Aggarwal And Modi Enterprises (Cinema … vs New Delhi Municiapl Council on 30 August 2005

Delhi High Court
Aggarwal And Modi Enterprises (Cinema … vs New Delhi Municiapl Council on 30 August, 2005
Equivalent citations: 123(2005)DLT154, 2005(84)DRJ160
Author: A.K. Sikri
Bench: A.K. Sikri

JUDGMENT

A.K. Sikri, J.

1. The respondent, New Delhi Municipal Council (hereinafter referred to as `the NDMC’) is having land/site of about 13 acres in Chanakyapuri, New Delhi. In the year 1965, two projects were envisaged thereon, namely, (i) construction of an air-conditioned 11 storeyed (in addition to two basements) 212 rooms five star hotel and (ii) 1000 seats capacity cinema fully air-conditioned with a large restaurant and a number of shops in the premises. Sealed tenders were invited vide NIT dated 14th November, 1965 to grant lease in respect of these two projects described as `tender for hotel’ and `tender for cinema’. The appellants were the successful bidder for the cinema and this culminated into the execution of the license agreement dated 3rd October, 1967 between the parties whereby the appellants were granted license to use the proposed building housing a cinema, which was to be constructed by the NDMC, with all the fittings and fixtures for a term of 10 years. The agreement provided renewal clause whereby option was given to the appellants to get the license renewed for another 10 years `on the terms and conditions to be mutually agreed’ between the parties at the time of renewal. The NDMC constructed the cinema hall and possession was handed over to the appellants. The appellants started running the said cinema popularly known as `Chankya’ cinema. The license period of 10 years’ was to expire on 30th September, 1980. The appellants exercised their option of renewal vide letter dated 11th January, 1980. On exercise of this option the NDMC renewed the license for another 10 years with effect from 1st October, 1980 to 30th September, 1990. Agreement dated 23rd September, 1980 was also executed. Clause (i) of this license agreement containing renewal clause was reproduction of the clause from the previous lease. The appellants again exercised their option for renewal vide letter dated 3rd September, 1990. This time, however, the NDMC refused to renew the license and instead sent cancellation notice dated 14th September, 1990 to the appellants.

2. It may be noted at this stage that after the second license deed dated 23rd September , 1980 was executed, the appellants had filed the Suit No. 295/1981 on 9th April, 1981 for injunction, inter alia, on the ground that the license deed dated 23rd September, 1980 was executed under coercion and was not binding. Injunction order was granted in favor of the appellants in the said suit by the Sub-Judge First Class. The NDMC went in appeal which was allowed by the Senior Sub-Judge vide order dated 10th May, 1982 and injunction order was vacated. However, the appellants filed Civil Revision No. 1054/1982 and order was passed by this court in the said petition directing the NDMC to charge only 30 per cent additional license fee till the disposal of the matter. After the matter was remitted to the Sub-Judge, stay was again granted which led to filing of appeal by the NDMC and then civil revision No. 206/1985 in this court. Order dated 14th January, 1987 was passed in the said revision petition directing that interim orders were to continue till the disposal of the suit. Status quo regarding possession and carrying on of business was given subject to payment of 30 per cent extra license fee.

3. Thus inspite of cancellation notice dated 14th September, 1990, the NDMC could not take further steps due to this status quo order. On the other hand, the appellants sent a representation dated 12th November, 1990.

4. It appears that the NDMC constituted a Sub-Committee thereafter to examine various grievances of the appellants contained in the representation dated 12th November, 1990. Minutes of the meeting of this Sub-Committee held on 13th May, 1991 would show that having regard to prolonged litigation going on between the parties pending for last 10 years resulting into recurring financial loss to the NDMC, the Sub-Committee took certain decisions, to reach an out of court settlement, relevant terms whereof are reproduced below:

1. M/s Aggarwal & Modi will pay license fee for the period 1.10.80 to 30.9.90 by enhancing the license fee at 66.6 per cent on the original license fee of Rs. 5,51,111/- i.e. Rs. 9,18,150/- p.a.payable in 12 monthly Installments of Rs. 76,512.50 p.m.

3. The license in favor of M/s Aggarwal & Modi will be renewed for a further period of 10 years i.e. effective from 1.10.90 to 30.9.2000 by enhancing license fee at 60 per cent over and above the license fee payable up to the period ending on 30.9.90 i.e. Rs. 14,69,040/- p.a.payable in 12 equal monthly Installments of Rs. 1,22,420/-per month.

7. Next renewal due in the year 2000 will be decided between the licensor and the licensess on mutually settled terms and conditions at that time.

5. On approval of these decisions by the administrator, the NDMC addressed a letter dated 2nd December, 1991 to the appellants, communicating the said decisions and inter alia, stating that the terms of the license would be renewed for another 10 years effective from 1st October, 1990 subject to the payment of enhanced license fee at 65 per cent over and above the license fee payable in the preceding term. It was also stated that `license will have to be executed incorporation (sic. incorporating) the present day terms and conditions of allotment’ and that the appellants `will withdraw court cases pending before any judicial authority’. Vide letter dated 5th December, 1991 marked `without prejudice’ the appellants accepted this offer although according to them the revision of license fee was quite steep. They also communicated to the NDMC that since they would have to make major investment of over Rs. 75 lacs on renovation, it may consider adopting a license fee renewal policy for a longer duration as in other similar cases. They also expressed their willingness to execute supplementary agreements in this regard.

6. While acknowledging appellants’ response, the NDMC addressed a letter dated 29th January, 1992 to them requesting them to arrange payment of the arrears for the period 1st October, 1980 to 31st January, 1982 in terms of the decision contained in the letter dated 2nd December, 1991 and also informing them that the issue of framing the renewal policy for longer period, would be examined. While this arrangement was expected to give a quietus to the long drawn disputes between the parties, it, however, failed to take off as the appellants allegedly failed to withdraw the pending cases. They instead filed CWP No. 3244/1992 for direction to the NDMC to renew the lease/license for the period 1st October, 1990 to 30th September, 2000 with respect to the Chanakya Cinema complex and for framing just, fair and reasonable policy for determining the rent/license fee for each renewal and for longer duration with respect to Chanakya Cinema complex on the line of hotels and other commercial buildings. A show cause notice was issued to the NDMC on this. Interim restraint orders were also passed against it. However, as the NDMC did not file reply, ultimately the Division Bench was pleased to issue Rule DB on 10th February, 2003 and interim orders dated 21st September, 1992 were also confirmed till the decision of the writ petition. Attempt of the NDMC to get the interim orders vacated failed as its application for this purpose was dismissed by the Division Bench on 30th September, 1993. The prayers made in the aforesaid writ petition would, however, show that the appellants had not only challenged the license fee fixed by the Sub-Committee and communicated to the appellants vide letter dated 2nd December, 1991 but wanted the NDMC to frame renewal policy for longer duration and was not satisfied with the decision of the NDMC to renew the license for a period of 10 years. In other words, although the appellants had given their acceptance vide its letter dated 5th December, 1991 to the terms contained in the NDMC’s letter dated 2nd December, 1991, the acceptance of the appellants was `without prejudice’ and the said terms were immediately thereafter challenged in this writ petition. The moot question, therefore, would be as to whether there was any renewal of lease/license from 1st October, 1990 to 30th September, 2000. We shall advert to this aspect at the relevant stage as the contention of the NDMC is that neither there was any unqualified acceptance to the offer of the NDMC contained in the letter dated 2nd December, 1991 for renewal of license up to 30th September, 2000 nor any lease/license deed was executed and registered which was a necessary requirement and specifically stated so in the offer dated 2nd December, 1991.

