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2025 Supreme(Online)(Mad) 56525
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. Anand Venkatesh, J
M/s.Jasmine Recreation Club – Appellant
Versus
The Commissioner of Prohibition and Excise, Government of Tamil Nadu – Respondent
WP No. 11330 of 2025 | WMP No. 12765 of 2025
For the Appellants/Petitioners: Mr.D.Baskar
For the Respondents: Mr.E.Veda Bagath Singh, Mr.V.Raghavachari
The court upheld the suspension of the liquor license due to the petitioner's loss of lawful possession following lease termination and ongoing eviction proceedings.
Headnote:(A) Prohibition Act - Temporary suspension and revocation of liquor license - The court upheld the suspension of the Foreign Liquor (FL-2) license issued to the petitioner due to the termination of the lease agreement and pending eviction proceedings - The court referred to previous judgments underscoring that an NOC's validity is contingent upon the legality of possession and the status of the lease agreement. (Paras 11, 12, 13, 14)
(B) Legal Possession and NOC - The court held that a tenant's possession becomes litigious after the termination of the lease, barring the issuance of a liquor license - Juridical possession does not equate to lawful possession, emphasizing the need for lawful rights for license issuance. (Paras 13, 16)
Facts of the case:
The petitioner contested a government order suspending their FL-2 license based on rental arrears and the termination of a lease agreement related to running a bar. Previous notices demanding payment and eviction were cited as grounds for the license suspension. The application was made to resolve these disputes.
Findings of Court:
The court decided that the NOC could not be upheld in light of the pending eviction proceedings and lack of lawful possession due to the termination of the lease.
Issues: The primary issue addressed was whether the petitioner could maintain their FL-2 license amidst ongoing rental disputes and eviction proceedings.
Ratio Decidendi: The court reasoned that without a valid lease or lawful possession, the issuance of an NOC for the FL-2 license is not sustainable; possession must be lawful to support license issuance.
Result: Writ Petition dismissed.
| Table of Content |
|---|
| 1. the petition challenges the suspension of the liquor license due to tenancy issues. (Para 1 , 5 , 17) |
| 2. details the lease agreements and rental disputes affecting the appellant. (Para 2 , 3 , 6) |
| 3. legal precedents on liquor license and tenant status. (Para 11) |
| 4. explains that litigious possession impacts the validity of the liquor license. (Para 12 , 13) |
| 5. affirms the dismissal of the petition. (Para 14) |
| 6. discussion on landlord's demands and legal notices. (Para 15) |
ORDER
This writ petition has been filed challenging the impugned proceedings of the 1st respondent dated 28.02.2025, wherein the 1st respondent has directed the stoppage of supply of liquor and the temporary suspension of the Foreign Liquor (FL-2) license issued to the petitioner.
2. The case of the petitioner is that they entered into a lease agreement with the 2nd respondent in the year 2018 for a period of five years. Subsequently, on 07.12.2018, both the parties entered into a Supplementary Lease Deed, whereby the period was extended to 30.12.2026.
3. The petitioner is utilising the property to run a bar after obtaining proper license from the competent authority and a No-Objection Certificate (NOC) from the 2nd respondent. On 24.05.2024, the 2nd respondent had sent a communication in the form of notice demanding a sum of Rs.76,67,571/- for non-payment of rental arrears for the period from July 2023 to May 2024. 4. Subsequently, another notice was issued by the legal representative of the 2nd respondent demanding a sum of Rs.63,40,019/- towards the rental dues from October 2023 to May 2024. Another legal notice was issued by the 2nd respondent on 06.12.2024 demanding a sum of Rs.52,90,259/- towards rental arrears. The petitioner was also asked to vacate the premises within a period of one month, as the lease period had come to an end on 30.11.2023.
5. The 2nd respondent also approached the 1st respondent, seeking for revocation of the NOC for running the Bar and cancellation of the FL2 license issued to the petitioner. The 1st respondent through the impugned proceedings dated 28.02.2025, directed the petitioner to resolve the dispute with the 2nd respondent and renew the lease agreement or, alternatively, find an alternative location before 31.03.2025, failing which the FL-2 license would be suspended and the supply of liquor from the Tamil Nadu State Marketing Corporation (TASMAC) depot would be stopped. Aggrieved by the same, the present writ petition has been filed before this Court.
6. The 2nd respondent has filed a counter affidavit. The 2nd respondent has taken a stand that the agreement entered into with the petitioner was terminated as early as on 27.09.2023 and that there are rental arrears to the tune of Rs.66 lakhs payable by the petitioner. It is further stated that no rents were received by the 2nd respondent from the year 2023 onwards and rent control proceedings have been initiated in RLTOP No.46 of 2025 which is pending before the Small Causes Court. The further stand taken by the 2nd respondent is that there was a breach of contract and non-payment of rent and the petitioner was unauthorizedly occupying the property, and the 2nd respondent had sought for cancellation of NOC.
7. Based on the same, the 1st respondent passed the impugned order, which is being challenged by the petitioner. Under such circumstances, the 2nd respondent has sought for the dismissal of this writ petition.
8. Heard Mr.D.Baskar, learned counsel for the petitioner, Mr.E.Veda Bagath Singh, learned Special Government Pleader appearing on behalf of the 1st respondent and Mr.V.Raghavachari, learned Senior Counsel appearing on behalf of the 2nd respondent.
9. It is not in dispute that the petitioner was a tenant under the 2nd respondent and based on the earlier agreement, the petitioner was utilising the property for running a Bar and an FL-2 license was issued, enabling the petitioner to serve liquor supplied by the TASMAC in the Bar. The 2nd respondent has termi
