1. MoU between state authority and private entity for sports event organization — Dispute over cost-sharing and reimbursement of public funds — Challenge to High Court directions. (Para 2 , 4 , 6 , 7 )
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2025 Supreme(SC) 376
SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, MANOJ MISRA, JJ.
Racing Promotions Private Limited – Appellant
Versus
Dr. Harish & Ors. – Respondents
Civil Appeal Nos. 2755-2758 of 2025 Arising Out Of SLP(C) Nos. 10926-10929 of 2024
Decided on : 20-02-2025
Advocates appeared:
For the Petitioner(s): Mrs. Theepa Murugesan, Adv. Ms. Sanya Bhatia, Adv. Mr. Gaurav Singh, AOR
For the Respondent(s): Mr. D.kumanan, AOR Ms. Preetika Dwivedi, AOR Mr. C. Paramasivam, Adv. Ms. Adviteeya, Adv. Mr. Rakesh K. Sharma, AOR
For the Petitioner(s): Mrs. Theepa Murugesan, Adv. Ms. Sanya Bhatia, Adv. Mr. Gaurav Singh, AOR
For the Respondent(s): Mr. D.kumanan, AOR Ms. Preetika Dwivedi, AOR Mr. C. Paramasivam, Adv. Ms. Adviteeya, Adv. Mr. Rakesh K. Sharma, AOR
Important Points
The court affirmed the validity of public-private partnerships in organizing sporting events, emphasizing limited judicial review in contractual matters between the State and private entities.
Subject
Administrative Law - Public Interest Litigation
Headnote
(A) Public Interest Litigation - Directions issued by Madras High Court regarding Formula 4 racing event - The court upheld the government's policy decision to promote motor racing while ensuring public safety and financial obligations of the Racing Promotion Private Ltd (RPPL) - The High Court's directions for reimbursement and future funding were deemed beyond its jurisdiction. (Paras 2, 4, 23)
(B) Public-Private Partnership - The court emphasized the validity of public-private partnerships in organizing sporting events, asserting that the State's role is facilitative rather than operational. (Paras 21, 23)
(C) Judicial Review - The court reiterated that the scope of judicial review in contractual matters between the State and private entities is limited, particularly in public interest litigations. (Paras 20, 23)
Facts of the case:
The appeals arose from a High Court order permitting a Formula 4 race in Chennai, with concerns raised about public safety, noise pollution, and financial implications for the State. The RPPL entered into a MoU with the State for organizing the event, with specified financial obligations.
Findings of Court:
The court found that the High Court overstepped its jurisdiction by imposing financial obligations on the RPPL and directing the State to conduct future events.
Issues: The main issues included the legality of the High Court's directions regarding financial responsibilities and the role of the State in organizing the event.
Ratio Decidendi: The court ruled that the High Court's directions were not legally sustainable, emphasizing the importance of public-private partnerships and the limited scope of judicial review in contractual matters.
Result: Appeals partly allowed.
(B) Public-Private Partnership - The court emphasized the validity of public-private partnerships in organizing sporting events, asserting that the State's role is facilitative rather than operational. (Paras 21, 23)
(C) Judicial Review - The court reiterated that the scope of judicial review in contractual matters between the State and private entities is limited, particularly in public interest litigations. (Paras 20, 23)
Facts of the case:
The appeals arose from a High Court order permitting a Formula 4 race in Chennai, with concerns raised about public safety, noise pollution, and financial implications for the State. The RPPL entered into a MoU with the State for organizing the event, with specified financial obligations.
Findings of Court:
The court found that the High Court overstepped its jurisdiction by imposing financial obligations on the RPPL and directing the State to conduct future events.
Issues: The main issues included the legality of the High Court's directions regarding financial responsibilities and the role of the State in organizing the event.
Ratio Decidendi: The court ruled that the High Court's directions were not legally sustainable, emphasizing the importance of public-private partnerships and the limited scope of judicial review in contractual matters.
Result: Appeals partly allowed.
Legal Category Hierarchy
Table of Contents
2. Challenge to directions requiring reimbursement of state expenditure, advance deposits for future events, and restrictions on state facilitation in contractual sports event organization. (Para 3 , 17 )
3. State's sports promotion is a policy decision — Public-private partnerships leverage private expertise — Limited judicial review in state contracts regarding financial apportionment. (Para 7 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 18 , 20 , 21 , 22 )
4. Courts cannot rewrite contractual terms between the State and private parties or interfere with financial apportionment in policy-driven public-private partnerships. (Para 20 , 23 )
5. Appeals partly allowed — High Court directions regarding reimbursement, advance deposits, and state-led conduct of future events set aside. (Para 24 )
6. What is the scope of judicial review regarding contractual relationships between the State and private parties concerning finances?