7. We have noted that in the said writ petition No. 3244/1992 stay against dispossession was granted vide order dated 21st September, 1992. However, this stay was vacated by the Division Bench on 25th May, 2001. In the injunction suit which was pending before the Sub-Judge, Delhi, order dated 5th April, 1994 was passed holding that matter between the parties cannot be treated as `compromised’. Civil revision No. 344/1994 was preferred against that order in which order dated 16th April, 1994 was passed by a Single Judge of this court directing that even if the arguments are heard final orders would not be passed by the trial court. Because of this order, the suit is still pending. In the revision petition, however, another order dated 13th February, 2002 was passed clarifying that no stay is continuing as it was not extended after 18th January, 2001. In this scenario, normally the appellants’ fate would have been determined in CWP No. 3244/1992 but a leeway was provided by the order dated 21st September, 1992 in which it was observed :

‘This order will not prevent the NDMC from considering the proposals of the petitioner dated 5th April, 2000 and 15th March, 2001.’

8. It is clear from this order that the appellants had submitted the proposals on 5th April, 2000 and 15th March, 2001 as it was trying to buy peace with the NDMC by proposing out of the court resolution of disputes and the Division Bench directed that the NDMC takes decision on these proposals. The NDMC later passed the resolution dated 28th August, 2001 extending the lease of the appellants for a period of three years from 1st October, 2001 to 30th September, 2003 pending final decision on the proposals of the appellants to redevelop the complex as a multiplex-cum-commercial center. It would be apposite to reproduce this resolution in toto:

3(XLiv) CHANKYA CINEMA-Redevelopment & licensing of enhanced rates.

Resolved that in view of the direction of the Hon’ble High Court of Delhi dated 4.5.2001 and after considering petitioner’s representations of April’2000 and March’ 2001, the proposal contained in para 11 and 12 of the preamble are approved as under:-

i) a comprehensive proposal be put up at an early date giving merits and demerits of this Cinema Complex being redeveloped as a Commercial-cum-Multiplex as suggested by the present licensee or be developed as a Commercial Complex subject to the provisions of the Master Plan or to be retained as it is with minor modification and as to whether the redevelopment of the project be taken up by the NDMC or by a outside agency or by the present occupier and as to whether the cost of construction be met by NDMC or by the outside agency or by the present occupier. The revenue implication of the proposal be also spelt out in the detailed proposal.

ii) Since a period of almost one year has already elapsed without a valid license with the present occupier; pending decision on the redevelopment of the building and legal and procedural approvals from DUAC & CFO, the present licensee be allotted through a fresh license deed for a period of 3 years from 01.10.2000 to 30.9.2003 by which a final decision is expected, on an enhanced license fee of Rs. 39.39 lacs from 01.10.2000, Rs. 43,32,900/- from 01.10.2001 and Rs. 47,66,190/- from 01.10.2002 per annum.

iii) While executing the fresh deed, it may be made clear that whether Council opts for Multiplex, alternatively a Commercial Complex or thirdly to retain it as it is, the license beyond 1.10.2003, shall be a fresh license through normal and fair competition as prescribed under Section 141(2) of the NDMC Act.

This decision may be reported to the Delhi High Court and brought on their record with a reference to the directions dated 4.5.2001 so that there is no further dispute about the proposed fresh license for 3 years on the license fee as decided above and on the method of examining the proposed redevelopment of the building.

9. Appellants made representations pursuant thereto and floated the following proposals in their representations dated 5th April, 2000 and 15th March, 2001:

(i) to renew the license of cinema complex on existing terms and/ or ;

(ii) to permit the appellants to develop the cinema complex in a multiplex by investing its own funds on annual license fee of Rs. 1.80 crores.

10. These were considered and the Chairman of the NDMC passed the order dated 13th November, 2001 after giving personal hearing to the authorised representatives of the appellants. The representations were found to be without merit and rejected. The appellants were granted time to hand over the possession of the premises to the NDMC on 28th February, 2002 after removing all the belongings which are removable as per the terms of the license. They were also asked to pay damages for the intervening period at the rate of Rs. 15.15 lacs and further submit an undertaking to vacate the premises on 28th February, 2002 within 15 days from the receipt of the order. Their request for renewal and for developing a multi-complex is also turned down as it was not found in consonance with provisions of Section 141(2) of the NDMC Act (hereinafter referred to as `the Act’).

11. The appellants felt aggrieved of this and filed yet another CWP No. 773/2002 to challenge this order and some other actions of the NDMC.

12. The writ court dismissed appellants’ writ petition by judgment dated 8th August, 2003 against which this appeal is filed.

13. Before adverting to the contentions raised in this appeal, it is deemed proper to take note of the basis of the impugned Writ Court judgment.

THE IMPUGNED JUDGMENT:

14. A perusal of the judgment shows that the court framed the following question for determination :

‘The principal question involved in this writ petition is whether a party who has been issued a license/lease and has consequently enjoyed a long tenure in this complex can insist as a matter of law and legal right that the NDMC should not auction the same but must re-allot it to the petitioner as the petitioner was the original allottee inter alia on its plea that it was entitled to renewal in the year 2000.’

15. The court then recorded the following findings and conclusion to decide this.

(i) Whether the grant was a license or lease had become academic because according to the appellants’ own showing the period stipulated originally in the lease/license had come to an end. Even otherwise, the terms of acceptance of the tender in 1967 do not indicate any renewal beyond 2000.

(ii) As per the contractual terms, the appellants had no right to seek any renewal beyond 30th September, 2000 as there was no clause to this effect.

(iii) If a public authority were to allot an estate by inviting public tender then the very fact that more revenue was likely to be generated was clearly indicative of public interest as laid down by the Division Bench of this court in CWP No. 1066/1998 decided on 29th May, 1998.

(iv) Appellants were estopped from pleading discrimination qua hotels at this stage. Even otherwise hotels and cinema complexes, though figuring together in classification, could not be equated for the purpose of Article 14 as inherently the business of hotels and cinemas are different and, therefore, there was no discrimination, hostile or otherwise.

(v) The decision of the NDMC not to renew the lease of hotels/cinemas after present term coming to an end was a policy decision, adopting a uniform yardstick of the expiry of existing leases of hotels/cinemas and was, therefore, perfectly valid and reasonable. If the NDMC takes recourse to Section 141(2) of the Act for generating higher revenue from its resources such a policy decision cannot be questioned unless it is unconstitutional and it was not for the court to consider where a different policy should have been followed on the ground that other policy would have been fairer or wiser or more scientific or more logical.

(vi) Section 141 of the Act deals with the lease, let out on hire or transfer otherwise of any immovable property belonging to the Council. Section 141(2) clearly indicates that sale, lease or transfer of such property should not be less than the value at which such property could be sold, leased or otherwise transferred in normal and fair competition. Thus, it is evident that the transfers should be at the market rate when any property of the Council is sold, leased or otherwise transferred.

(vii) The impugned action could neither be treated as unreasonable, nor it was against public interest nor could it be termed as irrational, discriminatory or arbitrary to be affected by the judgment of the Supreme Court in Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. .

16. The Writ Court accordingly dismissed the writ petition and granted appellants time to vacate the cinema complex on or before 30th September, 2003 subject to filing of an undertaking to vacate the complex by this date.

