“Becoming Greater Nuisance”: Madras High Court Directs To Ensure That Recreation Clubs Selling Liquor Have Incorporated Specific Clause In Their By-Laws

The Madras High Court has directed the Inspector General of Registration to ensure that the Recreation Clubs selling liquor have incorporated a specific clause in their by-laws, which must be approved by due verification and in accordance with the laws in force.

The Madurai Bench was hearing a batch of Writ Petitions seeking either to close down the Recreation Clubs, which are recently mushrooming in the urban and rural areas or not to grant FL-2 licence to run liquor shops in the name of Recreation Clubs.

A Division Bench comprising Justice S.M. Subramaniam and Justice G. Arul Murugan observed, “These Recreation Clubs are becoming greater nuisance to the nearby residents and to the society at large. These Recreation Clubs are circumventing the TASMAC Shops fully owned by a Corporation of the State Government. However, the Government authorities are paving way for these private individuals to operate retail liquor vending shops and allow them to sell liquor to the members and non-members. Since the owners of these Recreation Clubs are either belonging to political parties or influential persons in that locality, the corrupt activities in these Recreation Clubs cannot be overruled.”

The Bench said that the word ‘Recreation’ cannot be misinterpreted for the purpose of selling liquor alone in the Recreation Clubs.

Advocate K.P. Satheeshkumar represented the Petitioner while Additional Advocate General (AAG) M. Ajmal Khan represented the Respondents.

Facts of the Case

As per the Complaints, numerous Recreation Clubs are registered under the Tamil Nadu Societies Registration Act, 1975, and those Recreation Clubs are running only liquor shops and selling liquors to not only the members, but also to the non-members. In the State of Tamil Nadu, retail vending liquor shops are being run only by the TASMAC, a fully State-owned Corporation and no license has been granted to the private individuals to run retail liquor shops. Since licenses are not granted to run liquor shops, the private individuals are registering Recreation Clubs under the 1975 Act.

By obtaining FL2 license, they are running liquor shops alone, which is causing not only inconvenience to the residents residing in that locality, road users etc., but such Recreation Clubs are allowing the persons to involve in certain offenses inside the premises. These clubs are mostly remaining unchecked by the officials of the Registration Department as well as by the police officials. The happenings inside these Recreation Clubs are since non transparent, no actions are taken either by the police officials or by the officials of the Prohibition and Excise Department or by the competent authorities under the 1975 Act. This situation resulted in institution of number of Writ Petitions before the High Court seeking either to close down the Recreation Clubs or not to grant FL2 license to these Recreation Clubs, who all are running only retail vending liquor shops.

Court's Observations

The High Court in the above regard, noted, “These Recreation Clubs are circumventing the provisions of the Tamil Nadu Societies Registration Act, 1975, Tamil Nadu Prohibition Act, 1937 and various other laws for the purpose of selling liquors in the clubs under the guise of supplying liquor to its members. Whether the list of members is submitted before the Registrar of Societies, the genuinity of the members is ascertained and the objectives of the Recreation Clubs are made in consonance with the by-laws or not have not been verified by any of these authorities.”

The Court added that the word ‘Recreation’ has not been defined either under the 1975 Act, or under the other Acts; however, the Tamil Nadu Societies Registration Act, 1975, is an Act to register a Society, which would function for the betterment of the society and to develop the communal living in accordance with law.

“The Commissioner of Prohibition and Excise Department shall not grant FL2 licence to these Recreation Clubs in a routine manner. Prohibited locations, number of Recreation Clubs seeking FL2 licences, genuinity of the by-laws, incorporation of necessary clauses in the by-laws are all to be verified before considering the applications seeking FL2 licences for selling liquor to the members of the Club. In the name of Recreation Clubs, retail selling of liquor cannot be allowed in a routine manner so as to infringe the rights of the residents of the locality and affecting the public health. Maintaining public health is the duty of the State Government under the Constitution”, it ordered.

The Court remarked that ‘Public Health’ is the State subject and therefore, the State Government is expected to regulate the activities in public interest and for maintenance of ‘Public Health’ in the society as enumerated in the Constitution and under various laws.

“Establishing Recreation Clubs for selling liquor nearby the hospitals, educational institutions, religious institutions etc., are to be verified before granting FL2 licence. No FL2 licence is to be granted in such prohibited areas to the Recreation Clubs”, it said.

The Court further clarified that transfer of Recreation Clubs from one place to other place is to be done by following the procedures as contemplated under the statutes and rules in force and if there is no provision, such Recreation Clubs may not be allowed to function.

“Any illegality in the matter of transfer of FL2 licence from one district to another district cannot be considered and such activities would lead to anomalous situation resulting in illegality. The police officials, authorities of Prohibition and Excise Department must periodically monitor these activities and prosecute the offenders and cancel the FL2 licences by initiating all appropriate and necessary actions”, it also observed.

Court’s Directions

The Court, therefore, issued the following directions –

(i) The Inspector General of Registration shall ensure that the Recreation Clubs selling liquor have incorporated a specific clause in their by-laws, which must be approved by due verification and in accordance with the laws in force. In the absence of any such clause in the by-laws, registration of such Recreation Clubs is to be cancelled.

(ii) The Director General of Police (DGP) is suo motu impleaded as a party Respondent.

(iii) The DGP shall ensure that periodical surprise inspections are conducted by the police officials in the Recreation Clubs and its licences, documents and the activities inside the Clubs are verified and in the event of identifying any offence or illegality, the offenders are to be prosecuted.

(iv) The competent authorities, on receipt of information or complaint, shall conduct inspections in the Recreation Clubs and verify the validity of the FL2 licences and the conditions stipulated therein and initiate appropriate actions in the manner known to law.

(v) The activities of these Recreation Clubs, genuinity of the objectives approved in the by-laws under the 1975 Act, all are to be monitored closely by the police authorities, authorities of the Registration Department and Prohibition and Excise Department.

Accordingly, the High Court disposed of the Writ Petitions and issued necessary directions.

Cause Title- Perumal v. The Commissioner of Prohibition and Excise & Ors. (Neutral Citation: 2025:MHC:2044)

Appearance:

Petitioner: Advocate K.P. Satheeshkumar

Respondents: AAG M. Ajmal Khan, Government Pleader P. Thilakkumar, Standing Counsel H. Arumugam, Additional Public Prosecutor (APP) T. Senthil Kumar, Advocates T. Bashyam, and K. Gokul.

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