The scope of judicial review is limited, particularly regarding the ambit of work and finances in contractual relationships between the State or its instrumentalities and private participants. (Para 20 )
7. Can a court rewrite the specific terms of a contract entered into between a state authority and a private entity?
No, it is a settled position that courts cannot rewrite contractual terms between parties, including mutual obligations and the apportionment of expenditure. (Para 23 )
8. How does the court view the use of public-private partnerships for providing public services or organizing events?
The court recognizes public-private partnerships as a matter of good governance, allowing the State to leverage private sector capital, efficiency, and expertise to overcome limited state resources. (Para 21 , 23 )
JUDGMENT :
PAMIDIGHANTAM SRI NARASIMHA, J.
1. Leave granted.
2. The present appeals arise out of an order dated 19.02.2024 passed by the Madras High Court disposing of various writ petitions filed as public interest litigations (‘PILs’) against the conduct of Formula 4 racing in the city of Chennai, Tamil Nadu, in which the following directions were issued:
“22. Accordingly, this batch of writ petitions are disposed of, with the following directions
(i) The Formula 4 Race proposed to be conducted in the Chennai Racing Circuit is permitted to be held on the dates to be decided by the State Government in consultation with the stakeholders
(ii) The State Government shall ensure that the street race in the 3.7 km as stipulated, shall be carried on, with highest degree of public safety and avoiding inconvenience to the public, especially the in-patients of the Rajiv Gandhi Government General Hospital, Madras Medical College, and Omandurar Government Multi-speciality Hospital. This can be ensured by installing necessary silencing equipment like sound silence panels/acoustic sound panel for noise control in the hospitals during the time of the racing events.
(iii) The RPPL shall ensure that all public viewers will be provided with necessary protective gear for their safety during the Race
(iv) The RPPL shall reimburse the expenditure made by the State Government (i e) Rs 42 crores from the public exchequer, to them, prior to the conduct of the event
(v) The State Government must ensure that RPPL or anyone should deposit in advance (prior to next year and the upcoming third year's event) the stipulated expenditure of Rs 15 crores for the upcoming two years for holding the Street Circuit in Chennai
(vi) The RPPL cannot expect anything more than facilitation as well as arrangements along with co-ordination and co-operation of the State authorities, and the expenditure for the event will have to be completely borne out only by the RPPL
(vii) In future, the State is expected to take upon itself the responsibility of conducting of such event in furtherance of its policy to encourage the racing sport and seek the support of private bodies having experience and expertise in the field. This will ensure fairness and also dispel any doubt as to mala fides in distribution of the State largesse”
3. The directions contained in paragraphs 22(iv) to (vii) alone are impugned before us.
4. The short facts that are necessary for us are that Racing Promotion Private Ltd, hereinafter referred to as the appellant, is involved in sponsoring and conducting the Formula 4 championship, which is a motorsport series of races. The appellant entered into a Memorandum of Understanding (MoU) dated 16.08.2023 with the Sports Development Authority of Tamil Nadu, hereinafter referred to as SDAT, for a term of three years for organising the event. The MoU sets out the obligations of both parties, and the relevant clauses are that while the appellant is under an obligation to spend Rs. 202 crores as part of its responsibility, the SDAT is required to spend Rs. 42 crores towards license and operations fee, roads, and miscellaneous expenditures including road beautification and painting. The relevant portion of the clauses are as under:
| ‘MEMORANDUM OF UNDERSTANDING’ | ||||
| This Memorandum of Understanding (“MOU”) is made in Chennai on 16th day of August 2023 (“Effective Date”) by and between. A. Racing Promotions Private Limited… AND B. Sports Development Authority… 1. Principles of Collaboration 1.1 The Parties recognize each other’s interest and expertise and hereby agree to work together for the organization and promotion of the Festival. 1.2 The Parties agree that…. 2. Term and Termination… 3. Obligation of the Parties 3.1 RPPL shall be responsible for the following deliverables and costs. a) | ||||
| Sr. No. | Particulars | Cost (in INR) | ||
| 1. | Circuit Electronic System |
| ||
