Liquor policy monopolistic: HC

HYDERABAD Oct. 22. The High Court has criticised the liquor policy of the Chandrababu Naidu Government and held that the procurement of liquor in increasing quantities from the existing distilleries in the State to the exclusion of other distilleries amounted to creating an illegal manufacturing and supply monopoly. This was an "insular, invidious, hostile and unconstitutional discrimination of distilleries intending to establish fresh units in the State.''

Although it may sound ironical, consumption of liquor is the highest in Andhra Pradesh, a State where ``partial prohibition'' is in force after the Chandrababu Naidu Government reversed the policy of total prohibition imposed by late N. T. Rama Rao in 1994. The new policy allows unhindered sale of liquor, including cheap liquor, and toddy but prohibits arrack.

This "robust growth in the consumptive pattern,'' as the High Court described it, is reflected in the turnover of the A. P. Beverages Corporation Limited (APBCL), the nodal agency for wholesale liquor trade, which has increased from Rs. 2,250 crores in 1998-99 to 2,583 crores in 1999-2000, Rs. 2,936 crores in 2000-01 and more than Rs. 3,200 crores in 2002-03.

In a landmark judgment delivered on September 12 while allowing writ petitions filed by the Goa-based Crag Martin Distillery challenging the Government's action in rejecting its application for establishing a distillery in Andhra Pradesh, a Division Bench consisting of Justice Bilal Nazki and Justice Goda Raghuram quashed the Government's orders. This marked the culmination of a series of legal battles in the High Court since 1998.

After the partial prohibition policy came into effect, the APBCL began procuring Indian Liquor from distillers and bottlers by floating tenders. Initially, distilleries from outside the State and 31 within AP supplied liquor to meet the State's requirement of about one million cases (nearly 2.5 million cases this year). Crag Martin Distillery quoted a price of Rs. 230 a case for lower-end categories forcing local distilleries to follow suit. But, it was a totally different ball game during 1998-99 when the Government revised its excise policy through GOMs. 166. This, according to the petitioner, ``facilitated the formation of a cartel and exploitation of both the Beverages Corporation and the consuming public of Andhra Pradesh.'' The GO laid down that sealed tenders would be accepted only from local distilleries situated in AP who possessed a valid excise licence. The Government also insisted that out-of State distilleries must enter into a contract with local distilleries for manufacture of liquor. As the Goa-based distillery was disabled from participating in the tender, it applied to the State Government for grant of a letter of intent to establish a distillery in AP. It offered to supply to APBCL liquor at Rs. 200 per case in comparison to Rs. 300 per case being charged by distilleries , who had allegedly formed a cartel. Its contention was that production cost would be as low as Rs. 142.51 a case since all raw material, particularly molasses, was available in abundance in AP. The Government rejected the application to establish a distillery stating that the production of the existing units was more than adequate to meet the demand. Denying the formation of a cartel, it held that the import of A, B and C categories of liquor was banned to curb the menace of non-duty paid liquor. Its orders were set aside by the Court which said the State had acted arbitrarily and in violation of Article 14 of the Constitution.

The State's stand on surplus capacity turned out to be unfounded since it allowed modernisation of distilleries for introducing 90 ml packages and for "improving hygiene and efficiency!'' However, one of the 31 existing distillery licensees, who impleaded in the case, admitted that he had started an extra bottling line and its manufacturing capacity had been increased from 27,647 cases to 47,711 per month.

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