New Delhi: Upholding the ban on French liquor giant Pernod Ricard in the Capital, the Delhi High Court has dismissed its plea for a wholesale liquor licence—laying out the legal repercussions of the “Delhi excise policy scam”, specifically focusing on criminal allegations against the company’s former assistant vice-president Manoj Rai and its alleged role in a “super cartel”.
Pernod Ricard is known for Absolut Vodka and Chivas Regal whisky. For now, its products remain off the shelves in Delhi as the company continues to battle the fallout of the excise policy case. A change in this situation may be possible when the trial in the case progresses.
Currently, the trial is in the initial stages as the Central Bureau of Investigation (CBI) has appealed against the discharge order for 23 accused in the excise policy case this February. The accused include AAP supremo and former Delhi chief minister Arvind Kejriwal, former deputy CM Manish Sisodia and Bharat Rashtra Samithi (BRS) leader K. Kavitha.
The legal trouble for Pernod Ricard—the world’s second largest producer of wine and spirits—intensified soon after its 2022 licence application for units in Gwalior and Mohali.
While the excise department initially issued “Approval Letters”, the tide turned when the CBI registered an FIR in August 2022 regarding irregularities in the framing and implementation of the 2021-22 excise policy.
Central to the case was the charging of Pernod Ricard’s Rai as an accused by the CBI and Enforcement Directorate (ED).
The CBI has alleged that Rai and other officials were involved in a criminal conspiracy and falsification of accounts to gain “undue advantage”. The company has denied the allegations.
The involvement of a high-ranking Pernod Ricard executive became the primary catalyst for the department to revisit the company’s eligibility for licence, citing Section 13 of the Delhi Excise Act, 2009.
The crux of the case rested on the interpretation of Section 13(1)(c) of the Act, which requires that an applicant possess “good moral character and has no criminal background or has not been convicted of any offence”.
Before the HC, Pernod Ricard argued that since there was no formal conviction in the liquor policy case, a mere pending investigation against a former employee should not disqualify the entire corporation.
The court, however, rejected this narrow view, favouring a broader interpretation that prioritises public interest over commercial privilege.
Justice P.K. Kaurav in his order Friday held that “the condition for not being convicted of a criminal offence… is the floor and not the ceiling for a person to not have a criminal background”, and clarified that the term “criminal background” is “ex facie broader than not being convicted for an offence”, and that equating the two would render the legislative intent “otiose and nugatory”, meaning useless and ineffective.
The court’s decision was heavily influenced by findings from the ED, which named Pernod Ricard as Accused No. 12 in the money-laundering probe, and alleged the existence of a “super cartel” where the company used credit notes as a “novel method of recovery of kickbacks” and provided corporate guarantees to favoured retailers to push its brands, including Absolut Vodka, and gain “illegitimate market share”.
“Surely a company which is accused of committing the offence of money-laundering… cannot in anybody’s imagination be considered as being without a ‘criminal background’,” said the court.
The HC ruling confirms that the ban on Pernod Ricard’s portfolio will continue as the liquor trade is “res extra commercium”—things outside commerce and thus a privilege, not a right—allowing the state to set stringent moral bars for entry.
The court granted Pernod Ricard liberty to apply for a licence afresh only if there is a change in the stage/status of the criminal cases presently pending against it.
(Edited by Nida Fatima Siddiqui)
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