State has power to enhance lease rent, CJ questions Advocate general

CHENNAI: The Chief Justice of the Madras High Court (MHC) has directed the State to respond on what authority the government has ordered to enhance the rent amount of 160 acres of land leased out to the Madras Race Club.

The Madras Race Club moved the MHC challenging the single judge order and enhancement of lease rent ordered by the State.

The case was listed before the first bench of the MHC comprising Chief Justice SV Gangapurwala and Justice D Bharatha Chakravarthy.

The counsel appeared for the club contended that the lease agreement was made in 1945 during the British government for 99 years. The lease agreement does not stipulate enhancement of lease rent and the rent cannot be revised through government order. The counsel also sought to quash the demand notice issued by the revenue department to enhance the rent by 14 percent.

The counsel argued the agreement is for 99 years with Rs 614 as annual rent, it cannot be enhanced now.

The Advocate General (AG) R Shunmugasundaram appeared for the State said that in 1970 the State enhanced the land lease rent as per the change in ground value and the State can enhance the rent through an order.

Chief Justice intervened and wondered if it is a statutory agreement the rent can be enhanced by the State, in this case, it is a contractual agreement. Further, the Chief Justice also wondered if the State has any power to enhance the lease rent if it is a contractual agreement.

As the AG sought time to get instruction, the bench adjourned the matter to January 23 for further hearing.

In April 2023, the single judge had ordered that the club pay Rs.730.86 crore towards rental arrears from 1970 to 2004 within a month or it would be evicted.

He further directed the government to raise a demand within a month for another Rs. 12,381 crores, the rental arrears from 2004 to till date.