As an Indian citizen who lived in bangalore. I can tell you there are couple of more plausible reasons why police/politicians don't want late night hotels. 1) They can charge bribes from such clubs/hotels. This is single biggest reason. 2) Politicians can tell to conservatives that they are protecting Indian culture and get votes from them. Conservatives are more likely to vote than these club going crowd.

Specific intelligence might have been a reason but 1am drama happens very year in every South Indian city, so I am less likely to believe it.