Madras High Court Upholds Closure of TASMAC Liquor Shops

Cause Title: Rajesh Kannan v. Secretary

Background

The Madurai Bench of the Madras High Court recently heard a batch of writ petitions filed by persons licensed to sell snacks and water bottles and collect empty bottles at TASMAC shops. Some landlords who had leased premises for TASMAC outlets had also moved the Court. The petitioners challenged the closure of TASMAC shops after an announcement that 717 retail liquor vending shops would be shut.

Court's Observation

Justice D Bharatha Chakravarthy held that vendors could not compel the State to continue liquor shops merely because their licences were valid till June 30, 2026. The Court observed that liquor trade is res extra commercium, or outside ordinary commerce, since it is considered harmful to public health and welfare.

The Court noted that when the State monopolised the retail liquor vending business through TASMAC, the object was twofold. Firstly, if the same were licensed to a private person, they would make every effort to lure people to consume, and such practices would be stopped. Secondly, the revenue arising from this can be regulated and maximised for the State's purposes.

Decision

The Court rejected the argument that the government could not close shops located within 500 metres of educational institutions, places of worship and similar locations without amending the Tamil Nadu Liquor Retail Vending Rules. Rule 8 of the Rules prohibits shops from being located within 50 metres or 100 metres of such places, depending on the area. The Court said that this Rule does not prevent the State from adopting a broader standard and closing shops located at greater distances.

The Court, therefore, rejected the plea to restrain the closure of TASMAC shops. However, it granted limited relief on refund. Since licence fee was payable month-to-month, vendors who had paid for May 2026 were entitled to proportionate refund if shops were closed before the end of the month. If any vendor had paid licence fee for June in advance, that amount should also be refunded.

Key Points

• The Court held that liquor trade is res extra commercium, or outside ordinary commerce, since it is considered harmful to public health and welfare.
• The State monopolised the retail liquor vending business through TASMAC to regulate and maximise revenue.
• The Court rejected the argument that the government could not close shops located within 500 metres of educational institutions, places of worship and similar locations without amending the Tamil Nadu Liquor Retail Vending Rules.
• Vendors who had paid licence fee for May 2026 were entitled to proportionate refund if shops were closed before the end of the month.

Significance

The Court's decision upholds the State's decision to close TASMAC liquor shops, while also providing limited relief to vendors who had paid licence fees in advance. The judgment highlights the importance of regulating the liquor trade to protect public health and welfare.