Tiruchi SRM Hotel Row: HC allows appeals preferred by State, TTDC

The Madurai Bench of the Madras High Court on Wednesday allowed the appeals preferred by the State and Tamil Nadu Tourism Development Corporation (TTDC) against orders of a Single Bench that had granted relief to SRM Hotel in Tiruchi.

Last year, SRM Hotels Private Limited filed a petition before the court seeking a direction to restrain the authorities from evicting the hotel management from the premises in Tiruchi. The authorities had attempted to take possession of the premises following the expiry of the 30 year lease agreement with TTDC.

Granting relief to SRM Hotels, a Single Bench set aside the order passed by the authorities that rejected the request of SRM Hotels seeking renewal of the lease. The matter was remitted to the authorities. The Single Bench had observed the authorities had acted illegally and it was its duty to put the clock back and restore the status quo ante. The State and TTDC preferred the appeals against the Single Bench orders.

A Division Bench of Justices A.D. Jagadish Chandira and R. Poornima observed that the relevant aspect to be considered in the case was whether there was any legitimacy in the expectation of SRM Hotels that the lease, which was granted for 30 years, could be renewed on its expiry.

The contract clearly stipulates that renewal is at the sole discretion of the government. SRM Hotels’ request for extension does not create any right. At the same time, the government’s silence cannot be treated as implied consent and the subsequent rejection of extension on expiry is legally valid, the court observed.

“It is seen that SRM Hotels happens to be a chronic defaulter in payment of lease amount to the tune of about Rs.40 crore for the period from June 13, 2003 to June 12, 2021 and another spell from June 13, 2021 to June 12, 2024, arrived at by the authorities by effecting the enhancement agreed upon, of course with some administrative delay,” the judges pointed out.

While such enhanced lease amount itself was arrived at by the authorities belatedly, SRM Hotels who was certainly bound to pay the enhanced lease amount as per the terms of the lease deed, instead of showing any inclination to pay the same, at least in some instalments, “had entered into tactics of bargaining” with the authorities for renewal of lease and also chosen to file litigations to protract the issue and to squat on the demised property. “Such an attitude does not deserve any consideration, especially, on the ground of breach of legitimate expectation,” the court observed.

Once the lease expires no vested right to renewal arises, unless statute grants such right. The doctrine of legitimate expectation cannot be traced and pressed into service to claim lease extension with lease terms excluding such renewal. Legitimate expectation must be based on definite terms which are based on contractual terms and not on mere desire or hope, the court added.

The court said the Single Bench undermining the government machinery and its officials were unwarranted and could have been avoided especially when the writ petitioner being a defaulter had attempted to delay the handing over of possession by circumventing the process of court. Thereby the remarks based on assumptions are liable to be expunged, the court said and set aside the orders passed by the Single Bench.