Excise regulations and Licenses –
Production of liquor and alcoholic products requires to pass through strict regulations in the forms of licenses and permits, without which one cannot initiate production. Further, interstate transfers are very difficult due to stricter regulations and permits and higher excise duty levies. Hence, the manufacturer is forced to enter into an agreement for “tie-up”/ lease arrangement with different manufacturing units in different parts of the Country, since establishing a new manufactory in every state would not be practical and cost-effective solution. In such kind of tie-ups, difficulties arise because though the brands and products belong to the manufacturing units, the license is in the name of the Lessor. Hence, all the licenses ...view middle of the document...
Dispute with Distributors –
In many cases, promotion and distribution responsibilities are given to the distributors by the manufacturing Companies who by abrogation of the understanding in the agreement resort to raising debit notes on the basis of false or inflated claims which ultimately leads to litigation.
Statutory and Labour Disputes –
Due to bad management practices followed by the Lessor units, there will be strike “go slow” by the workers or due to non-compliance of some statutory requirements and stoppage of work, the MGQ clause gets affected leading to a perpetuating litigation.
Willful non-compliance with the agreement –
It is also observed that there are quite a few cases where there will be willful violation of the agreement by different players, knowing fully well that it will take years and years for the manufacturer to get his grievances redressed in the present long drawn legal process. In fact, it is frequently overheard in the industry that “when a case by escalation to the highest court can take more than 10 years, where is the hurry to settle the case by paying-off, even the bonafide payments due to the manufacturers?”
Non-Disclosure Agreement with Employees –
The liquor industry being a small and a close-ended one, the critical manpower keep moving from one Company to the other and sometimes to the competitors. In such a situation, protecting the trade secrets and the Blend from the competitors is the real challenge and most of the Companies have stringent Non-Disclosure Agreement signed with their employees; but since the documentary evidence of proof of violation and passing-off of such information becomes difficult to establish, the matter leads to endless and futile litigation.