New Delhi, May 30 (IANS) The Delhi High Court (HC) has dismissed a plea filed by French wine and spirits giant Pernod Ricard against denial of a wholesale liquor licence, holding that the company has a “criminal background” under the Delhi Excise Act and is therefore ineligible for an L-1 licence.

Justice Purushaindra Kumar Kaurav ruled that the authorities were justified in rejecting the company’s applications for wholesale liquor licences in view of pending prosecution against it in connection with the alleged Delhi excise policy scam.

The Court concluded that Pernod Ricard, as on date has a criminal background under Section 13(1)(c) of the Delhi Excise Act and is therefore ineligible for the grant of an L-1 licence.

“The decision-making process of the respondents while adjudicating upon the petitioner’s applications was not arbitrary, illegal, or violative of Article 14 of the Constitution,” the Court held.

The High Court further observed that the requirement under Section 13(1)(c) of the Delhi Excise Act, 2009, that an applicant should not have been convicted of a criminal offence is not the sole test for determining whether an entity has a criminal background.

“The condition for not being convicted of a criminal offence under Section 13(1)(c) of the Delhi Excise Act is the floor and not the ceiling for a person to not have a criminal background,” the Court said.

Clarifying the interpretation of the provision, the Court added that the word ‘or’ appearing between the expressions ‘has no criminal background’ and ‘has not been convicted of any offence’ should be read as ‘and’.

The order came on a petition by Pernod Ricard challenging a February 17 order of the Financial Commissioner (FC), which had upheld an earlier decision of the Excise Commissioner rejecting the company’s L-1 licence applications.

The licence applications were rejected on the ground that the company is facing prosecution initiated by the Enforcement Directorate (ED) in a money laundering case linked to the alleged Delhi excise policy irregularities, in which Pernod Ricard is an accused.

Senior advocates appearing for Pernod Ricard argued that the authorities had wrongly treated pending criminal proceedings as equivalent to having a “criminal background”, despite there being no conviction against the company.

The company argued that Section 13 only disqualifies applicants who have been convicted and contended that the Financial Commissioner effectively rewrote the law by reading pending prosecution into the eligibility conditions.

Appearing for the Delhi government, Standing Counsel (Civil) Sameer Vashisht, Panel Counsel Avni Singh and other advocates defended the decision to reject the licence applications.

With the HC dismissing the plea, the orders passed by the Excise Commissioner and the Financial Commissioner refusing the wholesale liquor licences remain in force.

However, the Court granted liberty to Pernod Ricard to apply afresh for a licence if the stage or status of criminal proceedings pending against it changes.

Earlier this month, the Competition Commission of India (CCI) ordered a detailed antitrust investigation into Pernod Ricard over allegations that it entered into exclusive arrangements with retailers in Delhi to promote its brands and restrict rival products in the market.

The regulator found prima facie merit in allegations that the company and associated entities may have engaged in exclusive dealing agreements aimed at increasing market share in Delhi’s Indian Made Foreign Liquor (IMFL) segment and directed its Director General to complete a probe within 90 days.

–IANS

ag/