The Madurai Bench of the Madras High Court recently refused to stop the Tamil Nadu government from closing TASMAC liquor shops, but directed authorities to refund excess licence fee paid by vendors who sold snacks and water at such outlets. [Rajesh Kannan v. Secretary]
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.
“When the business itself is considered harmful to public health and public welfare, any step towards closing the shop is only welcome,” the Court said.
The Court was hearing 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. They argued that the shops were closed suddenly and without notice, affecting their livelihood and legitimate expectation.
However, the Court held that liquor trade is res extra commercium, or outside ordinary commerce, since it is considered harmful to public health and welfare.
"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," it said.
The Court also 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.
The Court directed TASMAC and other authorities to consider individual representations filed by vendors and pass refund orders within three weeks. The authorities were also directed to consider refund of security deposits as per licence conditions.
The petitioners were represented by Advocates H Lakshmi Shankar and S Vishnuvardhan.
The State was represented by Advocate General Vijay Narayan, assisted by Special Government Pleader D Ghandiraj.
TASMAC was represented by Additional Advocate General T Gowthaman, assisted by Advocate S Sivaneshan.
[Read Judgment]