Madras HC: Recreation Clubs Misusing FL-2 Licences to Sell Liquor, Becoming a Public Nuisance; Govt Silent Owing to Political Influence
Safiya Malik
The High Court of Madras at Madurai, Division Bench of Justice S.M. Subramaniam and Justice G. Arul Murugan delivered a common order addressing a series of writ petitions concerning the operation of recreation clubs registered under the Tamil Nadu Societies Registration Act, 1975. The Bench held that recreation clubs functioning solely as liquor shops under the guise of membership activities are not permissible. The Court directed the Inspector General of Registration, the Director General of Police, and other competent authorities to strictly regulate, inspect, and, if necessary, cancel registrations and licences of such clubs. The Court mandated that no FL-2 licence be granted or continued unless the clubs’ by-laws specifically authorize liquor sales in compliance with statutory provisions and public health concerns.
The petitions in this batch were filed over several years, beginning in 2019 and extending into 2025. They challenged the functioning of various clubs across districts such as Virudhunagar, Kanyakumari, Pudukottai, Tiruchirappalli, Ramanathapuram, and Madurai. Petitioners sought directions to cancel FL-2 licences issued to clubs and prevent them from functioning as de facto retail liquor shops. In each petition, the grievance was that the clubs, though registered under the Tamil Nadu Societies Registration Act, 1975, were operating primarily as liquor vending establishments.
The petitioners argued that licences granted under Rule 17 of the Tamil Nadu Liquor (Licence and Permit) Rules, 1981, particularly the FL-2 licence meant for non-proprietary clubs, were being misused. They contended that liquor was being sold not only to club members but also to the general public, causing nuisance to residents and violating the exclusive retail rights of TASMAC, the State-owned corporation authorized to operate retail liquor shops.
For example, in one petition, the petitioner sought cancellation of the FL-2 licences of over 15 clubs in Sivakasi, Virudhunagar District, including Latcham Sports Club, Chakra Club, and Vaigai Recreation Club. The petitioner alleged that these clubs were operating as commercial liquor shops without adherence to their stated by-laws. In another petition, residents of Gomathipuram, Madurai, sought to restrain the authorities from granting an FL-2 licence to Lake View Recreation Club, arguing that the club’s operation would cause public nuisance in a residential locality.
Affidavits submitted included a status report from the Assistant Commissioner (Excise), Pudukkottai, detailing the conditions for granting FL-2 licences. It was recorded that, under Rule 19(B)(2), such a licence can only be issued if the club is non-proprietary in nature, has functioned for more than three years, and has at least 50 members willing to obtain liquor through the club. Despite these requirements, petitioners alleged that clubs were obtaining licences without meeting the statutory conditions.
The statutory framework considered included the Tamil Nadu Prohibition Act, 1937, which established prohibition as a directive principle, and the Tamil Nadu Societies Registration Act, 1975, which allows societies to register for purposes including recreation, but not specifically retail liquor vending. Provisions under Sections 34, 34-A, 36, 37, and 38 of the 1975 Act were discussed regarding the Registrar’s powers to inquire, supersede committees, or cancel registrations when unlawful activities are identified.
The petitioners maintained that clubs were using loopholes to evade restrictions placed on TASMAC shops, particularly by exploiting the undefined scope of the term “recreation.” They contended that the authorities failed to conduct inspections or take enforcement actions, allowing these clubs to continue their activities unchecked. Several petitions also stated that these clubs were operating near prohibited areas such as schools, hospitals, and residential neighborhoods.
The respondents, including the Commissioner of Prohibition and Excise, the Managing Director of TASMAC, District Collectors, police authorities, and Registrars, contested these allegations. They argued that licences were issued in accordance with the Tamil Nadu Liquor (Licence and Permit) Rules, 1981, and that inspections were conducted as required. Clubs represented by counsels denied that they were selling liquor to non-members or causing nuisance. They maintained that they were lawfully registered entities functioning within the scope of their by-laws.
Throughout the proceedings, additional parties such as the Inspector General of Registration and the Director General of Police were impleaded by the Court to ensure proper enforcement and monitoring.
The Bench recorded that large-scale complaints demonstrated that “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.” The Court noted that TASMAC is the sole authority permitted to run retail vending liquor shops, and the granting of FL-2 licences to private clubs was never intended to authorize retail sale to the general public.
