United Spirits Limited and Others vs Uttarakhand Agricultural Produce Marketing Board and Others

Umesh Chandra Dhyani, J.—Since the factual matrix of the aforesaid writ petitions and the law governing the field is the same, therefore, both of them are being taken up together for brevity and convenience.

Writ Petition No. 2932 of 2015 (M/S), M/s. United Spirits Limited vs Uttarakhand Agricultural Produce Marketing Board and others, shall be the leading case.

By means of present writ petitions, the petitioners seek following reliefs, among others:

A) Issue a writ, order or direction in the nature of mandamus directing the State Government/Excise Commissioner to lay down detailed mechanism pertaining to procurement of Foreign Liquor at all levels in the value chain so as to address, amongst others, all the issues raised in Ground (d) to ensure that the respondent No. 1/respondent No. 2/respondent No. 3 act in an efficient, transparent, fair, reasonable and unbiased manner.

B) Issue a writ, order or direction in the nature of mandamus or any other writ, order or direction directing the Addl. Excise Commissioner (Licensing) and District Collectors to fix minimum stocks (brand-wise) of Foreign Liquor to be maintained at all times by the respondent No. 1/respondent No. 2/respondent No. 3, on a basis which is reflective or orders placed by the retailers and commensurate to the true consumer demand, in a fair and transparent manner and in accordance with Para 10, 11 and 12 of the Communication dated 27.04.2015 and Rule 10, 11 and 12 of the Rules dated 30.04.2015.

C) Issue a writ, order or direction in the nature of mandamus or any other writ, order or direction directing the respondent No. 1/respondent No. 2/respondent No. 3 to procure Foreign Liquor in a fair, transparent and reasonable manner and place orders on the petitioners keeping in mind the true market demand (brand-wise).

It is the submission of learned Senior Counsel that the petitioner company is not challenging the policy of the State Government. Accepting the policy, it is the contention of learned Senior Counsel that the policy enunciated by the State Government is being applied in arbitrary manner and, therefore, they are required to frame guidelines to implement the same.

Learned Senior Counsel drew attention of this Court towards paragraph Nos. 17, 18, 19 and 20 of the writ petition in support of his contention. Said paragraphs are being reproduced here-in-below for convenience:

"A meeting was held on 01.09.2015 between the Chief Secretary, Government of Uttarakhand and representatives of the said industry associations alongwith representatives of the petitioner. The said meeting was also attended by the Principal Secretary, Excise Department, Government of Uttarakhand alongwith other officials from Excise Department wherein, amongst other mattes, the Chief Secretary requested the petitioner to submit 5 years date and assured that corrective steps would be taken if any anomaly was found in the procurement process.

Pursuant to such meeting, a follow up letter dated 01.09.2015 was filed by the Industry Association with the Chief Secretary, Government of Uttarakhand, wherein it was stated that the orders for petitioner and another multinational company, two companies with biggest consumer franchise in Uttarakhand were drastically reduced for the month of August 2015, which completely disregarded consumer preference and historical performance of the two companies. Along with the said letter, the industry association also filed relevant data to evidence the said drastic fall in the orders. A copy of the letter dated 01.09.2015 is annexed as Annexure 12 to the writ petition.

The petitioner also wrote a letter dated 03.09.2015 to the Principal Secretary, Excise Department, Government of Uttarakhand, wherein as required by the Chief Secretary, Government of Uttarakhand, the petitioner amongst others submitted 5 years sales data and pointed out that its sales had drastically dropped despite there being no consumer or supply related issues. The petitioner also requested the former for a systematic intervention. A copy of the letter dated 03.09.2015 filed by the petitioner is annexed as Annexure 13 to the writ petition.

