People who are consistently unable to sing in tune are likely to be unaware that this is the case, and will continue to do so. In a singaround among friends this might be fine, however, if this person then decides to broaden their horizons and sing in other settings you can be sure someone will tell them. How will they feel then having be reassured by the previous conspiracy of silence regarding their abilities.
Anyone singing in clubs to a wider audience, or singing professionally should expect criticism if the are unable to hold a tune.
john