17. The Appellants have filed this Appeal to question the judgment. When this came up for hearing on 15th September, 2003, the court directed the parties to place on record the following information:

‘(1) The amount spent by the appellant on the renovation of theater etc. (2) The details of agreements entered into by the Corporation with other parties, giving in details that after the period of lease, the property is put to auction or has been renewed.

(3) Any resolution passed by the Corporation, before or after the letter dated 30.11.2001.’

18. The requisite affidavit has been filed by the NDMC in compliance with the aforesaid order.

19. Mr. Ashok H. Desai, learned senior counsel, representing Appellants submitted that they were not seeking enforcement of any right under the license/lease and would proceed on the basis that the lease had expired and it did not provide for any further extension. Their case, however, fell within the realm of administrative law because refusal to grant extension of the lease/license by the NDMC was arbitrary, unfair, discriminatory and the umbrage under Section 141(2) of the Act was misconceived. He contended that Section 141(2) of the Act applied only to grant of fresh lease/license under this the NDMC was obliged to resort to public auction and while granting a fresh lease the requirement of holding a public auction did not apply to the renewal of a lease and Section 141 had no application in such a case. He submitted that pursuant to the order dated 15th September, 2003 passed by the Division Bench, the NDMC had accepted that :

(i) it had not held any public auction while granting the renewal of a lease.

(ii) that all public auctions were held at the stage of first letting, and

(iii) that license of hundreds of shops was renewed without following the procedure contained in Section 141(2) without holding any such auction. The shops were exempted from the rigour of Section 141 even in the impugned NDMC decision. Therefore, there was no rationale to exclude cinemas and hotels and such categorization was clearly discriminatory and impermissible.

20. Mr. Desai submitted that the NDMC being a public body was supposed to act fairly but in the present case, where the appellants were in occupation of the cinema hall for last more than 32 years and had the status of a `tenant’ in occupation after the lease, it had failed. He placed reliance on the following Supreme Court judgments in this regard:

(i) E.P. Royappa v. State of Tamil Nadu and Anr.

(ii) M/s Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay

(iii) Ramana Dayaram Shetty v. The International Airport Authority of India and Ors.

21. Learned Senior Counsel also submitted that the mala fide and arbitrariness of the NDMC was further evident from the fact that even on the NDMC’s own showing if the cinema complex was converted into multiplex, it would earn approximately Rs. 2 crores per annum as against Appellants’ offer of Rs. 1.80 crores but still the Corporation was wanting to go for public auction purposelessly. He argued that the NDMC as instrumentality of the State was to act fairly and equitably and could only ask for suitable and equitable enhancement of rent/license fee.

22. Learned Senior Counsel placed reliance on Supreme Court judgments in Balco Employees’ Union (Regd.) v. Union of India , State of MP v. Nandlal Jaiswal , Peerless General Finance and Investment Co. Ltd. v. Reserve Bank of India , Premium Granites v. State of T.N. , Delhi Science Forum v. Union of India, [(1998) 2 SCC 405], R.K. Garg v. Union of India , M.P. Oil Extension v. State of M.P. , State of Punjab v. Ram Lubhaya Bagga and Bhavesh D. Purish v. Union of India in support of his contentions. He more particularly projected the ratio of Supreme Court judgments in Damodhar Tukaram Mangalmurti v. State of Bombay and Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai and Anr. to urge that the NDMC was not a private landlord and could not fix the rent/license fee arbitrarily with a view to make a buck out of a public contract.

23. Learned Senior Counsel, Mr.Arun Mohan representing the NDMC, countered the aforesaid submission. His contention was that even if it was assumed that the premises was leased out to appellants, a valid lease for a term exceeding one year could only be created by a registered instrument and in the absence of this, the status of a tenant was that of a month to month tenant and since there was no registered instrument in the present case, the lease was to be treated to have as expired by efflux of time and appellants were to be considered as tenants at sufferance and in wrongful possession of the premises.

24. On the other issue of the NDMC action bring arbitrary and discriminatory, Mr. Mohan contended that the NDMC was within its competence to frame a policy of holding a public auction with a view to fetch a better revenue of its assets/properties to subserve the public interest. The Corporation was only adhering to the mandate of Section 141 and its action which was in conformity with law could not be termed as arbitrary and discriminatory. He submitted that the NDMC had made a beginning of holding public auction to earn maximum revenue and it could not be prevented from dealing with its properties through a method which was in public interest. He sought to justify the order dated 13th November, 2001 passed by the NDMC.

25. We may add that the submissions are noted in brief. Both the parties have filed detailed written submissions also. Their oral as well as written submissions, are, however, duly considered while discussing the various aspects of the case. It would be clear from the aforesaid arguments of the respective parties that we are required to answer the following questions:

(i) Whether the appellants had any right of renewal or extension of lease under the lease agreement?

(ii) Whether, in the facts and circumstances of the case, Section 141(2) of the Act would apply and it is incumbent upon the NDMC to resort to the procedure laid down in this Section for grant of lease?

(iii) Whether the impugned decision dated 13th November, 2001 rejecting the offer of the appellants for extending the lease beyond 30th September, 2003 and to convert the cinema in a multiplex is arbitrary and/or discriminatory?

RIGHT OF RENEWAL UNDER THE LEASE:

26. As noted in the beginning, license/lease deed 16th September, 1970 was for a period of 10 years i.e. up to 30th September, 1980 and contained a renewal clause as per which this period could be extended by another 10 years. We proceed on the presumption that the grant given to the appellants vide this license deed was in the nature of `lease’ and the appellants were inducted as `tenant’. In this license deed (which learned senior counsel for the NDMC described as first block of 10 years for the sake of convenience)option was given to the appellants to seek renewal. Second block, thus, commenced on 1st October, 1980 and was to last till 30th September, 1990. The appellants paid enhanced license fee for few months but thereafter filed Suit No. 295/1981 on 9th April, 1981 alleging that the license deed dated 23rd September, 1980 (for second block) was got executed under coercion and was not binding. The manner in which this suit and other suits filed subsequently progressed have already been indicated above. What needs to be emphasized is that the appellants themselves questioned the legality and validity of license deed dated 23rd September, 1980. However, they continued in possession under the cover of court orders whereby stay of dispossession was granted. They also paid, as against agreed amount of 54 per cent, contracted amount of Rs. 1,12,500/- per month as stated in the license deed. During the pendency of these court proceedings, period of second block also came to an end on 30th September, 1980. The appellants, however, continued to be in possession because of pending litigation and stay operating. Although the license deed dated 23rd September, 1980 also contained renewal clause in the following terms, no such right was exercised. Therefore, there was no extension of lease contractually. However, in order to give a quietus to the long drawn litigation the NDMC gave an offer on 2nd December, 1991 to settle at Rs. 70,392/- per month license fee for second block and agreed to extend it by another 10 years i.e. up to 30th September, 2000 , namely, third block at a license fee of Rs. 1,16,146/-. Thus lease for 3rd block was because of fresh offer given by the NDMC. The appellants responded to this offer vide letter dated 5th December, 1991 stating it to be `without prejudice’. Thereafter, the appellants filed CWP No. 3244/1992.

27. No formal license deed was also executed and there was no unqualified acceptance to the offer contained in the NDMC’s letter dated 2nd December, 1991. Therefore, in the eyes of law, no valid license was granted for the third block i.e. 1st October, 1990 to 30th September, 2000.

