Supreme Court Strikes Down High Court Directions Requiring State Reimbursement and Advance Deposit for Chennai F4 Street Race

A bench of Justice Pamidighantam Sri Narasimha and Justice Manoj Misra heard appeals challenging portions of a Madras High Court order that disposed of public interest litigations against the conduct of a Formula 4 racing event in Chennai and issued directions altering commercial terms between the State’s sports authority and the private promoter.

The Court allowed the appeals in part and set aside paragraphs 22(iv) to (vii) of the High Court’s order dated 19.02.2024. It held that the directions which effectively rewrote the Memorandum of Understanding (MoU) between the Sports Development Authority of Tamil Nadu (SDAT) and the private promoter could not be sustained. The bench observed that the High Court erred by prescribing new contractual terms — including an order that the promoter reimburse Rs. 42 crores to the State, make advance deposits of Rs. 15 crores for subsequent years, and limiting the promoter to mere “facilitation” by the State — since such matters fell within the contractual domain and the policy choices of the State. The Court, in its reasoning, observed: "Once the High Court was satisfied that the decision to hold the sports event is a matter of policy, it could not have proceeded to interfere with the specific terms of the MoU entered into between the authority and the appellant herein. Issues such as the mutual obligations, including the apportionment of expenditure that the contracting parties must bear, are beyond the scrutiny of the High Court in a public interest litigation. Finally, direction (vii) calling upon the State itself to take up the responsibility of conducting such sports events ignores the principle of public-private partnership adopted by governments across the globe as a matter of good governance, which takes into account the limited resources of the State coupled with issues of efficiency and expertise. We are of the opinion that the High Court committed an error in issuing directions (iv), (v), (vi) and (vii), which cannot be sustained in law." The Court further noted that "The Sports Development Authority is an instrumentality of the State and acts as a nodal Governmental Authority for promoting sports and the welfare of sportspersons."

Background The disputes arose after Racing Promotions Private Limited (RPPL) entered into an MoU dated 16.08.2023 with SDAT to host an Indian Racing Festival, including Formula 4 races in Chennai for a three-year term. The MoU set out mutual obligations: RPPL undertook to expend about Rs. 202 crores on race infrastructure and operations while SDAT committed to deliverables costing Rs. 42 crores for the first year and an estimated Rs. 15 crores per year thereafter for the remainder of the term. A Government press release announced the event for December 2023. Several PILs challenged the event on grounds of public inconvenience, safety, noise and environmental impact and raised concerns about State support to a private promoter.

The Madras High Court permitted the race but issued directions including (i) permitting the event subject to safety measures, and (ii) directing RPPL to reimburse Rs. 42 crores to the State, deposit Rs. 15 crores in advance for upcoming events, bear the entire expenditure in future and stating that the State should in future itself conduct such events. SDAT filed a counter-affidavit explaining the rationale for the MoU, the role of SDAT in promoting sports, anticipated economic benefits, extensive safety and coordination measures, and the global practice of public‑private collaboration for international sporting events. The Supreme Court examined the MoU, the administrative record showing deliberations by a high-level committee, and precedent law on the limited scope of judicial interference in contractual arrangements involving State instrumentalities. Relying on earlier authorities, the Court held that courts should not rewrite contractual terms entered into after deliberation and that directions imposing new financial obligations on private parties and mandating a change in policy were unsustainable. The appeals were partly allowed; the High Court directions in paragraphs 22(iv), (v), (vi) and (vii) were set aside. The Supreme Court recorded no order as to costs and disposed of pending applications.

Case Details: Case No.: 2025 INSC 252; Civil Appeal Nos. 2755-2758/2025 arising out of SLP(C) Nos. 10926-10929 of 2024 Case Title: Racing Promotions Private Limited v. Dr. Harish & Ors. Appearances: For the Petitioner(s): Not indicated in the reported judgment For the Respondent(s): Not indicated in the reported judgment