Despite the meetings and the assurances given therein, no steps were taken by either the Chief Secretary, Government of Uttarakhand or by the Principal Secretary, Government of Uttarakhand or the Excise Commissioner to correct the procurement of brands of Foreign Liquor (including IMFL) in the State of Uttarakhand. It is submitted that as a result of the complete inaction at the end of the aforesaid authorities, unfettered discretion has been vested in the respondent No. 1 to act in an arbitrary manner, thereby favouring some suppliers over the others, in complete disregard of the consumer preferences and demand. It is submitted that the same amounts to abuse of the monopoly vested in the respondent No. 1 by virtue of the license granted in terms of the New Excise Policy and the Rules. It is also submitted that not the petitioner but also the retailers and consumers of the petitioner''s products are prejudiced on account of such acts and omissions of the respondent No. 1. It is submitted that on account of disregard of the consumer demand by the respondent No. 1 coupled with the absence of a mechanism whereby the retailers can place brand wise orders as per the consumers demand and respondent Nos. 2 and 3 are obligated to fulfill such brand wise orders, the retailers are facing grave hardship as they are not in a position to cater to the consumer demands, resulting in significant drop in sales. Further, it goes without saying that the consumers are not getting the products of their preference. In addition to the above, the same may also result in smuggling, illicit sale of Foreign Liquor and sale of spurious liquor in the State of Uttarakhand. The same is also evident from the various news reports in various newspapers which are annexed hereto as Annexure No. 14 to the writ petition.

Learned Senior Counsel also emphasized that that the Communication dated 27.04.2015 and the Rules dated 30.04.2015 vested unfettered discretion in the respondent No. 1, without any checks and balances, inasmuch as the Communication and Rules are completely silent on aspects such as how the minimum stocks (brand-wise) of Foreign Liquor have to be ascertained, time period within which the minimum stocks should be replenished, process for placing brand-wise orders by the retailers reflective of actual demand, mechanism for suppliers and retailers to check the availability of stock (brand-wise) at the warehouse of respondent Nos. 1 to 3. As a result of the above, the respondent No. 1 is acting in a completely non-transparent manner, which in turn, is to the detriment of the suppliers like the petitioner, retailers, consumers and the market as a whole.

Learned Senior Counsel suggested various guidelines in support of his contention. The said guidelines read as under:

i) Both retailers and suppliers should have information, through online and any other mode about stock levels of various brands available with the wholesale and sub-wholesale licensees.

ii) There should be an online system of placing orders, making payments towards adibhaar etc. and generation of retailer permits.

iii) Retailers should be allowed to pick and choose brands of their preference whilst placing orders and the adibhaar amount that the retailer is required to pay should be calculated on the basis of brands and quantities chosen.

iv) The retailer permits should have the option of mentioning brand names and brand specific demands by the retailers should be duly captured in the system.

v) The Excise Department should be aware of the available stock levels not only at the wholesale supplier level but also at the retailer level.

The letter issued by the Chief Secretary of the Government of Uttarakhand on 27.04.2015 has been enclosed as Annexure 3 to the writ petition. The relevant paragraphs of the Chief Secretary''s letter are as under:

"The Mandi Parishad will procure all brands in each FL2 and will authorise Garhwal Mandal Vikas Nigam and Kumaon Mandal Vikas Nigam to operate sub-FL2 in all district of Garhwal Division and Kumaon Division respectively.

It will be mandatory for Mandi Praishad to maintain minimum stocks of all the brands of foreign liquor/beer/wine at FL2s as fixed by Additional Excise Commissioner (Licensing) and at all sub FL2s as fixed by the Collector of the concerned district.

Sub-FL2 licensee of each district will have make available all brands of foreign liquor at FL2 license in accordance with the demands of the retailer licensee of the concerned district. In case the FL2 licensee fails to make available the brands in accordance with the demands of the retailer licensee of foreign liquor, the retail licensee will file the complaint against FL2 licensee before the Collector of the concerned district. The Collector of the district, on receipt of written complaint, shall dispose of the same within 3 days of receipt. Any party would be entitled to file an appeal against the order of the Collector before the Excise Commissioner/Government within 15 days in accordance with rules.

Sub-FL2s opened in each district will ensure the availability of all brands of foreign liquor. To control illegal sale/smuggling of liquor, only foreign liquor in bottles with the approved holograms by the excise department will be permitted for sale and the foreign liquor will be sold at the price fixed. On receipt of complaint of any irregularity by the department, strict action will be taken in accordance with rules.

In pursuance of the letter and Notification, an agreement was entered into between the Uttarakhand Agricultural Produce Marketing Board and the petitioner on 15.05.2015. Clauses 1.1, 2.7 and 6.1 of said agreement are relevant in this context and are being reproduced here-in-under for reference:

"1.1. The quantity of liquor to be procured and distributed shall be determined by the Board from time to time, keeping in view the demand for liquor manufactured/supplied by the Manufacturer.

2.7. Manufacturer should maintain the minimum stock of liquor at FL2 depots (Rudrapur and Dehradun) as per direction of Board.

