Court Denies Licensee Appeals, Orders Refund of Proportionate Fees for Premature Shop Closures
In a significant ruling, the Madras High Court's Madurai Bench has upheld the decision by the Tamil Nadu government to close numerous TASMAC retail liquor vending shops across the state, citing public health and welfare concerns. The judgment, delivered by Justice D. Bharatha Chakravarthy, dismissed the petitions of licensees who sought to challenge the state's decision to shut these shops, asserting that the state has the constitutional authority to regulate and even monopolize the liquor trade.
The court noted that the right to trade in liquor is not an unrestricted fundamental right under Article 19(1)(g) of the Indian Constitution, as the sale of potable liquor is classified as res extra commercium—a category of trade considered outside ordinary commerce due to its potential harm to public health. The court referenced Article 47 of the Directive Principles of State Policy, which advocates for the prohibition of intoxicating drinks to improve public health.
The petitioners, who held licenses to sell snacks and water at these liquor shops, argued that the closures were abrupt and violated their legitimate expectations, as their licenses were valid until June 30, 2026. However, the court rejected these claims, stating that the doctrine of legitimate expectation does not apply in matters involving res extra commercium trades like liquor, given the inherent public health concerns.
Furthermore, the court addressed the issue of refunding the license fees, stating that licensees are entitled to a refund of the proportionate fees for the period of closure. The court directed the state to consider individual representations for refunds, including any excess fees and security deposits, within a specified timeframe.
The judgment also clarified that landlords of the premises where the TASMAC shops operated should pursue any claims for damages or refunds through appropriate civil courts, in accordance with their lease agreements.
This decision reinforces the state's authority to make policy decisions aimed at safeguarding public welfare, even if it impacts the commercial interests of businesses associated with the liquor trade.
Bottom line:-
The State has the authority to close TASMAC retail liquor vending shops in furtherance of public health and welfare, consistent with Article 47 of the Directive Principles of State Policy. Licensees selling snacks and water in such shops cannot compel the State to continue shop operations, and such a prayer is contrary to constitutional principles.
Statutory provision(s): Article 19(1)(g) of the Constitution of India, Article 47 of the Directive Principles of State Policy, Tamil Nadu Liquor Retail Vending (in Shops and Bars) Rules, 2003 - Rule 8(1).
