Shut Down 'Bars' Attached To TASMAC Shops, Recall The Tender For Issuing Licenses: Madras High Court

Madras High Court has recently held that Tamil Nadu State Marketing Corporation (TASMAC) cannot endorse the 'bars' attached to the TASMAC Shops by issuing licenses to a section of bidders.

A single-judge bench of Justice C. Saravanan ruled that all the 'bars' attached to the respective TASMAC shops that currently enjoy a monopoly in the wholesale and retail sale of liquor should be shut down within six months.

The Madras High Court has also elaborately given reasons for its direction in the order by relying primarily on Sections 4 and 4A of Tamil Nadu Prohibition Act, 1937.

Section 4A of the Prohibition Act talks about Punishment for being found in a state of intoxication in a public place or for consuming liquor in a private when the person consuming alcohol is not permitted to do so.

The judge noted in his observations as follows:

"The provision as it stands today does not permit a person to be in public in an intoxicated state. Therefore, the respondents TASMAC as a State Monopoly can only confine itself with "wholesale" and "retail sale" of alcohol/liquor and cannot be allowed to be seen actively encouraging a person to consume alcohol in public space and violate the sanctions under the law...The practice of respondents TASMAC to allow mushrooming of "Bar" within the meaning of Tamil Nadu Liquor Retail Vending (In Shops and Bars) Rules, 2003 is contrary to the provisions of the Tamil Nadu Prohibition Act, 1937"

The court observed that the power to grant a licence to run a bar can vest only with the licencing authority namely the Commissioner of Prohibition & Excise. TASMAC is a mere "wholesale" and "retail" dealer and it cannot run a "Bar" by itself whether directly or indirectly, added the court. Sub Clause (1-A) and Section 17-C (1-B) of the Tamil Nadu Prohibition Act, 1937 which were inserted in the Prohibition Act via an amendment in 2003, merely allows TASMAC to do "wholesale" and "retail business". In 2003, Section 4(1) (j) and Section 4A was not amended and kept intact. Therefore, the newly inserted sections do not afford TASMAC a right to confer a privilege to 3rd parties to carry on the service of providing short snacks or collecting used liquor bottles within the allied premises used as a bar. 

"If the Act does not permit a person to be in a state of intoxication in a public place, TASMAC cannot be seen permitting consumption by consumers of liquor in pubic place. Even if the bar is not a public place, person after consuming liquor in the so-called bar will have to necessarily pass through public place to return home. Therefore, what TASMAC cannot do directly, it cannot do indirectly...It is to be further underlined, that a person choosing to consume the liquor purchased from TASMAC shop in the Bar goes only to get intoxicated, the court added about the caveat about liqour consumption given in Section 4A of the Prohibition Act.

In the judgment, the court elaborately discusses the current model of business of TASMAC and the historical background of the prohibition law in the State of Tamil Nadu. The court has also traced the timeline of other statutes related to liquor wholesale and retail sale and consumption in the State of Tamil Nadu in association with Article 47 of the Constitution. Article 47 mentions that the State shall endeavour to bring about prohibition of intoxicating drinks and drugs which are injurious to health. The 2003 amendments to the Tamil Nadu Prohibition Act, 1937 which paved way for the Tamil Nadu Liquor Retail Vending (In Shops and Bars), Rule 2003 merely contemplates grant of an exclusive license to TASMAC for retail sale under Rule 4 of the aforesaid Rules under Section 17-C of the Tamil Nadu Prohibition Act, 1937.

"The reality shows that respondent TASMAC merely leases a small portion of a building premises for its retail shops. In the retail shops, its staff are stationed along with the stock of liquor/ alcohol for sale to the consumers and buyers...The respondents TASMAC has not entered into any separate lease agreements with the owners of premises for the balance area which are being used as a "Bar" for the consumers to consume the liquor/alcohol purchased from the TASMAC Shops"

Based on the above, the court observes that TASMAC has encouraged the owners of such leased premises which are often local and municipal authorities to develop an area adjacent to the TASMAC retail shop as a 'Bar' for the consumption of liquor. Such premises are leased to the licensees to aid the persons who buy alcohol from TASMAC shops to consume liquor.

The court also noted that Rule 9A of the Tamil Nadu Liquor Retail Vending (In Shops and Bars), Rules 2003 mentions the grant of privilege to run a 'Bar' to private parties by tender. The court iterated that TASMAC cannot continue to auction such right to sell short eats to private parties and to collect used bottles under the garb of Rule 9A and the power to grant a license is only vested with the licencing authority, i.e, the Commissioner of Prohibition & Excise.

Background

The judgment has been pronounced in a batch of writ petitions filed by the successful bidders from 2019 who were permitted to run these allied bars till 31st December 2021. The licence given to these petitioners by TASMAC was for collecting used empty bottles and sell short eats by making use of these allied premises rented out to them by its respective owners as 'Bars'. The main grievance of the petitioners was that the pandemic has forced them to shut down these bars for almost fifteen months and they have incurred losses on account of fixed rental charges and salaries to staff. They requested the court that the TASMAC should allow them to operate the 'Bars' for another fifteen months.

According to the tender floated in 2019, the bidders were required to obtain 'No Objection Certificates' pursuant to the court order in The Deputy Collector / District Manager, Tamil Nadu State Marketing Corporation Tiruchirapalli v. R.Ramkumar (2012) and a circular dated 2014. This requirement is absent in the new bidding process of 2021. This was also challenged by the petitioners.

Before examining the case on its merits, the court noted that there has been a mixed history wherein the consumption of intoxicating drinks was an accepted norm and later stigmatized. 

"Owing to ills and social menace and deleterious impact on the society, Madras Prohibition Act, 1937 was enacted", the court observed.

"The successive Governments have been seen encouraging promoting the sale and consumption of alcohol and liquor, presumably to augment the revenue for the State. There has been a steady increase in the numbers among consumers owing to increase in the disposable income and the consuming public seems to have lapped the culture of drinking Indian Made Foreign Liquor and the imported Foreign Liquors that are being sold by the respondents TASMAC as a State Monopoly. The taboo which was earlier associated with drinking is giving way to a new social order", the court added.

Accordingly, the writ petitions filed by the previous licensees were dismissed, directing TASMAC to recall the tender and shut down the existing 'Bars'.

Case Title: S. Jagannathan v. The Managing Director, TASMAC & Ors and Connected Matters

Case No: W.P.No.27352 of 2021 & Others.

Citation: 2022 LiveLaw (Mad) 47

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