Image for representational purposes only
Image for representational purposes only
Litigation News

Supreme Court stays Madras HC orders to close Liquor shops in Tamil Nadu and imposition of conditions for selling liquor amid Lockdown

Shruti Mahajan

The Supreme Court today stayed all orders of the Madras High Court concerning the closure of TASMAC/liquor shops in Tamil Nadu amid the COVID-19 lockdown, including the orders on additional conditions for the sale of liquor that were imposed by the High Court on May 6.

The Bench of Justices L Nageswara Rao, Sanjay Kishan Kaul, and BR Gavai today took up for hearing a batch of petitions challenging the two orders of the Madras High Court in relation to sale of liquor in Tamil Nadu during lockdown.

This included a challenge to a May 8 High Court order directing the State to close all TASMAC/liquor vending stores in the State of Tamil Nadu amid lockdown citing to large scale violation of safety norms when these outlets were re-opened on May 7.

Also under challenge was a previous order passed by the High Court a day earlier on May 6 which had laid down certain guidelines for allowing the sale of liquor.

After these orders were challenged, another Madras High Court Bench had also passed an order on May 11, standing by the decision to order the closure of TASMAC shops in the state.

The Madras High Court orders have now been stayed by the Supreme Court, paving the way for the TASMAC shops in the State to re-open for liquor sale as per the modalities put in place by the State government.

The additional conditions imposed by the High Court on May 6 also stand stayed after today's Supreme Court order. The Court said,

"In the meanwhile there shall be ad interim stay of orders dated 6.5.2020 and 8.5.2020 passed by the High Court of Judicature at Madras..."

The Court today observed that the Court may only ask the State to consider modalities for sale of liquor through online means and to consider home delivery. However the ultimate decision on how the sale has to be made remains on the State.

The Supreme Court also issued notice in matter and has sought a reply on the same within four weeks.

Senior Counsel Mukul Rohatgi arguing for the State of Tamil Nadu questioned how the High Court could have delved into the domain of policy by imposing additional conditions for the sale and purchase of liquor in the State.

Referring to conditions imposed by the High Court such as digital payment and requirement of Aadhaar card for the sale of liquor, Rohatgi said that it should be up to the State to decide how the sale has to be made.

The Counsel for the respondents, Advocate PV Yogeswaran told the Court that no ban on sale of liquor was being sought but what was sought was merely for some precautionary measures to be followed. He added that selling liquor is not a fundamental right but merely a commercial activity.

When Yogeswaran pointed out that the Full Bench of Madras High Court was scheduled to take up the matter concerning closure of TASMAC, Rohatgi also sought a stay on the proceedings before the High Court.

The Full bench of Madras High Court has reportedly decided to refrain from hearing the matter further after it was informed about the stay order passed by the Supreme Court.

On May 8, the Madras High Court had ordered the closure of liquor vending outlets, a day after it initially declined to intervene on a plea urging that they remain closed during the lockdown.

The very next day, this order came to challenged before the Supreme Court where the Tamil Nadu State Marketing Corporation (TASMAC) submitted that the net effect of the Madras High Court's order is a "complete and indefinite standstill of the sale of liquor in the State leading to grave losses to the State’s revenue and commercial activity in the State."

This order was challenged as factually untenable and legally unsustainable given that,

  • the Supreme Court itself has declined to entertain a plea for the total ban on the sale of liquor as the same is a policy matter within the domain of State.

  • the State has reasons to believe that the entire batch of Writ Petitions if not some have been filed by vested private interest, so has to make enormous commercial gains, from the unfortunate situation.

The TASMAC has argued that this closure order was passed on a misinterpretation of an order of the Supreme Court on Friday, wherein it had urged the State governments to consider non-direct sale including online sale/home delivery of liquor. The TASMAC contended that the Supreme Court had thereby, "recognised that States have a broad margin of power to determine whether and how to effect sales of liquor in this lockdown period."

Therefore, the TASMAC argued that the Madras High Court's May 8 order "is a clear case of judicial overreach and is not sustainable in light of the Supreme Court Order." This order was passed after the Court was appraised of large-scale violations of the guidelines issued by the State as well as the High Court on May 6 to be followed during the sale of alcohol during this time.

Apart from the precautionary directions concerning social distancing, sanitisation etc. issued by the State, on May 6 the High Court had also issued guidelines concerning, inter alia,

  • limits of alcohol purchase per person per day,

  • a bar on cash payments save for those without online payment facilities and;

  • a direction that the bill of sale include the name, Aadhar number and address of the customer.

Following this order, the Tamil Nadu Government had approached the Supreme Court in appeal challenging the High Court's directions qua mandatory cashless payments and the inclusion of Aadhaar number in the bill of sale.

Before the Supreme Court, the Tamil Nadu Government raised concern that the mandatory inclusion of the customer's Aadhaar number in the bill of sale would amount to a violation of the right to privacy.

An objection had also been raised to the High Court's direction to make cashless transactions the norm for alcohol sale. In this regard, the Tamil Nadu Government has raised objection that there can be no prohibition on cash payment. It is added that there are practical difficulties to implementing a cashless regime for alcohol sale overnight.

While challenging the May 8 closure order before the Supreme Court, the State has also asserted, inter alia, that the "the Impugned Judgment has encouraged commercial opportunism from the private entities", while referring to an application moved by a Fintech company called ‘HIP Bar Private Ltd’, which had "prayed that they be permitted to intervene to propose alternatives to opening of the TASMAC liquor shops to the public in the form of technology assisted home delivery."

The State added that, "its (HIP Bar's) capability as a home delivery coordinator is unknown and untested at best and it is not scheduled systems provider of the State", while "e-payment and home delivery call for immense logistical coordination, supply chain management."

TASMAC contended that this would warrant time and manpower, especially in the present COVID-18 situation, "thus all the more requiring close scrutiny through the State’s bidding process."

Over and above these concerns, the State-owned entity had challenged the Madras High Court ruling as disproportionate, "when considered against the fact that that the State had made elaborate bandobast arrangements for crowd control."

Arguing that the High Court ought not to have passed its closure order on unsubstantiated media reports, TASMAC had urged the Supreme Court to set aside the ruling.

Read Order:

TASMAC order in SC - 15.05.2020.pdf
Bar and Bench - Indian Legal news