A) ABSTRACT / HEADNOTE

Racing Promotions Private Limited v. Dr. Harish & Ors., 2025 INSC 252 (Supreme Court of India) considers the limits of judicial intervention in a Public Interest Litigation (PIL) that attacked the state’s decision to host a Formula-4 motorsport event and, in particular, the High Court’s modification of an executed Memorandum of Understanding (MoU) between the Sports Development Authority of Tamil Nadu (SDAT) and a private rights-holder, Racing Promotions Private Ltd. (RPPL).

The High Court declined to interfere with the policy decision to host the event but nevertheless imposed directions that effectively rewrote commercial allocations in the MoU ordering reimbursement of Rs. 42 crores by RPPL to the State, advance deposits for future years, and a broad directive that the State should itself conduct such events going forward. The Supreme Court, after analysing the MoU, the role of SDAT and the policy context for public-private collaboration in sporting events, held that once hosting the event was accepted as a policy decision judicially permissible in a PIL, the High Court lacked jurisdiction to alter contractual terms and apportionment of costs agreed by the parties.

Directions that prescribed new financial and contractual obligations were set aside as beyond the High Court’s remedial scope in a PIL; however, directions aimed at public safety and mitigation remained intact. The judgment underscores the restricted doctrinal space for courts to rewrite commercial bargains struck by state instrumentalities acting within policy, and affirms the legitimacy of public-private partnerships for hosting international sporting events.

Keywords: Scope of judicial review; Public-private partnership; Memorandum of Understanding; PIL; Contractual apportionment; Sports administration.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

Racing Promotions Private Ltd. entered into an MoU dated 16.08.2023 with the Sports Development Authority of Tamil Nadu (SDAT) to host the Formula-4 motorsport festival in Chennai for three years. The MoU allocated detailed deliverables and quantified financial liabilities: RPPL agreed to spend Rs. 202 crores on circuit systems, vehicles, safety infrastructure and event management; SDAT (the Host City) agreed to meet Rs. 42 crores for licence/operation fees, roads and miscellaneous first-year costs, with Rs. 15 crores per year thereafter for the remaining term. The State issued a press release fixing dates in December 2023.

Several PILs challenged the event on grounds of public inconvenience, noise and environmental impact, safety and alleged misuse of public funds to benefit a private organizer. The Madras High Court, while refusing to obstruct the policy choice to host the event, nevertheless issued directions that materially altered the MoU’s commercial allocations — including an order that RPPL reimburse Rs. 42 crores to the State, lodge advance deposits for subsequent years and bear the entire event expenditure, and a suggestion that the State should itself conduct future events. The State (SDAT) and RPPL appealed to the Supreme Court.

The counter-affidavit filed by SDAT elucidated its mandate to promote sports, the economic and infrastructural benefits of hosting international sporting events, steps taken to form an inter-departmental working committee, safety protocols and the rationale for public-private collaboration. The Supreme Court confronted two central strands: first, whether the High Court, in a PIL, could lawfully modify contractual allocations agreed by an instrumentality of the State; and second, whether policy decisions to host events permit greater judicial restraint regarding contractual terms between the State and private partners.

The Court accepted SDAT’s policy reasoning and held that the High Court exceeded its remedial jurisdiction by rewriting the MoU’s terms.

D) FACTS OF THE CASE

The salient factual matrix, drawn from the MoU and affidavits, is: RPPL is the licensed promoter for Formula-4 in India and had previously conducted events (Hyderabad, Noida). SDAT and RPPL executed an MoU dated 16.08.2023 for a three-year Indian Racing Festival (F4 in year 1; F3 in year 2; etc.). Clause 3.1(a) itemised RPPL’s financial commitments totaling Rs. 202 crores (electronic systems, barriers, cars, operations, hospitality, grandstands, safety).