28. Be as it may, vide order dated 25th May, 2001 stay granted in CWP No. 3244/1992 was also vacated on the ground that even the period of third block had come to an end. This petition was also dismissed as withdrawn on 20th May, 2002. Even otherwise the NDMC’s letter dated 2nd December, 1991 did not contain any renewal clause. Therefore, contractually there was no entitlement to seek renewal after 30th September, 2000 and in fact there was no such lease in operation under which this right could be exercised. However, while vacating the stay vide order dated 25th May, 2001 since the Division Bench observed that request of the appellants for renewal of the license agreement for further period be considered, the NDMC adverted to this aspect. Request of the appellants included allowing them to convert the cinema complex into a multiplex. Again, it was not in terms of lease that the question of ‘extension’ of lease period was considered. But it was the request of the appellants which was to be considered, and NDMC agreed to bestow its consideration in view of the observations of this court in its order dated 25th May, 2001. As consideration of this request was to take some time, the Council first passed resolution dated 28th August, 2001 extending the lease for a period of three years i.e. from 1st October, 2000 to 30th September, 2003 pending final decision on the proposal of the appellants to redevelop the complex as multiplex-cum-commercial center. This proposal was, thereafter, considered and vide impugned order dated 13th November, 2001 rejected the offer.

29. In the aforesaid conspectus, the position can be summarized as under:

(a) In the public auction held in the year 1965, bid of the appellants was accepted and 10 years’ lease was granted i.e. from 1st October, 1970 to 30th September, 1980 (first block). This license deed contained renewal clause as per which one renewal could be allowed.

(b) On the appellants’ exercising their option to renew the license/lease agreement dated 23rd September, 1980 was entered into for second block i.e. 1st October, 1980 to 30th September, 1990 by enhancing the license fee and mentioning the same in the said license deed. However, the appellants themselves challenged this license deed on the ground that it was executed under coercion and was not binding by filing Suit No. 295/1981.

(c) Even if this license deed dated 23rd September, 1980 is to be treated as binding, fresh renewal could be, as per the license deed, only on both the parties agreeing for renewal and on terms on which renewal is to take place. No such thing happened. No further license deed was executed. Therefore, contract between the parties came to an end.

(d) Offer of further renewal beyond 1st October, 1990 (third block) was initiated vide NDMC’s letter dated 2nd December, 1991. Although response dated 5th December, 1991 was given which was not an acceptance in the eyes of law; no further license deed/agreement was executed although offer dated 2nd December, 1991 clearly stipulated that the same was subject to execution of fresh agreement. Moreover, the offer contained in the letter dated 2nd December, 1991 was challenged by the appellants themselves by filing CWP No. 3244/1992 meaning thereby it did not accept the said offer. However, they continued in possession because of stay orders granted in the writ petition. In this manner although without a contract, even the third block contained in the offer dated 2nd December, 1991 expired on 30th September, 2000. Therefore, this ‘extension’ did not flow from the lease executed in the beginning which had already expired, but was the result of the offer of the NDMC, an offer which did not fructify into a binding contract but the appellants enjoyed the occupation and term of 3rd block completed under the umbrella of court order.

(e) The Council extended the lease for another 3 years i.e. from 1st October, 2000 to 30th September, 2003. Again a unilateral act to validate the possession of the appellants for this period and to enable it to consider the proposal of the appellants. Otherwise there was no subsisting lease or agreement written or oral which gave any right to the appellants to seek further renewal under the lease.

30. It clearly follows from the aforesaid discussion that initial license/lease agreement dated 16th September, 1970 and thereafter second lease deed dated 23rd September, 1980 (even if it is to be treated as binding) came to an end and, therefore, there was no contract between the parties governing contractual relationship. Thus in so far as the appellants are concerned, they could not exercise any right for further extension under any contract/lease in the absence of any agreement in this behalf operating between the parties. Extensions thereafter are given by the NDMC, that too in the circumstances explained above. Although there was a debate at the bar as to whether the grant given by the NDMC to the appellants was a license or lease and learned senior counsel appearing for the NDMC sought to argue that what was granted was only a license under Section 52 of the Indian Easement Act and not a lease under Section 105 of the Transfer of Property Act. In support of this proposition, he relied upon the judgments of this court rendered in the cases of D.T.T.D.C. v. M/s D.R. Mehara and Sons (AIR 1996 Delhi 351), Liberty Sales Services v. M/s Jakki Mull & Sons and Anr. and Jagjit Cotton Textiles Ltd. and Ors. v. Col. A.K. Malhotra . However, determination of this question is not even necessary in the present case and we have proceeded on the premise that what was granted was lease. It is more so as license fee or `rent’ being more than Rs. 3,500/- per month, in the present case this distinction has no relevance and is totally blurred. Even Mr.Arun Mohan, learned senior counsel appearing for the NDMC accepted this position proceeding on the assumption that the appellants were given possession of the premises on lease.

31. All this leads to the conclusion that there was no agreement/contract between the parties giving any right to the appellants to seek `renewal’ of lease. Legal support for this can be found in the judgments of following cases:

(i) Mrs. (Dr.) P.S. Bedi v. Project & Equipment Corporation of India Ltd.

(ii) Hitkarini Sabha v. Jabalpur Corporation .

(iii) Syed Jaleel Zane v. P. Venkata Murlidhar

(iv) State of UP v. Lalji Tandon

(v) Naveen Chand v. Nagarjuna Travels and Hotels Pvt. Ltd. .

32. It is not necessary to quote from all these judgments and our purpose would be served by pointing out that Lalji Tandon (supra) contains erudite exposition of statement of law on the subject. For the sake of brevity, instead of quoting from this and other judgments noted above, we may cull out the following principles:

(a) In India, a lease may be in perpetuity and the law, either the Transfer of Property Act or the general law abhors a lease in perpetuity. If there is a covenant for renewal in the lease agreement, lessee can exercise his right unilaterally for extension of lease, for which consent of Lesser is not necessary.

(b) Where the principal lease executed between the parties containing a covenant for renewal, is renewed in accordance with the said covenant, whether the renewed lease shall also contain similar clause for renewal depends on the facts and circumstances of each case, regard being had to the intention of the parties as displayed in the original covenant for renewal and the surrounding circumstances.

(c) There is difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease. In the case of extension it is not necessary to have a fresh deed of lease executed. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties.

(d) Failing the execution of fresh deed of lease, another lease for a fixed terms shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be.

(e) If the language in the lease deed is ambiguous, the court would opt for an interpretation negating the plea of the perpetual lease. Where there is a clause for renewal subject to the same terms and conditions, it would be construed as giving a right to renewal for the same period as the period of the original lease, but not a right to second or third renewal and so on unless, of course, the language is clear and unambiguous. While ascertaining the intention of the parties in this behalf, lease deed has to be read as a whole.

33. We may also note that in Ratan Kaur v. Union of India which was also a case of lease by the Government to a licensee, decision of the Government to extend the lease was held to be valid as the lease deed provided only for one renewal and no right for any further renewal. Upholding the decision of the High Court to the effect that there was no renewal under the lease and, therefore, no right of assignment, the Supreme Court observed:

‘…Since under the covenant, the predecessor-in-interest was entitled to only one renewal, after the first renewal, she had no right. Rejection of her application for assignment is quite legal. The view taken by the High Court is correct. The lands absolutely belonged to the Government and they were assigned to Khansahib Naban Ali. The assignee has a right only for one renewal. Admittedly, the lease was made in May 1922. After the expiry of 30 years in 1952, further renewal for another 30 years having been rejected, she had no right for assignment. The rejection of the application for renewal of grant is clearly intra vires.’ There would, thus, be an inescapable conclusion that under the lease there is no right to seek any renewal.

