The Madras High Court on Wednesday directed the Madras Race Club (MRC) to pay within a month ₹730.86 crore to the Tamil Nadu government towards rental arrears from 1970 to 2004 for 160.68 acres of land leased to it at Guindy in Chennai in 1945. The court directed the government to raise a demand for another ₹12,381 crore, which is the rental arrears from 2004 to date.

Justice SM Subramaniam ordered that MRC be evicted from the property, with police assistance, if it fails to remit ₹730.86 crore within one month. However, in so far as the other amount of ₹12,381 crore was concerned, the government was directed to raise the demand within a month and the club was ordered to honour it within two months thereafter.

In the event of failure to settle the arrears, either partly or in full, the government was directed to initiate recovery proceedings against the club besides initiating action against individuals liable to settle the dues. The orders were passed while disposing of three writ petitions filed by MRC in 2017 challenging the unilateral revision of lease rent as per market value.

MRC’s contention

According to the club, it was in 1945 that the then Government of Madras leased out 160.68 acres of land to it after fixing an annual rent of ₹614.13, and the club paid the entire rental amount for 99 years in advance. A lease deed was executed and duly registered with the Sub Registrar’s Office at Saidapet in Chennai in April 1946.

The lease was granted for developing recreational and sports activities, with special emphasis on horse racing. Since the lease deed had been registered, no modification could be done unilaterally by any one of the parties to the deed since it would be against Section 107 of the Transfer of Property Act, the club contended.

Yet, the government, in 1970, went ahead and revised the rent for the property at 14 per cent of its market value and raised a demand in 2004 for ₹730.86 crore. After the first round of litigation, the demand was reiterated, hence the present writ petitions. Not finding any reason to grant relief to the club now, the judge refused to give weightage to the colonial lease deed.

He held that it was against public policy and in the public interest to draft a deed without a clause to revise the rent periodically. He wrote that the government was duty-bound to revisit all such government agreements/leases/contracts in respect of government lands and properties that had been leased to various private bodies across the State.

Mohamed Imranullah is The Hindu’s Legal Correspondent in Chennai