6.1 Payment for the liquor delivered shall be made only after the sale of liquor and it is subject to every fortnight payment cycle, means the liquor sold between 01 to 15th of a month will be paid from 16th to 19th of same month and the liquor sold between the 16th to end of the month and payment will be made up to 4th of the next month."

It has been mentioned at the end of the agreement that Clauses 1.1, 2.7 and 6.1 will be read as per letter from UAPMB dated 15.05.2015. The said endorsement was pursuant to the letter dated 15.05.2015 issued on behalf of Uttarakhand Agricultural Produce Marketing Board (FL2 licensee). Number of retailers wrote to the In-charge Sub-FL2, Kumaon Mandal Vikas Nigam Ltd. and Garhwal Mandal Vikas Nigam Ltd. (for brevity here-in-after referred to as ''KMVN & GMVN'') requesting supply of the liquor brand-wise. The said letter is part of Annexure 16 and is one of the representations moved by many retailers to KMVN and GMVN. General Manager of respondent No. 1 wrote a letter (Annexure 19 to the writ petition) to all the suppliers to provide previous year supply details of liquor (all Brands) quantity (QPM) month wise and district wise so that it may help in generating demand to liquor companies and supplying IMFL/BEER to Sub-FL2.

Learned Senior Advocate for respondent Nos. 1, 2 and 3 opposed the writ petitions on various grounds, viz., locus and maintainability, among others. Learned Sr. Advocate questioned the filing of the writ petitions by arguing that whether, suppliers or manufacturer can invoke writ jurisdiction of the Court? Learned Senior Advocate also contended that the petitioners, by way of filing present writ petitions, cannot ask the Government to do things in a particular manner. According to him, trading of liquor is not a fundamental right and, therefore, writ petitions are not maintainable before this Court.

Learned Senior Advocate for the respondents also submitted that since there is a dispute between the parties regarding non-lifting of liquor, therefore, the petitioners ought to have invoked the arbitration clause, which is slated at Clause 11.1 of the agreement dated 15.05.2015. The same reads as under for convenience:

"ARBITRATION

11.1 Any dispute, which may arise between the Parties herein shall be submitted to arbitration. The arbitral award shall be conclusive, final and binding on both the Parties herein. The Manufacturer has agreed with the Board to provide for the nomination of a sole arbitrator by the Board only from amongst the following:

a. Any retired Judge of the High Court of Uttarakhand,

b. Any retired Chief Secretary or Additional Chief Secretary to Government of Uttarakhand,

c. Any retired Excise Commissioner to Government of Uttarakhand."

It is also the submission of learned Senior Advocate for the respondents that the retailers have not come to the Court. It is the manufacturers, who have approached this Court, by way of filing present writ petitions. Having accepted the policy of the Government, the petitioners ought to have taken recourse to the arbitration clause.

In reply thereto, learned Sr. Counsel for the petitioner referred to the statutory rules dated 30.04.2015, to bring home the point that the petitioners can very well approach the Writ Court to press implementation of statutory rules, which imposes duties on number of authorities, including R-1 to R-6. Paragraph 10 of the Notification is pari materia to the relief No. B of WPMS No. 2932 of 2015, as sought for by the petitioners in both the writ petitions. Paragraph 10 of the Notification and relief No. B of the writ petitions are, therefore, identical. It is emphasized that the petitioner is pressing his rights under the rules and not under the agreement, especially, Rule 3 and 11 of the Notification dated 30.04.2015.

In paragraph 33 of a decision rendered by Hon''ble Apex Court in Union of India (UOI) and Others Vs. Tantia Construction Pvt. Ltd., , the following was observed:

"Apart from the above, even on the question of maintainability of the writ petition on account of the arbitration clause included in the agreement between the parties, it is now well established that an alternative remedy is not an absolute bar to the invocation of the writ jurisdiction of the High Court or the Supreme Court and that without exhausting such alternative remedy, a writ petition would not be maintainable. The various decisions cited by Mr. Chakraborty would clearly indicate that the constitutional powers vested in the High Court or the Supreme Court cannot be fettered by an alternative remedy available to the authorities. Injustice, whenever and wherever it takes place, has to be struck down as an anathema to the rule of law and the provisions of the Constitution."