Re: Applicability of Section 141(2) of the Act

34. As already pointed out above, twofold proposal of the appellants contained in their representation, which was considered in the impugned decision, was for (a) renewal of the license of the cinema complex on existing terms and/or (b) permitting the appellants to develop the cinema complex in a multiplex with its own funds and assuring the NDMC payment of Rs. 1.80 crores per annum as license fee. The proposal is rejected by giving following reasons:

‘In view of the provisions of Section 141(2) of the NDMC Act and the other relevant provisions of law, it is not possible to accept the proposals of the company to permit them to develop the cinema complex in a multiplex in isolation as such an action would be prima facie violative of Section 141(2) of the NDMC Act which requires NDMC to follow fair competition for licensing/leasing its properties to get the best price at prevalent market rates. Even otherwise, development of property in the form of multiplex would also require compliance of other statutory legislations i.e. Delhi Development Act and provisions of Master Plan etc.which would require certain FAR to be maintained keeping in view the land parcel in toto.

Now coming to the second preposition, it is felt that the party which dragged NDMC in litigation for the last 20 years and has not been willing to pay even the agreed license fee which was determined keeping in view the terms of the agreement entered into between the company and NDMC and which was decided in accordance with the policies of NDMC; extending the license in favor of the party on the existing terms would be conferring benefits to a party who is defaulter from day one and would also not be in consonance either with the provisions of Section 141(2) of the NDMC Act or with the mandates of the Council.’

35. Apart from other consideration, namely, litigious nature of the appellants which dragged the NDMC into litigation for the last 20 years; appellants being perennial defaulter; terms of the agreement not entitling the appellants to seek renewal, what went in the mind of the authority was that renewal of license or permitting the appellants to convert it into a multiplex was not permissible in view of the provisions of Section 141(2) of the Act. It is this aspect to which we may revert to in the first instance.

36. Section 141 of the Act is in the following terms:

‘141. Disposal of immovable property:

(1) The Chairperson may, with the sanction of the Council, lease, let out on hire or otherwise transfer any immovable property belonging to the Council.

(2) The consideration for which any immovable property may be sold, leased or otherwise transferred shall not be less than the value at which such immovable property could be sold, leased or otherwise transferred in normal and fair competition.

(3) The sanction of Council under Section 140 or this section may be given either generally for any class of cases or specially for any particular case.

(4) Subject to nay conditions or limitation that may be specified in any other provisions of this Act the foregoing provisions of Section 140 and this section shall apply to every disposal of property belonging to the Council made under, or for any purpose of this Act.

(5) Every case of disposal of property under sub-section (1) of Section 140 shall be reported by the Chairperson without delay to the Council.’

37. The mandate of Sub-Section (2) of Section 141 is that any immovable property belonging to the NDMC is to be sold, leased or otherwise transferred on consideration which is not to be less than the value at which such immovable property could be sold, leased or otherwise transferred in `normal and fair competition’.

Thus the NDMC is obligated to adopt a procedure by which it can get maximum possible return/consideration for such an immovable property. The procedure prescribed is `normal and fair competition’. Indubitably, the methodology which can be adopted for receiving maximum consideration in a normal and fair competition, would be the public auction- a well recognised process/procedure to achieve this end. That is even otherwise the fundamental principle for disposing of a Government property. Public auction not only ensures fair price and maximum return, it also militates against any allegation of favoritsm on the part of the Government authorities while giving grant for disposing of public property. In Ramrao Jankiram Kadam v. State of Bombay an auction has been described as the proceeding at which people are invited to compete for the purchase of property by successive offers of advancing sums and a sale by auction is a means of ascertaining what the thing is worth, viz. its fair market price.

38. Courts have also, time and again, emphasized upon the public auction as a transparent mean of disposal of government property. Reference can usefully be made to the following judgments:

(i) State of UP v. Shiv Charan Sharma

(ii) Ram and Shyam Company v. State of Haryana .

(iii) Chenchu Rami Reddy v. Govt.of Andhra Pradesh .

(iv) Sachidanand Pandey v. State of West Bengal .

(v) Haji T.M. Hassan Rawther v. Kerala Financial Corporation .

(vi) Lakshmanasami Gounder v. C.I.T., Selvamani .

(vii) Sterling Computers Ltd. v. M & N Publications Ltd. .

(viii) Mahesh Chandra v. Regional Manager, UP Financial Corporation .

(ix) Union of India v. Hindustan Development Corporation .

(x) Pachaiyappa’s Trust v. Official Trustee of Madras .

(xi) Chairman and M.D., SIPCO, Madras v. Contromix Pvt. Ltd.

(xii) New India Public School v. HUDA

(xiii) Om Prakash Tewari v. District Magistrate, Ballia .

(xiv) State of Kerala v. M. Bhaskaran Pillai

(xv) Vadavalli Fishermen Co-op. Society Ltd. v. Rayidi Krishna Kumari (AIR 2000 Andhra Pradesh 403).

(xvi) Haryana Financial Corporation v. Jagdamba Oil Mills .

(xvii) Rajubaben Dadbhai Kahor Charitable Trust v. State of Gujarat .

39. It is not necessary to quote from all these judgments. However, following observations from some of these judgments would bring the point home:

State of UP v. Shiv Charan Sharma .

‘Public auction with open participation and a reserved price guarantees public interest being fully sub served. This is what High Court by the judgment under appeal directed.’ Ram and Shyam Company v. State of Haryana .

‘Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expend its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognized public purpose, one such being to achieve the goals set out in Par IV of the Constitution.’ Sachidanand Pandey v. State of West Bengal ‘On a consideration of the relevant cases cited at the bar the following proposition may be taken as well established: State-owned or public-owned property is not to be dealt with at the absolute discretion of the executive. Certain percepts and principles have to be observed. Public interest is the paramount consideration. One of the methods of securing the public interest, when it is considered necessary to dispose of a property, is to sell the property by public auction or by inviting tenders. Though that is the ordinary rule, it is not invariable rule. There may be situations where there are compelling reasons necessitating departure from the rule but then the reasons for the departure must be rational and should not be suggestive of discrimination. Appearance of public justice is as important as doing justice. Nothing should be done which gives an appearance of bias, jobbery or nepotism.’ Mahesh Chandra v. Regional Manager, UP Financial Corporation .

‘The sale by public auction or tender or private negotiation should be bona fide action. First is universally recognized to be the best and most fair method. It is expected to fetch best competitive price and is beyond reproach. Second should be resorted to rarely only if first is an impossibility. Generally tenders would be calling quotation to execute public work or to award contracts etc. And third should always be avoided as it cannot withstand public gaze. It casts reflection on Corporation and its officials and is against social and public interest. In case transfer cannot be effected by public auction and it is necessary to inform the unit holder, if unit has been got valued for purposes of transfer of the estimated value for sale as he is as much interested as the Corporation. Sale of public property by calling tenders escape attention of many an intending participants. Every endeavor should, therefore, be made to give wide publicity and to get the maximum price.’ New India Public School v. HUDA .

