India court rejects Pernod's plea to sell liquor in Delhi, citing 'criminal background'
Indian Court Ruling and Ongoing Legal Challenges for Pernod Ricard
By Arpan Chaturvedi
Pernod Ricard's Market Presence in India
NEW DELHI, May 29 (Reuters) - An Indian court rejected French giant Pernod Ricard's plea seeking permission to sell its products in New Delhi on Friday, dealing a blow to the company in a key market where it is battling a host of legal and tax issues.
India is Pernod's biggest market by volume in the world, where it recorded $2.9 billion in sales last year. New Delhi, which typically accounts for 5% of its India sales, is a key locale for any company operating in India's $65 billion alcohol market.
Legal Disputes with Delhi Authorities
Licence Denials and Ongoing Investigations
Pernod and Delhi authorities have been at loggerheads for three years as officials have denied it a licence to sell its products - like Absolut vodka and Chivas Regal whisky - while being an accused in a liquor policy investigation.
The Delhi city authorities have repeatedly rejected its requests, citing an ongoing investigation where the federal financial crime agency accuses Pernod of colluding with some Delhi retailers to boost its market share - allegations the company denies.
Court's Justification for Rejection
The ongoing investigations mean Pernod has a "criminal background" under New Delhi city rules, making it "ineligible" for a license, High Court Judge Purushaindra Kumar Kaurav said on Friday, backing the arguments of city authorities.
Pernod has repeatedly argued that it has not been convicted and so it should be granted a licence.
Company's Response and Next Steps
Pernod Ricard's Reaction
Pernod Ricard did not respond to a Reuters request for comment on the verdict. The company has the option to appeal the ruling before a larger bench of the Delhi court or at India's Supreme Court.
Recent Licence Rejection
The latest licence rejection from city authorities came in February, prompting the company to approach the court saying three years of denials had left its business "hopelessly fettered" in New Delhi, Reuters has reported.
Additional Legal and Tax Issues
Tax Demands and Allegations
The company is also battling a demand from Indian tax authorities to pay $314 million in back taxes on some of its Scotch imports and faces allegations of not disclosing the age and composition of its imported malts, Reuters reported this week.
Pernod's Denial of Wrongdoing
Pernod has denied wrongdoing in these investigations.
(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra and Thomas Derpinghaus)