Clause 3.2(a) recorded SDAT’s first-year financial obligations totalling Rs. 42 crores (license/operations fee, roads, miscellaneous) and an annual estimate of Rs. 15 crores for remaining years to be paid 90 days before the festival. The MoU contemplated cooperative inputs (police permissions, fire support, pollution control, hospital arrangements). The State announced the event dates (08–10 December 2023). Multiple PILs challenged the event on noise, public safety, disruption to hospitals, environmental concerns and transparency of public expenditure.

The High Court permitted the Race subject to public-safety directions but also directed RPPL to reimburse Rs. 42 crores spent by the State, to deposit Rs. 15 crores in advance for the next two years, to bear all event expenditure henceforth, and opined that in future the State should itself conduct such events.

SDAT filed an affidavit explaining the economic benefits, history of motorsport in Chennai, formation of a high-level committee and safety measures. RPPL accepted safety directions but challenged the High Court’s financial directions as amounting to judicial re-writing of contractual terms. The Supreme Court heard the appeals and set aside the challenged financial and policy-restructuring directions, while leaving safety-related directions intact.

E) LEGAL ISSUES RAISED

1. Whether a High Court in a PIL can modify the express commercial terms of a MoU between a state instrumentality and a private party?

2. Whether directions that re-allocate financial obligations under an executed contract fall within the remedial powers of courts in public interest litigation?

3. Whether the State, having validly formed a policy to host international sporting events, may be directed by the court to conduct such events itself rather than collaborate with licensed private bodies?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that:
i. The High Court exceeded jurisdiction by imposing new financial terms not found in the MoU and thereby rewriting consensual contractual obligations.
ii. RPPL had agreed to large capital and operational commitments (Rs. 202 crores) and to safety measures; imposing reimbursement and advance deposits distorted the commercial bargain and violated principles that courts should not re-allocate contractual risks.
iii. The policy decision to host the event lies with the State; judicial review in PIL should be confined to legality, not commercial re-engineering.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that:
i. The High Court’s directions were necessary to protect public interest preventing the State from bearing disproportionate public expenditure that may benefit a private party.
ii. Given the public assumptions and public funds involved, the court could craft equitable directions to protect taxpayers and ensure fairness.

H) RELATED LEGAL PROVISIONS 

i. Indian Contract Act, 1872 (principles governing consensual obligations and contract interpretation).
ii. Judicial precedents limiting court interference in commercial bargains and the scope of judicial review in matters involving State instrumentalities (e.g., Master Marine Services v. Metcalfe & Hodgkinson; Orissa State Financial Corporation v. Narsingh Ch. Nayak).

I) JUDGEMENT

The Supreme Court examined the MoU’s text, the SDAT counter-affidavit and the High Court order. It accepted the High Court’s refusal to interfere with the policy decision to host the race, but emphasised that policy non-interference does not license judicial amendment of contractual allocations negotiated and recorded in an MoU. The Court noted the careful deliberations by SDAT (formation of a high-level working committee with multiple departments and stakeholders) and the legitimate public objectives sports infrastructure, economic benefits, tourism and city branding that informed the State’s decision.

The Court highlighted that the MoU explicitly allocated Rs. 202 crores to RPPL and Rs. 42 crores to SDAT for the first year, with Rs. 15 crores per remaining year a negotiated commercial matrix. Invoking established authorities that courts must not rewrite contractual terms, the Court held that directions (iv)–(vi) of the High Court (reimbursement of Rs. 42 crores by RPPL, advance deposit of Rs. 15 crores, and requirement that RPPL bear all expenditures) improperly altered these allocations.

The Court also rejected the High Court’s recommendation that the State itself should conduct future events, observing that international licence-holders confer rights to organisers and that governments routinely partner with licensed private entities for their expertise and resources.