‘A reading thereof, Section 15(3) read with Regulation 3(c)does indicate that there are several modes of disposal of the property acquired by HUDA for public purpose. One of the modes of transfer of property is indicated in sub-section (3) of Section 15 read with sub-regulation (c) of Regulation 5 is public auction, allotment, or otherwise. When public authority discharges its public duty the word ‘otherwise’ would be construed to be consistent with the public purpose and clear and unequivocal guidelines or rules are necessary and not at the whim and fancy of the public authorities or under their garb or cloak for any extraneous consideration. It would depend upon the nature of the scheme and object of public purpose sought to be achieved. In all cases relevant criterion should be pre-determined by by specific rules or regulations and published for the public. Therefore, the public authorities are required to make necessary specific regulations or valid guidelines to exercise their discretionary powers; otherwise the salutary procedure would be by public auction.’

40. The principles which can be culled out from the aforesaid decisions are the following:

(a) The demarcated approach for disposal of public property, in contradiction to the disposal of private property is that it should be for public purpose and in public interest.

(b) Disposal of public property partakes the character of a trust.

(c) Public purpose would be served only by getting best price for such property so that larger revenue coming into the coffers of the State administration can be utilized for beneficent activities to sub-serve public purpose, namely, the welfare State.

(d) For getting the best price, the public property should be put to public auction or by inviting tender with open participation i.e. ensure maximum public participation and a reserve price. This also ensures transparency and such an auction would be free from bias or discrimination and thus beyond reproach.

(e) Private negotiations should always be avoided as it cannot withstand public gaze and cast reflection on the Government or its official and is also against social and public interest.

(f) In exceptional cases, the authorities may depart from public auction or tender process and even dispose of the property at lower price than the market price or even for a token price. However, resort to this process can be taken only to achieve some defined constitutionally recognized public purpose, one such being to achieve the goal set out under Part-IV of the Constitution of India.

(g) When the statute provides for several modes for disposal of the property as in the case of New India Public School (supra) where Section 15(3) provided for the disposal of the property by public auction, allotment, or otherwise, the court declared that the word `otherwise’ would be construed to be consistent with the public purpose as public authority is discharging its public duty while disposing of the property when it is not resorting to public auction but `otherwise’. Therefore, the court mandated the necessity of unequal guidelines or rules so that it is not at the whim and fancy of the public authorities or under their garb or cloak for any extraneous consideration. Again it would depend upon the nature of the scheme and object of public purpose sought to be achieved while resorting to this mode. The court thus held that it was necessary to make specific regulations or valid guidelines to exercise discretionary powers by public authorities; otherwise the salutary procedure would be by public auction.

41. This clinching principle for the grant of government property, i.e. normally by public auction and in a given case if that is not possible then by inviting tenders and in no case by private negotiations, is statutorily recognized under Section 141(2) of the Act. In fact the appellants could not dispute this principle enshrined in Section 141(2) of the Act or even inbuilt in Article 14 of the Constitution of India and recognized by the courts dehors Section 141(2) of the Act.

42. Mr. Desai, therefore, sought to find escape route by contending that Section 141(2) applied only in cases of fresh grants i.e. when the property was to be sold, leased or otherwise transferred for the first time. He accepted that in such cases it should be by public auction. However, according to him, this provision will have no application when question of renewal of lease is to be decided in favor of a person who is already in possession and was inducted initially by means of a valid lease. His submission was that in the case of the appellants in whose favor lease was granted way back in the year 1965 and who were in possession for almost 40 years, and the issue for consideration by the authorities was to consider the renewal of the lase, umbrage under Section 141(2) could not be taken by showing its helplessness on the ground that only mode available was the public auction.

43. We are unable to subscribe to this view. We have already concluded that lease of the appellants had expired long ago. The appellants’ right to seek extension of the lease, under the lease agreement, also stood extinguished. If after the lease period is over by efflux of time or otherwise, there is no renewal clause under which right can be exercised to get the lease extended and the lessee has no right to continue in occupation of the premises in question, any ‘extension’ would be a case of fresh grant only. Therefore, it would be a case of creating lease of an immovable property and once the immovable property is to be `leased’, the NDMC has to resort to provisions of Section 141(2) of the Act. That is the only interpretation which can be given to the provisions of Section 141(2) of the Act, more so when the generally accepted principle of law for disposal of public property, as detailed above, is the public auction where most important consideration is the economics of getting maximum price. In the case of DDA v. Durga Chand Kaushik , the Supreme Court held:

‘….A renewal of lease is really the grant of a fresh lease. It is called a ‘renewal’ simply because it postulates the existence of a prior lease which generally provides for renewals as of right. In all other respects, it is really a fresh lease….’

44. In Provash Chandra Dalui v. Biswanath Banerjee , the Supreme Court held:

‘….the distinction between ‘extension’ and ‘renewal’ is chiefly in the case of ‘renewal’ a new lease is required while in the case of ‘extension’ the same lease continues in force during the additional period by the performance of the stipulated act. In other words, the word ‘extension’ when used in its proper and usual sense in connection with the lease means prolongation of the lease.’

45. In Gajraj Singh v. State Transport Appellate Tribunal , the Supreme Court held:-

‘This may be angulated from yet another legal perspective, namely, consequence that would flow from the meaning of the word ‘renewal’ of a permit under Section 81 of the Act. Black’s Law Dictionary, defines the word ‘renewal’ at page 1296 thus:

‘The act of renewing or reviving. A revival or rehabilitation of an expiring subject; that which is made anew or re-established. The substitution of a new right or obligation for another of the same nature. A change of something old to something new. To grant or obtain extension of;’ In P. Ramanatha Aiyar’s ‘Law of Laxicon ‘(Reprint Edn. 1987), the word ‘renewal’ is defined at page 1107 to mean ‘a change of something old for something new.’ The renewal of a ‘license’ means ‘a new license granted by way of renewal.’ The renewal of a negotiable bill or note is regarded simply as a prolongation of the original contract. The office of a ‘renewal’, as it is termed, of a life policy, is to prevent discontinuance or forfeiture.

In Provash Chandra Dalui v. Bishwantha Banerjee , this Court drew the distinction between the meaning of the words extension and renewal. It was held that:

‘…..a distinction between extension and renewal is chiefly that in the case of renewal, a new lease is required while in the case of extension the same lease continues in force during additional period by the performance of stipulated act. In other words, the word ‘extension’ when used in its proper and usual sense in connection with a lease, means prolongation of the lease.’

46. Thus grant of renewal is treated as a fresh grant though it breathes life into the operation of the previous lease or license granted as per existing appropriate provisions of a particular enactment. In the instant case, the two renewals, namely, for third block and thereafter from 2000 to 2003 were unilateral grants by the NDMC, that too to legitimize the possession of the appellants to enable it to consider their proposal.

47. The matter can be looked from another angle as well. Indisputably, Chanakya Cinema Complex is a ‘public premises’ as defined under Section 2(e) of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and such a public property cannot be handed over to the appellants in perpetuity as claimed by the appellants.

