UNITED BREWERIES LIMITED, A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 THROUGH ITS BRANCH MANAGER, AUTHORISED SIGNATORY MEA USMANI SON OF MD ASLAM Vs. STATE OF BIHAR

JUDGEMENT

(1.) The challenge in this writ application is against the order of the Managing Director of the Bihar State Beverages Corporation Ltd ('the Corporation', in short) directing recovery of amounts from the running business of the petitioner for payment of the same to the fifth respondent. According to the petitioner, the order is unfair, arbitrary, unreasonable, intended to enrich the fifth respondent without any authority of law, without jurisdiction and against the provisions of the Liquor Sourcing Policy ('the Liquor Policy', for brevity).

(2.) The Corporation was established by the State Government as a fully owned Government company entrusted with the monopolistic privilege of wholesale supply of liquor in the State of Bihar. The Corporation had framed its own policy and incorporated terms and conditions in the agreement executed between the manufacturers and suppliers of liquor. Annexure - 1 is the liquor policy of 2006 which was executed by the petitioner and the fifth respondent. As per the agreement, the terms and conditions incorporated in the agreement are binding on the parties. The petitioner and the fifth respondent are engaged in the manufacture and supply of reputed brands of beer in the State of Bihar. Since the Corporation was entrusted with the exclusive privilege of wholesale supply of all kinds of liquor in the State of Bihar and is licensed under Form I of the Bihar Excise Act, the petitioner and the fifth respondent, as per the agreements entered into between them, are bound to supply branded beer only to the Corporation. On 26.9.2006, the petitioner, to meet its ever-growing demand of its beer brands like Kingfisher, entered into an agreement with the fifth respondent to manufacture/bottle UBL brand, in accordance with the terms and conditions therein. The said agreement was amended incorporating certain relevant conditions on 28.12.2006, as is evident from Annexure - 2. On the basis of the agreement, the fifth respondent was authorised to manufacture beer by using the trade marks of the petitioner. The amended Clauses (1) and (2) of the agreement are as follows:

(3.) The fifth respondent entered into an agreement with the Corporation for supply of branded beer of the petitioner from its own brewery, as prescribed under the Liquor Policy and copies of the agreement entered into between the petitioner and the fifth respondent authorizing the petitioner to manufacture its branded beer were also given to the Corporation. As per the Liquor Policy, the manufacturer has to provide the names of authorised representatives to deal with the Corporation in matters connected with and in relation to liquor supplies. Accordingly, the fifth respondent had executed a declaration in favour of M/s. Hemant Mehta and Usmani, who are the employees of the petitioner declaring that they shall be liable for all omissions of the aforesaid authorised representatives in execution of the terms and conditions with the Corporation. On the basis of the agreement, the amount due to the fifth respondent was credited in the "collection account" which is to be operated by the two nominees, who are the authorised representatives of the fifth respondent in dealing with the Corporation. Since the Corporation was facing technical difficulties in making payment in the name of the fifth respondent, as the petitioner's brand was supplied to the Corporation from various other sources, it requested the authorised representatives of the fifth respondent to give consent so that payments in relation to the petitioner's brand could be directly made to the petitioner. Accordingly, payments were made every week upto December 2007 to the petitioner by the Corporation, for which the fifth respondent did not make any objection. Even after two months of the close of the financial year, no such objection was made and as per the Liquor Policy, no claim could be made after two months of the close of the financial year with regard to the supply made during the said financial year. Its contention is that on the basis of the agreement, the petitioner paid all statutory dues as well as the cost of raw materials, packing materials, etc. including fixed retention/service charges to which the fifth respondent was entitled. The fifth respondent, being well aware regarding payment schedule every week, had clear knowledge of its dues made to the petitioner and the manufacture and supply of the brands to the Corporation through the fifth respondent was stopped after 17.12.2007. For the first time on 24.10.2008, the fifth respondent made a claim before the Corporation that it had not received payments for the supply made from May to December 2007. When the claim was made to the Corporation, it directed recovery of the amount from the running account of the petitioner with the Corporation for being paid to the fifth respondent. It is the case of the petitioner that the direction given by the Managing Director of the Corporation is contrary to its own Liquor Policy and if there was any dispute regarding payment between the petitioner and the fifth respondent, the same should have been settled by arbitration, as provided in the agreement executed between them.