The outcome: the Supreme Court partly allowed the appeal and set aside paragraphs 22(iv), (v), (vi) and (vii) of the High Court order while leaving intact safety and mitigation directions. The Court therefore preserved the MoU’s contractual scheme and confirmed the limited scope of judicial intervention in PILs regarding private-state commercial arrangements.

a. RATIO DECIDENDI

The controlling ratio is that when a policy decision of the State to host an event is not interfered with by the court, the court cannot, in a PIL, substitute its own view to re-apportion contractual obligations between the State and a private contracting party. The MoU was a negotiated commercial instrument entered into by a State instrumentality acting within policy.

Judicial review in a PIL may ensure legality and public safety but does not empower courts to rewrite consensual contracts or prescribe new financial burdens not contemplated by the parties. This flows from settled precedent prohibiting courts from varying contract terms between consenting parties and from the recognition that public-private partnership is a valid policy instrument for public administration.

b. OBITER DICTA 

The Court observed (obiter) on policymaking and public-private collaboration: governments adopt private partnerships as a pragmatic response to resource constraints and expertise deficits. The judgment underscored the economic rationale for hosting international sporting events (tourism, job creation, infrastructure legacy) and the administrative safeguards (multi-departmental committees, safety protocols) that should inform judicial sensibilities when reviewing such executive actions.

The Court further noted the global practice where licensed bodies hold rights and States partner for facilitation rather than become sole organisers, implying deference to executive choices in such domains. These observations guide future PILs challenging similar collaborations but do not alter the operative ruling that courts cannot rewrite contracts.

c. GUIDELINES

i. Courts dealing with PILs that challenge State-private commercial arrangements should distinguish policy (which may attract greater judicial restraint) from contractual terms (which are outside routine PIL remediation unless illegality/fraud is shown).
ii. Judicial relief in PIL must be tailored to enforce legality and public safety but must avoid substituting judicial bargains for negotiated commercial allocations.
iii. Where public funds are involved, courts may scrutinise for mala fides, corruption or manifest illegality; mere distributive unfairness in a commercial MoU does not automatically permit re-writing.
iv. Executive instrumentalities should maintain transparent processes (committee records, approvals, safety protocols) to withstand PIL scrutiny.

J) CONCLUSION & COMMENTS

The Supreme Court’s decision reaffirms a principled limitation on judicial power in public interest litigation: courts must protect constitutional rights and legality, but must be cautious about intruding into commercial bargains legitimately struck by State instrumentalities within policy. The judgment is pragmatic it preserves directions aimed at public safety (sound mitigation, spectator protection) while removing intrusive economic directives that rewrote the MoU.

For administrative practice, the ruling urges clearer contractual transparency and robust administrative records to show that policy choices were reasoned and approvals obtained. For litigants and courts, the judgment is a reminder that relief in PILs must be proportionate and legally anchored; judicial creativity cannot extend to re-allocating commercial risks absent unlawful conduct.

The decision also endorses public-private partnership as a valid governance tool for staging international events, subject to standard judicial checks for legality, probity and safety. Finally, this ruling will guide future public-law challenges to sports and infrastructure partnerships, by distinguishing remedial roles of courts from commercial adjudication reserved for contractual fora.

K) REFERENCES

a. Important Cases Referred

1. Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138.

2. Arun Kumar Agrawal v. Union of India, (2013) 7 SCC 1.

3. Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489.

4. Orissa State Financial Corporation v. Narsingh Ch. Nayak, (2003) 10 SCC 261.

5. Orix Auto Finance (India) Ltd. v. Jagmander Singh, (2006) 2 SCC 598.

6. General Assurance Society Ltd. v. Chandumull Jain, AIR 1966 SC 1644.

7. Rajasthan State Industrial Development & Investment Corporation v. Diamond & Gem Development Corporation Ltd., (2013) 5 SCC 470.

8. Shree Ambica Medical Stores v. Surat People’s Coop Bank Ltd., (2020) 13 SCC 564.

9. Venkataraman Krishnamurthy v. Lodha Crown Buildmart Pvt. Ltd., (2024) 4 SCC 230.

b. Important Statutes Referred

1. Indian Contract Act, 1872.