48. There is yet another aspect which cannot be lost sight of. It is in the contemplation of the NDMC to develop the cinema complex into a multiplex. What was given to the appellants was to run the complex as cinema. Once the purpose is going to be totally different and the NDMC has now decided to lease out or otherwise transfer this property for a different purpose, namely, for construction of a multiplex, can it be said that the appellants have right to get the site for a totally different project merely because they had the lease for a different purpose and that too up to a particular period and even after applying all permutations and combinations the said lease came to an end on 30th September, 2003? Obviously, when the appellants have no contractual right to continue and the complex is to be redeveloped into another project, the NDMC shall have to resort to Section 141(2) of the Act while dealing with disposal of the immovable property for another project/purpose. In that eventuality, it no more remains the case of `renewal’ of the lease because it would be a fresh grant for altogether different purpose and obviously on different terms for which the authorities will apply different parameters. In such a scenario, grant of lease in favor of the appellants, ignoring the provisions of Section 141(2) of the Act, would be contrary to the statutory mandate. [See: MI Builders Pvt. Ltd. v. Radhey Shyam Sahu .

49. In State of M.P. v. Krishnadas Tikaram [1995 Suppl.(1) SCC 587], the Supreme Court held that it is a settled law that renewal is a fresh grant and must be granted consistent with the law in operation as on that date.

50. Once that is our view on the interpretation of Section 141(2) of the Act, the impugned decision rejecting the proposal of the appellants for `renewal’ of lease or allowing them to convert the cinema complex into multiplex, is on valid grounds.

Re: Arbitrariness and /or discrimination

51. Whether the impugned decision is arbitrary, mala fide or discriminatory is the next question which we have to answer.

52. Before answering this issue, we may again recapitulate two important conclusions we have already arrived at, namely, (a) there is no existing lease or contractual term between the parties which entitles the appellants any renewal and (b) Section 141(2) of the Act is applicable as per which it is the duty of the NDMC to put the complex to public auction for grant of fresh lease that too for altogether different purpose, namely, multiplex. If there is neither any contractual nor statutory right of the appellants to seek renewal and on the other hand, it is the obligation of the NDMC to put the site to auction to attract `normal and fair competition’ and to get maximum consideration, decision not to allot the same to the appellants on their request under the garb of ‘renewal’ cannot be treated as arbitrary inasmuch as what the NDMC is contemplating is the adherence to the statutory provisions which is even otherwise its obligation. In fact a writ petition for this purpose would not be maintainable as through writ the petitioner can only enforce public law right and in view of Section 141(2) of the Act even public law right is not available to the appellants. Public law would not place the appellants in an exalted class so as to be deprived of a grant in violation of the statutory provisions. We may take sustenance from the following observations of the Supreme Court in the case of Indian Oil Corporation Ltd. v. Amritsar Gas Service reported as :

‘We may at the outset mention that it is not necessary in the present case to go into the constitutional limitations of Article 14 of the Constitution to which the appellant-Corporation as an instrumentality of the State would be subject particularly in view of the recent decision of this Court in Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay , Mahabir Auto Stores v. Indian Oil Corporation and Shrilekha Vidyarthi v. State of U.P. . This is on account of the fact that the suit was based only on breach of contract and remedies flowing there from and it is on this basis alone that the arbitrator has given his award. Shri Salve is, therefore, right in contenting that the further questions of public law based on Article 14 of the Constitution do not arise for decision in the present case and the matter must be decided strictly in realm of private law rights governed by the general law relating to contracts with reference to the provisions of the Specific Relief Act providing for non-enforceability of certain types of contracts. It is, therefore, in this background that we proceed to consider and decide the contentions raised before us.’

53. Another case which may be of relevance would be Ashok Kumar v. Union Territory, Chandigarh reported as . That was a case where site for running a telephone booth to a handicapped person and riot victim was to be allotted. The petitioner was given license for one year without guaranteeing any right of renewal. Earlier policy of the allotment had been given go-by and new policy was enforced as per which sites were to be put to public auction. Negativing the right of the petitioner to seek renewal, the Supreme Court held that the authorities cannot be said to have acted arbitrarily in requiring licensees to go through procedure of public auction for being reallotted disputed sites for continuing their PCO booths. It was held that no promise was held out by the authorities to the effect that licenses will be renewed so as to run parallel to period of licenses for running PCO granted to them under under the Telegraph Act and the doctrine of promissory estoppel was not attracted.

54. It would also be worthwhile to quote from judgment of the Madras High Court in the case of T.N. Municipal Shop Merchants Assocn. v. State of Tamil Nadu :

’21. …It is the larger interest of the society that has to be taken into account. If certain persons, merely because they bid at the auction and became successful bidders and thereby became entitled to enjoy the right for certain period, are allowed to contend that they must be granted renewal, then there will be no control for the public bodies. Persons let into possession would like to continue as long as it is possible, and then their heirs will be let into possession and it will likewise become a heritable right. It cannot be permitted at all. The properties of local bodies cannot be allowed to be fettered by perpetuity.

24. There is one other aspect to be noted in this regard. The petitioners are there now because of the public auction. In other words, pursuant to the public auction held, they being the highest bidders were allotted the shop to enjoy the right. Therefore, when they owe their entry to a public auction, is it open to them to say that no public auction should be held. Can they say ‘it is all right, I have come into the property, thanks to a public auction. Let us have no more auctions’. I don’t think that the petitioners under law will be entitled to put forward such a contention. Their entry into the property is because of a public auction and they cannot claim that such an entry should be barred for others, enabling them to remain in the property forever. They are estopped from putting forward such a contention.’ xxx Further, if the right is leased out by public auction, everyone will have a chance to participate. The petitioners can also participate in the same. On the other hand, if it is renewed in favor of those who were already there, the right to others to participate in the auction would be taken away. Thus, an equal opportunity to everyone will be denied. The contention that if the opportunity to everyone will be denied. The contention that if the lease is not renewed, the persons who are already there will be uprooted and their livelihood will be affected, cannot be accepted. There is no right inhering in the petitioners to demand permanent lease in their favor. With open eyes, they have bid at the auction, knowing it is only for three years. They came into the picture only by way of public auction. Therefore, it is not open to them to contend that they will be uprooted. The deprivation of livelihood is not there. For, there was no assurance to the petitioners at any point of time by the local bodies that the lease will be permanent in nature. By clinging to the property forever, the petitioners will be only depriving the opportunity to those who in law are entitled to bid at the auction and become successful bidders. Therefore, there is no uprooting of the persons, but there is only uprooting of avarice of the individuals.’

55. Again, in the case of Surendra Prasad Saha v. State , the High Court did not find any arbitrariness in refusing to renew the mining lease keeping in view the fact that renewal was to be only as per the provisions of the statutory enactment.

56. In view of the aforesaid pronouncements and having regard to the provisions of Section 141(2) of the Act, when the conclusion is that action of the NDMC is not arbitrary, reliance placed by the appellants on the judgments of the Supreme Court in E.P. Royappa (supra), M/s Dwarkadas Marfatia and Sons (supra) and Ramana Dayaram Shetty (supra) or other judgments would be of no avail.

57. Once we hold this view, the argument of discrimination would also fail. It would not be open to the appellants to say that the NDMC has been giving long drawn leases to the hotels and this treatment should be extended to the cinema site in question as well. Likewise comparison with the shops in shopping complexes and alleging that license is renewed in their cases would also be of no avail to the appellants. If the appellants’ case is dealt with in accordance with law keeping in view the statutory provisions and when there is no arbitrariness in the impugned action while rejecting the appellants’ proposal, the appellants cannot contend that they should be given favorable treatment disregarding legal position by comparing their case with other persons and trying to make an attempt that those persons are given a particular treatment. It cannot be lost sight of that the concept of equality as envisaged under Article 14 of the Constitution is a positive concept which cannot be enforced in a negative manner. When any authority is shown to have committed any illegality or irregularity in favor of any individual or group of individuals, others cannot claim the same illegality or irregularity on the ground of denial thereof to them [State of Bihar v. Kameshwar Prasad Singh .

