In W.P.No.7890 of 2015-MAD HC- Constitutional Courts are bound to rescue people of India: Madras HC asks State Govt to revisit agreements, leases pertaining to Govt properties & ensure protection of public interest & State Revenue
Justice S.M.Subramaniam [25-03-2023]

Read Order:Pandyan Hotels Limited v. The Secretary to Government And Ors 

Tulip Kanth

Chennai, May 26, 2023: While observing that a high value property situated in heart of Madurai City cannot be assigned in favour of the peitioner-Hotel by compromising the public interest and causing financial loss, the Madras High Court has held that the State Govt’s decision of not assigning the land in favour of the petitioner is well founded and in consonance with the established principles of the Constitution.

Noting that the petitioner lost its credibility to claim any leniency from the hands of the High Court, Justice S.M.Subramaniam said, “ The petitioner committed series of defaults and is in unauthorised occupation of the Government property without even paying the rent. The lease expired in the year 2008. The market value of the land is above Rs.300 Crores. Thus, by granting largees, the Executives cannot cause financial loss to the State Coffers.”

The petition in question was filed by Pandyan Hotels Limited. Various orders were passed by the first respondent to lease the land situated in Madurai North Village for a period of 25 years on a monthly lease in favour of M/s.P.C.M. Sons.  The Petitioner Hotel after reclaiming the land, put up construction by spending their own funds and the Hotel was commissioned. 

The petitioner paid a sum of Rs 2 crore as advance and the value of the land was fixed at Rs 38,58,60,000 calculated at the rate of Rs.1,500 per sq.ft. The petitioner stated that despite the efforts taken by them to secure loans from the Bank, they could not do so and the private parties were not willing to part with their money. 

The petitioner sought time to pay a sum of Rs 31,08,83,940 as the Indian Overseas Bank had expressed its inability to sanction the loan and after issuance of various notices, the petitioner submitted a reply, expressing their inability to pay the amount. Thereafter,  an order was issued in 2015, under which, the Petitioner was called upon to pay a sum of Rs 36,58,60,000 immediately, failing which, steps were to be taken to cancel the order of assignment. The said notice was under challenge in the writ petition.

Firstly, the Bench enunciated the legal principles pertaining to the concept of public interest in the matter of public policy and concept of reasonableness. Reference was made to the judgment in  Maneka Gandhi v. Union of India , which clearly demonstrated that the requirement of reasonableness runs like a golden thread through the entire fabric of fundamental rights. 

“The Constitution of India invokes the term “Public Interest” at nine places in its Article 22, 31A(b) and 31A(c) of Fundamental Rights of the Citizen, 263, 302, Entries 52, 54, 56 of the Union List and Entry 33 of the Concurrent List”, the Bench specifically noted and also observed that while exercising the powers of judicial review the Court can look into the reasons given by the Government in support of its action but cannot substitute its own reasons. The Court can strike down an executive order, if it finds the reasons assigned were irrelevant and extraneous, the Bench further clarified.

The Bench noticed that the  petitioner was in unauthorised occupation of the Government land after the year 2008 and failed to pay the land cost as demanded by the Government. Pertinently, the petitioner had not even paid the rent. Perusal of the representations continuously submitted by the petitioner and the response made by the Government authorities indicated that the petitioner had no intention to settle the land cost as fixed by the Government. 

Considering the fact that the Government of Tamil Nadu as per their announcement is facing financial crunch, the Bench opined that the Government is duty bound to revisit all such Government agreements/ Leases / Contracts in respect of Government lands, properties etc., across the state of Tamil Nadu and ensure that the public interest and the Revenue of the State has been protected.

The Bench directed the District Collectors across the State of Tamil Nadu to ensure that the Government contracts, leases, assignments etc., are published in the Government website along with the details including name of the village, lease amount or the rent fixed or otherwise, period of lease, purpose for which the Government property was leased out or assigned or otherwise, recovery of rent or arrears of rent as the case may be and also the name of the defaulters and the actions taken.

The High Court also ordered the respondents to resume the land by evicting the petitioner/Hotel. The respondents were also asked to calculate the rental arrears and other charges due to the Government and recover the same from the petitioner by following the procedures as contemplated and without causing any undue delay.