The Court referred to Rule 17 of the Tamil Nadu Liquor (Licence and Permit) Rules, 1981, which provides for FL-2 licences for possession of liquor by a non-proprietary club for supply to members. It further recorded from the affidavit of the Assistant Commissioner (Excise), Pudukkottai, that an FL-2 licence required the club to function for more than three years and maintain at least 50 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 stated that the word “Recreation” has not been defined under the Tamil Nadu Societies Registration Act, 1975, or other statutes, but observed that, as per dictionary meaning, recreation refers to “any activity that refreshes, satisfies, and brings enjoyment to people, in which they engage on a voluntary basis during leisure time.” It held that liquor vending alone does not fall within the scope of recreation.
The Court observed that “the authorities competent knowing these facts remain as silent spectator, since the owners of these Recreation Clubs are either political persons or influenced persons in the particular locality.” The Bench noted the absence of regular inspections and enforcement actions by police and registration authorities. It stated, “These Recreation Clubs are becoming greater nuisance to the nearby residents and to the society at large.”
The Court recorded that while some by-laws of the clubs contained noble objectives, “it do not speak about the selling of liquor in retail by obtaining FL2 licences.” It noted that the activities of retail liquor sales were inconsistent with the approved by-laws and that the District Registrar is duty-bound to verify compliance and initiate inquiries under Sections 36 and 37 of the Tamil Nadu Societies Registration Act, 1975, if violations are found.
The Court stated, “Mere incorporation of the word ‘Recreation’ in the by-laws would be insufficient. The activities undertaken by these Clubs must be specifically stated in the by-laws and to be approved by the District Registrars.” It further observed that the Prohibition and Excise Department must verify by-laws before granting licences. It also noted that the placement of such clubs near hospitals, schools, or religious institutions undermined public health and order.
The Bench recorded concerns regarding transfer of FL-2 licences from one district to another, observing that “such transfer is impermissible. FL2 licence alone cannot be transferred.” It warned that permitting such transfers could result in illegality and anomalous situations.
Ultimately, the Court noted, “The activities of these Recreation Clubs, genuinity of the objectives approved in the by-laws under the Tamil Nadu Societies Registration Act, 1975, all are to be monitored closely by the police authorities, authorities of the Registration Department and Prohibition and Excise Department.”
The Court issued detailed directions. It ordered that the Inspector General of Registration must ensure that clubs selling liquor have incorporated specific clauses in their by-laws, duly verified and approved. “In the absence of any such clause in the by-laws, registration of such Recreation Clubs is to be cancelled.”
The Court suo motu impleaded the Director General of Police as a party and directed the police to conduct periodical surprise inspections of clubs. The order recorded, “The Director General of Police is directed to 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.” It further mandated that criminal actions taken by police be reported to the concerned District Registrar for action under the 1975 Act.
The Court directed that competent authorities must conduct inspections on receipt of complaints and verify the validity of FL-2 licences and compliance with conditions. It held that “the Commissioner of Prohibition and Excise Department shall not grant FL2 licence to these Recreation Clubs in a routine manner.” It mandated verification of prohibited locations, genuinity of by-laws, and incorporation of necessary clauses before grant.
The Court also stated that public health is a constitutional duty of the State and observed that liquor vending in the guise of recreation should not infringe upon the rights of residents. It directed authorities to regulate activities to maintain public health, prevent nuisance, and ensure compliance with law.
The common order disposed of all petitions with no costs and closed all connected miscellaneous petitions.
Advocates Representing the Parties
For the Petitioners: Mr. K.P. Satheeshkumar, Mr. K. Rajeshwaran, Mr. T. Lenin Kumar, Mr. P. Arun Jayatram, Mr. K. Kannan for Mr. N. Murugesan, Mr. S. Bharathi, Mr. D. Senthil, Mr. M. Rajarajan, Mr. P. Ganapathi Subramanian
For the Respondents: Mr. M. Ajmal Khan, Additional Advocate General assisted by Mr. P. Thilakkumar, Government Pleader; Mr. H. Arumugam, Standing Counsel; Mr. T. Senthil Kumar, Additional Public Prosecutor; Mr. T. Bashyam; Mr. K. Gokul; Mr. T. Lajapathy Roy, Senior Counsel for Mr. M. Mahaboob Fazil; Mr. Veera Kathiravan, Additional Advocate General; Mr. S. Sivanesan; Mr. K.R. Kishore Ram for M/s. R.B. Associates; Mr. K. Rajesh; Mr. K. Sivabalan; Mr. T. Ramesh.
Case Title: Perumal vs The Commissioner of Prohibition and Excise & Others
Neutral Citation: 2025: MHC:2044
Case Number: W.P.(MD) Nos.8038 of 2019, 19890 of 2020, 7409, 25271, 26471 of 2024, 16476, 18756, 21754 & 22021 of 2025
Bench: Justice S.M. Subramaniam and Justice G. Arul Murugan
