The Supreme Court overturned the Madras High Court’s order for Racing Promotions to reimburse Rs 42 crore to Tamil Nadu, affirming the contractual nature of their agreement and limiting judicial review in such matters.
New Delhi: In a major relief to event organiser Racing Promotions Private Limited (RPPL), the Supreme Court on Thursday set aside the Madras High Court’s direction that required the company to reimburse Rs 42 crore to the Tamil Nadu government for the 2023 Formula 4 Racing event in Chennai.
A bench of Justices P S Narasimha and Manoj Misra ruled that the Madras High Court “overstepped” its jurisdiction by interfering in the contractual terms between the Tamil Nadu government’s sports body and RPPL.
“Once the high court was satisfied that the decision to hold the sports event is a matter of policy, it could not have proceeded to interfere with the specific terms of the memorandum of understanding (MoU) entered into between the authority and RPPL,”
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Justice Narasimha stated in the judgment.
The Madras High Court had acted on a public interest litigation (PIL) that raised multiple concerns regarding the event, including:
- Public inconvenience
- Lack of safety measures
- Noise pollution and environmental impact
- Alleged lack of transparency in public fund usage
Though the High Court upheld the Tamil Nadu government’s policy decision to promote motor racing, it also ruled that since the event was organised by a private company, the government’s role was limited. It directed RPPL to reimburse ₹42 crore that the state had spent from public funds before the event.
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RPPL, which had signed a three-year MoU with the Sports Development Authority of Tamil Nadu (SDAT) on August 16, 2023, challenged the decision, arguing that the financial terms were pre-agreed and that judicial review should not extend to contractual agreements.
The Supreme Court strongly objected to the High Court’s interference in the contractual relationship between the state and RPPL, stating:
“Issues such as mutual obligations, including the apportionment of expenditure that the contracting parties must bear, are beyond the scrutiny of the high court in a public interest litigation.”
The court also observed that the Sports Development Authority acted as a nodal agency to promote sports and did not misuse public funds.
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“The scope of judicial review in matters concerning the contractual relationship of the state or its instrumentality with private participation, particularly as regards the scope and ambit of work and finances, are limited,”
the bench added.
With this ruling, RPPL is no longer required to pay Rs 42 crore, providing clarity on government-private sector collaborations in sports events.
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