.
Mohan Jain, who along with Vikram Jain appeared as counsel for the petitioner, argued that Clause 2.14 is suffering from lack of transparency in the process of allotment of L-1A License.

The policy restricts the number of suppliers (L1-A licence holders) to three for Indian made foreign liquor (IMFL) and two for beer from manufacturers.

Earlier, L1 licencees were directly purchasing liquor from the manufacturing and after the new provision they would have been in the second line of the supply chain and need to procure from the three L-1A licencees.
An L1-A licencee can get the consent letters for procurement from any number of manufacturing companies, while a manufacturer will be able to choose only one supplier.
During the course of hearing, Jain told the court that sub clause (ii) said manufacturing company could not issue consent letter to more than one entity. But criteria or parameters for the manufacturers to issue consent letter were not laid down in the entire policy.

Even parameters or criteria were not laid down for cancellation of consent or authority letter issued by the manufacturing unit.
Jain alleged that L-1A license was created to extend monopoly of three groups which were major stakeholders in the liquor business in Punjab.
Throughout the country, the liquor licence is being granted either by way of draw of lots or lottery.
But in the present case, L-1A licence is super wholesale license, which would deal with the entire business of liquor in the state of Punjab and further will sell the liquor to the L-1 licenses, who were earlier purchasing the liquor directly from any liquor manufacturing company, it was submitted.

The excise policy is silent how L-1A licence would be allotted and also silent on the aspect that who is the competent responsible person or authority to allot it, Jain said.