Supreme Court Issues Notice On Liquor Body's Appeal Against Kerala's Jawan Rum Preference, Alleges Competition Harm

The Supreme Court on Thursday has issued notice on an appeal filed by the Confederation of Indian Alcoholic Beverage Companies (CIABC) challenging the Competition Commission of India's (CCI) decision to reject allegations of preferential treatment to state-owned Jawan Rum in Kerala.

The appeal challenges the NCLAT's May 20, 2026 judgment, which upheld the CCI's decision to close the complaint.

It had upheld the CCI's decision rejecting allegations that preferential treatment accorded to state-owned Jawan Rum by the Kerala State Beverages (Manufacturing and Marketing) Corporation (KSBC) amounted to abuse of its dominant position.

A bench of Justices Sanjay Kumar and Sanjeev Sachdeva after hearing the matter issued notice and directed the matter to be listed on September 23, 2026.

Appearing for CIABC, Senior Advocate Amit Sibal submitted that the appeal raised a narrow issue concerning whether KSBC, being a statutory monopsonist and the dominant purchaser of alcoholic beverages in Kerala, could extend preferential commercial terms to a state-owned manufacturer.

Sibal argued that KSBC was the sole purchaser of liquor from private manufacturers in the State and therefore had significant bargaining power. He submitted that the CCI itself had found KSBC to be “dominant in the relevant market for procurement and supply of branded alcoholic beverages in the State of Kerala.”

He contended that KSBC imposed terms on manufacturers on a “take it or leave it” basis. According to him, the terms included unilateral price fixation, with manufacturers bearing the risk if their products remained unsold.

Sibal submitted that if liquor remained in KSBC's depot beyond 90 days, the manufacturer would not only remain unpaid but could face destruction of the stock and a penalty.

He argued that these conditions required examination particularly because preferential treatment was allegedly being extended to Jawan Rum manufactured by Travancore Sugars and Chemicals Ltd., a state-owned entity.

He also pointed to the difference in wholesale margins, submitting that the margin allocated for Jawan Rum was 1.5%, whereas private manufacturers received a wholesale margin of 8% for the same product category.

Sibal further argued that such differential treatment gave the state-owned brand an unfair advantage, particularly because the lower margin enabled Jawan Rum to be sold at a cheaper price.

After briefly hearing the case, the court issued notice and directed the matter to be listed on september 23, 2026.

Background

The industry bodies had approached the CCI in April 2021, alleging that the Kerala State Beverages (Manufacturing and Marketing) Corporation (KSBC) abused its dominant position as the State's exclusive wholesale liquor procurer by unilaterally fixing purchase prices, imposing unfair tender conditions, granting preferential treatment to government owned brands, delaying payments and levying discriminatory charges.

They also challenged the preferential treatment accorded to Travancore Sugar and Chemicals Ltd's "Jawan Rum." The Tribunal however, held that the appellants failed to substantiate their allegations with credible evidence.

It noted that they could not demonstrate losses suffered by manufacturers, market exits, or any material warranting an investigation by the CCI.

On the challenge to the preference accorded to Jawan Rum, the Tribunal noted that the preference was expressly provided under the State's tender policy and observed that the appellants had failed to show any adverse effect on competition.