The Madurai Bench of the Madras High Court recently upheld the Tamil Nadu government’s decision to close several TASMAC liquor outlets. The court, however, instructed the authorities to refund any excess license fees paid by vendors selling snacks and water at these locations. In the case Rajesh Kannan v. Secretary, Justice D Bharatha Chakravarthy ruled that vendors could not compel the State to maintain the operation of liquor shops simply because their licenses are valid until June 30, 2026.
Justice Chakravarthy emphasized that, as the liquor business is regarded as detrimental to public health and welfare, any initiative aimed at shutting down these establishments is a positive development. The court was considering multiple writ petitions from individuals licensed to sell snacks, water bottles, and collect empty bottles at TASMAC outlets. Some landlords who had leased properties for TASMAC stores also filed petitions.
The petitioners contested the closure of TASMAC shops following the announcement that 717 retail liquor vending outlets would be closed. They argued that the abrupt closure without prior notice negatively impacted their livelihoods and dashed their legitimate expectations. Nonetheless, the court maintained that the liquor trade is res extra commercium, meaning it is outside the realm of regular commerce, as it is perceived as harmful to public health and welfare.
The court noted that when the State monopolized the retail liquor vending business via TASMAC, the objectives were twofold: preventing private entities from enticing individuals to consume more alcohol and regulating and maximizing the resulting revenue for the State’s benefit. The court also dismissed the assertion that the government could not shut down shops located within 500 meters of educational institutions, places of worship, or similar areas without amending the Tamil Nadu Liquor Retail Vending Rules.
According to Rule 8 of these rules, shops are prohibited from being situated within 50 or 100 meters of such locations, depending on the area. The court stated that this rule does not prevent the State from enforcing a wider standard and closing shops located at greater distances. Consequently, the court rejected the request to block the closure of TASMAC shops.
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However, the court did grant some relief regarding refunds. As license fees are payable on a monthly basis, vendors who had paid for May 2026 are entitled to a proportional refund if the shops close before the end of the month. Additionally, any vendor who paid the license fee for June in advance should receive a refund for that amount. The court directed TASMAC and other relevant authorities to consider individual representations filed by vendors and issue refund orders within three weeks. It also instructed the authorities to consider refunding security deposits according to the license conditions.
The petitioners were represented by Advocates H Lakshmi Shankar and S Vishnuvardhan. Advocate General Vijay Narayan, along with Special Government Pleader D Ghandiraj, represented the State. TASMAC was represented by Additional Advocate General T Gowthaman, assisted by Advocate S Sivaneshan.