Conceding for the sake of argument that trading of liquor is not a fundamental right, the fact remains, that any aggrieved person can take recourse to writ jurisdiction under Article 226 of the Constitution of India to enforce his other legal rights. In other words, a writ can be filed under Article 226 of the Constitution of India for the enforcement of any of the rights conferred by Part III, or for any other purpose.

A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable, as has been held by Hon''ble Apex Court in M/s. Khoday Distilleries Ltd. etc. Vs. State of Karnataka and others, . In the instant case, learned Senior Counsel representing the petitioners, have not stated that the rules are arbitrary. Petitioners simply say that the rules of the policy are not being implemented in right earnest. The policy is being applied in an arbitrary manner and, therefore, the State Government is required to frame the guidelines to channelize the same. A subordinate legislation may be questioned under Article 14 of the Constitution of India on the ground that it is unreasonable; "unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary". ''The Government Company is expected to act bona fide and with responsibility and it is not correct to contend that the Government agency will be interested only in particular manufacturer. This submission has considerable force. ".....there is, therefore, no question of any hardship being caused to the appellants by reason of the fact that their sales have to be channelled through an intermediary. Depending upon the orders received by the MSIL, it, in turn, places orders with the suppliers or manufacturers concerned. The business activity of the appellants cannot, therefore be said to be curtailed in any manner. Nor can there be any hardship on the appellants".

Repelling such contention, the Apex Court in Khoday Distilleries''s case (supra) observed that ''.....looking to the channelizing role of MSIL, the fear of discrimination between different suppliers expressed by the appellants does not appear to be justified. In the case of Maganlal Chhaganlal (P) Ltd. Vs. Municipal Corporation of Greater Bombay and Others, , this Court has observed that it is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. The same view was reiterated in Director of Industries, U.P. and Others Vs. Deep Chand Agarwal, . Also, if there is discrimination in actual practice, this Court is not powerless......''

Annexure 7 is a tabular presentation of the sales figures of the petitioner company. As per Annexure 7, three lakh plus cases were sold out by the petitioner company during the period from August 2014 to October 2014. Four lakh plus cases were sold out by the petitioner company during the period from May 2015 to July 2015. Uttarakhand Agricultural Produce Marketing Board, KMVN and GMVN came into picture in May 2015. Then suddenly, there has been a fall in the orders placed before the petitioner company by the Board. The sale suddenly fell to ten thousand plus cases.

Annexure 8 is a monthly chart for the selfsame period. There was no problem till July 2015. The problem started from August 2015 onwards. The case of the petitioner companies is that their Brands are available, but no orders are being placed upon them by the respondents so much so that they are being driven out of the market and for that, although complaints have been filed, but they have not been redressed till date. Why the orders are not being placed by the Board to the petitioner companies?

Learned Sr. Counsel appearing for the Uttarakhand Agricultural Produce Marketing Board submits that he will find out the veracity of such statistics and shall file counter affidavit to this effect.

Prima facie, this Court is satisfied that the petitioners can approach this Court for redressal of their grievances under Article 226 of the Constitution of India. Both the writ petitions are, therefore, held to be maintainable. Yes, there appears to be substance in the argument of learned Sr. Advocate for respondent Nos. 1, 2 and 3 as well as learned Addl. Advocate General for the State that in case of dispute, the petitioners ought to have taken recourse to the arbitration clause, as has been mentioned in Clause 11.1 of the bipartite agreement dated 15.05.2015. At the same time, it is a fact that the trading of liquor is not a fundamental right, but as has been stated above, the petitioners can approach this Court under Article 226 of the Constitution of India ''for any other purpose'', i.e., enforcement of legal rights other than the rights guaranteed under Part III of the Constitution of India. It is being said, at the cost of repetition, that the petitioner companies are not challenging the policy of the State Government. They are only saying that the policy is being applied in arbitrary manner vis-a-vis the petitioner companies. A large part of reliefs sought for by the petitioners is akin to the various Clauses of the Notification dated 30.04.2015.

As prayed, three weeks'' time is granted to the respondents to file counter affidavits. In the counter affidavit, the respondents are at liberty to challenge the statistics regarding sales of cases, as provided by the petitioner companies among others. In the meantime, it is provided as an interim measure, that orders shall be placed on the petitioner companies for the month of December 2015, corresponding to the sale period of December 2014.

List after three weeks, i.e., on 21.12.2015.

CLMA No. 13345 of 2015 as well as CLMA 13297 of 2015 both stand disposed of.