Scam in New Excise Policy? Delhi Government Issues Show Cause Notices To Indospirit Group And Others

Rattled with allegations of mass scam in the new Excise Policy of Delhi, the Excise Department of the Delhi Government has issued show cause notices to Indospirit Group and Enrich Corporate Services Private Limited, who have been alleged of cartelization and flouting of rules to grab the liquor trade of the Capital of the country. The Show Cause Notice signed by Narender Singh, Assistant Commissioner (IMFL) Delhi, goes on to say “in view of the above mentioned observations/allegations if found true, are violation of terms and conditions of L-1/Excise Policy 2021-22. Hence, you are hereby directed to submit your clarification at the earliest but not later than 07 days from the receipt of this Show Cause Notice, falling which necessary action as deemed fit will be taken without any further notice”.

The copy of show cause notice is given below for the viewers of www.bharatvigilante.com –

                                                                                                                            SHOW CAUSE NOTICE 

Whereas, the Indospirit Marketing Private Limited has applied for the wholesale license in form of L-1 for the year 2021-22 under new Excise Policy 2021-22. The applicant has applied under joint venture mode wherein the other JV partners are Indospirit Distribution Limited. Individuals namely, Mr. Prem Rahul Manduri, Mr. Butchibabu Gorantly and Mr. Arun Ramachandran Pillai.

And whereas, a complaint has been received that M/s Indospirit Marketing Private Limited is being alleged to be involved in shareholding of M/s Khao Gali Restaurants Pvt. Ltd holding zonal retail license for Zone 2 & Zone 3.

And whereas, the L-1 application has been applied by your company as a Joint Venture by the name of M/s. Indospirit Marketing Pvt. Ltd.

And whereas, on the basis of the allegations leveled against your firm in the complaint and the observation of the department, the following needs clarification:

a. Indospirit Beverages Pvt. Ltd – a manufacturer of brocode beer brand has shareholding of 66.68% in the name of Sh Sameer Mahandru and 33.32% in the name of Samaka Holdings Pvt Ltd. Both are declared as promoters in the Annual Return for FY2020 Further, the shareholding of Indospirit Distribution Pvt. Ltd is in the name of Sh. Sameer Mahandru (59.2%) and Mrs Geetika Mahandru (38.27%). Both are declared as promoters in the Annual Return for FY2020. It has also been alleged in the complaint that Indospirit Marketing Pvt. is shareholder and promoter of Indospirit Distribution Pvt. Ltd holding shares to the tune to 99.3%

b. Further, on perusal it has been noticed that registered office addresses of M/s Indospint Beverages Pvt Ltd, M/s Indospirit Marketing Pvt. Ltd. and M/s. Indospirit Distribution Pvt. Ltd. are at same address i.e. B-230, Okhla Industrial Area, Ph-1 Delhi.

c. M/s Khao Gali Restaurants Pvt Ltd is a related party of Indospirit Group, an existing distributor and liquor manufacturer. It has been stated in the complaint that as per the MCA records such as the Annual Return for FY 2020 of M/s Khao Gall Restaurants Pvt Ltd, the promoters and shareholders of the company are Sh Shyam Kapur (45%), Mrs Geetam Kapur (45%) and Sh Tarun Kaira (10 %) (father, mother and maternal uncle of Mrs Geetika Mahandru respectively). These persons are also promoters of the company as per the Memorandum of Association. M/s Khao Gali Restaurants Pvt. Ltd is a part of Indospint Group is also evidenced from the fact that Geetika Mahandru was a Director in Geetech Dynamic from 20 June 2016 to 30 March 2021. If that is true, then it is a violation of clause 1.5 of the Terms and Conditions for grant of L-1 license for the year 2021-22

d. Sameer Mahandru and Geetika Mahandru who are blacklisted by Delhi Excise Department vide Excise Department Order dated 16.07.2019 have clandestinely bid for retail zones through related party – M/s Khao Gall Restaurants Pvt Ltd The L-17 license of Barshala a unit of Indospirit Bars Pvt. Ltd. has been cancelled by the department and the Ms. Geetka Mahandru one of the Directors of the Barshala has is also the Director of M/s. Indospirit Distribution Ltd. who had applied for L-1 license.

e. The Complaint states that there is a cartel formation between M/s Khao Gali Restaurants Pvt. Ltd. a Indospirit group company and the Balaji Group for winning five zones (Zone 2, 3, 4, 23 and 32). It has been further alleged that the Balaji Group and the Indospirit Group have formed a cartel in a clandestine manner and has won five retail zones (Zone 2, 3, 4, 23 and 32) between them despite being distributors and manufacturers in violation of Clause 4.1.1, Clause 4.1.2 ( and Clause 4.1.2 (iv) of the Excise Policy 2021-22 and Clause 2.3, 2.6, 66, 202, 20.3, 24.1 and 26 of the Tender.

f. And whereas, as per the shareholding certificate, shareholding of M/s. Indospirit Distribution Ltd. owns 99.38% shareholding in M/s. Indospirit Marketing Pvt. Ltd. Further as per clause 3 i,e. “Ownership clause” and clause 4 “Distribution of Profit clause” of Joint Venture agreement, share of interest is 35% of Indospirit Pvt. Ltd. and also the profit shall be distributed in the said ratio and whereas, a Private Limited by its very nature can not distribute profits but can only declare Dividends which is divided among shareholders in their shareholding ratio. The contradiction between shareholding certificate and Joint venture agreements needs clarification.

And whereas, as per Delhi Excise Policy for the year 2021-22, No manufacturer or retail licensee shall be allowed to apply for Wholesale License or vice versa. If wholesalers and manufacturers/retailers are common entities, there is possibility of formation of syndicates leading to overcharging and brand influencing/Pushing by entering into arrangements with certain brands at the cost of exclusion of others. Also the L1 licensee cannot own any of the retail vends either directly or through any sister concerns. For this purpose, sister concerns/related entities shall mean that the entities should not have common proprietor or partners or directors, Majority ownership (51% or more) of the proprietorship or partnership or company shall not lie with the same person in all the entities. The entities shall not have a holding-subsidiary relationship or are not subsidiaries of the same holding company.

Therefore, in view of the above mentioned observations/allegations if found true, are violation of terms and conditions of L-1/Excise Policy 2021-22 Hence, you are hereby directed to submit your clarification at the earliest but not later than 07 days from the receipt of this Show Cause Notice, falling which necessary action as deemed fit will be taken without any further notice.