High Court Directs TN Govt To Evict Ootacamund Gymkhana Club Upon Failure To Pay Rent Arrears Of ₹31 Crores

The Madras High Court directed the Petitioner (Ootacamund Gymkhana Club) to pay the rent arrears amounting to Rs. 31,16,65,786 (Rs 31 crores). The Court further instructed the government to vacate the land if the Petitioner fails to pay the rent arrears.

The Court dismissed the Writ Petitions filed by the Petitioner-club against the Tehsildar’s rent demands, contending that the Tehsildar did not have the authority to demand rent. The Court rejected the argument and held that the rent demands were made under the orders of the Additional Chief Secretary and Commissioner of Land Administration.

“Therefore, the final decision for enhancement of lease rent as per the agreement and the rejection of the request of the petitioner for reconsideration of lease rent were made based on the instructions given by the Government and the Additional Chief Secretary and Commissioner of Land Administration, Chennai. The entire proceedings would unambiguously portray that neither the District Collector nor the Tahsildar had acted independently. But their proceedings including the Demand Notices were based on the Government instructions and based on the recommendations of the Additional Chief Secretary and Commissioner of Land Administration, Chennai. Thus, the very ground raised by the petitioner in this regard is untenable”, Justice S.M Subramaniam observed.

Advocate R. Shanmugam appeared for the Petitioner, and Additional Advocate General S. Silambanan with Additional Government Pleader G. Krishna Raja appeared for the Respondent.

The Ootacamund Gymkhana Club was a non-profit and non-commercial organization in India. The Government had granted a lease of 10.32 acres of land for golf activities at various intervals through several Government Orders. From 2018 to 2021, a demand notice was issued for Rs. 10,06,42,689/-; from 2021 to 2023, it was issued for Rs. 6,70,95,126/-.

A set of Writ Petitions were filed by the Petitioner challenging the lease rent demands issued periodically by the 3rd and 4th Respondents. The Petitioner argued that only the government had the authority to determine or adjust the lease amount and that to after providing an opportunity for hearing to the Petitioners. As the government granted the lease directly to the Petitioner, the 4th Respondent (Tahsildar) had no right to issue the demand notice.

The Respondents contended that the club generated a significant income by renting cottages and operating a liquor bar. The club paid Rs.4,50,000/- annually for the purchase of liquor consumed by its members and Rs.90,000/- in Municipal Taxes. The club employed 40 people, including a manager, and paid them salaries. The club had 40 members in 2012 and did not engage in charitable activities, so it could not be considered a non-profit organization.

The Court referred to the Supreme Court Judgment in the case of Kasturi Lal Lakshmi Reddy v State of Jammu And Kashmir & another [1980 SCR (3) 1338] and noted that public interest should align with the Directive Principles as envisioned by the founding fathers. The Court observed that any government action implementing a Directive Principle should typically be guided by public interest. However, if such an action fails to meet the standards of reasonableness and public interest, it could be deemed invalid. The Court emphasised that the courts will presume that such actions are valid, and the responsibility of proving otherwise falls on the party contesting the action with proper and adequate evidence. The Court shall not assume that a government action is unreasonable or against the public interest.

The Court noted that per Clause 7 of the lease agreement, the government reserves the right to increase the rent during the lease period. The Court observed that the failure to agree to the enhanced rent may result in the lease being cancelled. The Court further noted that the other conditions specify that the land may only be used for the intended purposes outlined in the lease agreement.

“Clause 7 of the agreement unambiguously states that “The Government reserves to themselves the right to enhance the rent, during the period of lease and the grant is liable to cancellation if the grantee is not agreeable to pay the enhanced rent when so required”. Various other conditions are imposed stating that the land cannot be utilised for any other purposes other than the purpose of which it was leased out”, the Court observed.

The Court noted that the issue to ascertain was “whether a Demand Notice issued by the Tahsildar, Ootacamund is with or without authority”.

The Court held that the final decision to enhance the lease rent as per the agreement and the rejection of the Petitioner's request to reconsider the lease rent were made based on the instructions given by the government and the Additional Chief Secretary and Commissioner of Land Administration, Chennai.

Additionally, the Court rejected the relief sought by the Petitioner and directed them to pay the arrears of lease rent of ₹31,16,65,786/-within one month from the order date.

Accordingly, the Court dismissed the Writ Petitions and directed Petitioner to pay the rent arrears.

Cause Title: Ootacamund Gymkhana Club v State of Tamil Nadu

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