The main legal point established in the judgment is that the Government's unilateral fixation of annual lease rent without consulting the lessee was prejudicial and in violation of natural justice, requiring the Government to issue a fresh notice for fixing the fair rent and negotiate with the lessee on the fair rent issue.

The brief facts of the case are as follows:-

The petitioner stated that he was given an extent of 54.74 acres of land, on lease situated at Ootacamund Town by the Government of Tamil Nadu. The lease has been in force since 1970, but the same has been renewed from time to time by the Joint Commissioner, Land Administration. For the period ending 31.12.1979, the lease rent was Rs.75,200/- per year for the whole extent of the said land. The lease rent was originally fixed at Rs.2,737/- per annum for the entire said land. The petitioner further stated that when the lease of land was taken at Ooty, the petitioner incurred huge losses, besides paying entertainment tax and betting tax. The renewal of the lease was with effect from 01.01.1980 pending the Government decision regarding renewal of the lease. The second respondent / Collector of Nilgiris collected the lease charges at the rate of Rs.84,977.15/- per annum from the said entire land, which is being paid as on date. The horse racing in Ooty is conducted only in peak summer for the period from April to June and for the rest of the period, only inter venue betting is conducted. The petitioner has submitted various representations to the respondents to reconsider the lease charges as it has to incur huge expenditure every year for conducting the races. It is relevant to notice here that this Hon'ble Court had granted an interim injunction in the writ petition in W.P.No.4655 of 1975, dated 14.07.1975 restraining the respondents from in any way interfering with the petitioner's possession and enjoyment of the property pending disposal of the writ petition. During the pendency of the writ petition, the lease was extended from time to time and the last renewal period was in force till 1985. The second respondent herein / Collector of Nilgiris had recommended for renewal of the lease by stating that if the race club is allowed to continue, the state will get enriched by betting tax, entertainment tax even though the race is held only in the month of April, May and June.

2. As per the recommendation of the Board of Revenue, the rent was fixed. For the period between 08.04.1987 to 31.12.1996, the Madras Race Club was under the control of the custodian appointed by the Government of Tamil Nadu and as all the properties of the petitioners were vested with the Government, the question of payment of lease charges did not arise for the said period. By the letter bearing No.DORC U2 No.90466/90 dated April 1991, the Collector of Nilgiris recommended for the renewal of the lease for the longer period of 30 years as per G.O.M.S.No.2318, Revenue dated 14.12.1998. In that letter, the Collector of Nilgiris had categorically stated that the Government is earning a huge revenue from the petitioner. Every year, the petitioner has been making improvements, at its own costs by constructing stables, syces quarters. The value of leasehold land has been improved by the petitioner. Further, every year, a demand had been raised by the District Collector, Nilgiris for the payment of land revenue and cess. The petitioner further stated that he has made representation to the second respondent herein by his letter dated 08.11.1997 seeking for the continuation of the lease hold right for a long period. The entire land is utilized for the purpose of sports i.e., horse racing during summer season and inter venue betting. In spite of several requests to renew the lease, no orders have been passed for renewal of the lease till date. The petitioner has been remitting charges at the rate of Rs.84,977.15/- per annum from 01.01.1980 till date as per the statement enclosed in the typed-set of papers. It is further submitted that all of a sudden, without any prior notice, or intimation, the second respondent, by its notice dated 24.03.2002, made a demand for increasing the charges at the rate of 12% per annum retrospectively and has made a demand for the payment of Rs.37,38,415/-from 1986 till date with intere