58. In Gursharan Singh v. New Delhi Municipal Committee , the court held :

‘Before a claim based on equality clause is upheld, it must be established by the petitioner that his claim being just and legal, has been denied to him, while it has been extended to others and in this process there has been a discrimination.’ In State of Haryana v. Ram Kumar Mann this Court observed:

xxxx The doctrine of discrimination is founded upon existence of an enforceable right. He was discriminated and denied equality as some similarly situated persons had been given the same relief. Article 14 would apply only when invidious discrimination is meted out to equals and similarly circumstanced without any rational basis or relationship in that behalf.’

59. Legal position apart, in the facts of this case we do not find that any discriminatory treatment being meted out to the appellants. The attempt of the appellants to equate their case with small shopkeepers and alleged discrimination on that ground would be meaningless. The appellants cannot equate their case with small and petty shopkeepers and such shopkeepers would definitely constitute a separate class. We agree with the reasons given by the learned Single Judge on this aspect of the matter. We may note that relying upon the Supreme Court judgments in Balco Employees’ Union (Regd.) v. Union of India , State of MP v. Nandlal Jaiswal , Peerless General Finance and Investment Co. Ltd. v. Reserve Bank of India , Premium Granites v. State of T.N. , Delhi Science Forum v. Union of India [(1998) 2 SCC 405], R.K. Garg v. Union of India , M.P. Oil Extension v. State of M.P. , State of Punjab v. Ram Lubhaya Bagga , and Bhavesh D. Purish v. Union of India and rejecting the plea of hostile discrimination, the learned Single Judge held:

‘The learned counsel for the respondent contended and in my view rightly, that most of the shops in the NDMC area are allotted to small shopkeepers many of whom were displaced persons from West Pakistan or were displaced and uprooted from Baba Kharak Singh Marg and Panchkuian Road respectively and led to the development of Mohan Singh Place and Palika Bazaar. These small shopkeepers in various markets cannot be compared to the lessee/licensee of a cinema complex. Admittedly, the lease/license in the petitioner’s case and its renewal except the last one was for a fixed period of 10 years. The lease of the shops was for a period of 8 years & the renewals were for similar terms. The petitioner cannot now after 30th September, 2000 be termed either as a tenant if his plea as to the grant being a lease is accepted, or a licensee, since the period has expired and the petitioner is, therefore, at best a tenant at sufferance holding over. Hence this plea is also not sustainable. The challenge of discrimination qua the shops in various markets and their renewal on fixed increments cannot, therefore, be sustained in view of the above discussion and Article 14 can only be pressed into service among equals.’

60. The examples of Prominent Hotel Limited, CJ International Hotel Ltd. and Richie Rich Restaurant are misconceived as admittedly all these cases are embroiled in litigation. In so far as NDMC is concerned, it has not taken any such administrative decision which would come to the aid of the appellants. In the case of lease/license to Sunair Hotel admittedly before granting lease to that hotel tenders were invited and Sunair Hotel was found to be successful tenderer. Dispute which arose was altogether different i.e. Sunair Hotel had carried out some excess construction without obtaining completion certificate for which show cause notice was issued to the said hotel. It was that dispute which was resolved later. Again simply because the agreement dated 8th December, 1982 between Sunair Hotel and the NDMC contained clause 47 which provided for 33 years’ lease with provision for renewal, it would not be open for the appellants to say that there should have been similar clause in the agreement between the appellants and the NDMC. In the case of Bharat Hotel Limited also allotment was after inviting tenders and to a successful tenderer. The case is governed by the agreement between the parties. Other examples of certain commercial complexes, as already pointed out above, relate to the cases of shopkeepers and the appellants cannot equate themselves with those cases.

61. The appellants’ reliance on the judgment of the Supreme Court in Jamshed Hormusji Wadia (supra) is completely misplaced. The ratio laid down in that case would not apply to the present case. In the above matter there were about 3,000 tenants from more than 60 years divided into three categories i.e. monthly, 15 monthly and long leases. The areas occupied by the tenants were of different categories (commercial and residential), situated at different places and most of them were located on reclamation areas. The Port Trust valued the land through a valuer, who in turn valued the land on the basis that the land belonged to the Port Trust given to M/s. Ceat Tyres at Worli Mumbai which is a highly priced commercial area. On the basis of the valuer’s report the Port Trust demanded rent six times; of the existing rent. The issue was not of renewal of lease. Port Trust had in fact agreed to renew the lease. However, while doing so, it had sought to enhance the rent manifold and it is the revision of rent which was challenged as arbitrary. The Supreme Court, while granting relief to the tenants with regard to the rent revision till the year 2000, directed the High Court of Mumbai to appoint an adjudicator to decide further period of rent to be paid by lessees. Moreover, on the facts of that case involving inhabitants of small tenements, the Supreme Court treated the above problem as human and carved out a reasonable classification for dealing with a large number of tenants. Even the revision of rent was left by the Supreme Court to an adjudicator to be appointed by the High Court of Mumbai, only on account of the immense hardship stated to have been faced by about 3,000 tenants occupying reclamation area at different places owned by the Port Trust. The appellants cannot be permitted to compare themselves with such tenants. The ratio of that case would not have any bearing on this case.

Other incidental issues:

62. The argument of the appellants that they had made substantial investment as NDMC had merely given a semi finished super structure was countered by Mr.Arun Mohan describing this to be factually incorrect. Attention was drawn to Clause 10 of the license Deed dated 23rd September, 1980 which makes it clear that the licensee shall not make any additions or alterations in the building without prior permission of the licensor in writing and further that the licensee shall not be entitled to any compensation for any addition or alternation carried out by them in the building installations and that the same shall vest in the licensor. Further, Clause 18 of the license stipulates that in the event of the termination of a license the licensor shall have the option to retain the furnishing, interior decoration, carpeting and other fittings and installations belonging to the licensee on payment of a reasonable compensation. In the present case there has been no termination of license. On the contrary, it is the appellants who have assumed a lease in perpetuity in their favor without any documentation/registration instrument whatsoever. In the absence of any premium accompanying the license originally executed in favor of the appellants there can be no claim of the initial grant being one of lease coupled with interest. All the investment/additions made by the appellants are no more than revenue expenditure incurred by them to earn phenomenal profits from the complex.

63. Doctrine of legitimate expectation would also not apply in the facts and circumstances of the case. First relevant factor which which is to be borne in mind is that the appellants had given a bid with open eyes for a license which was to be for a duration of 10 years and agreement providing only one renewal. There was no assurance held that the license shall be renewed after every 10 years and in perpetuity. In view of these facts reliance upon the judgments in M.P. Oil Extraction and Anr. v. State of MP and Ors. Bharat Catering Corporation and Anr. v. UOI and Ors. , Union of India and Ors. v. Hindustan Development Corporation and Ors. and Narendra Kumar Maheshwari v. UOI and Ors. 1990 (Supp) SCC 440 is misplaced. Secondly, doctrine of legitimate expectation cannot be enforced against these statutory provisions. Thirdly, legitimate doctrine which is developed by the court and is based on equality would not override public interest. The court would interfere only if the decision taken by the authority was arbitrary, unreasonable and not taken in public interest. [See: Union of India v. Hindustan Development Corporation and Food Corporation of India v. M/s Kamdhenu Cattlefeed Industries .

64. We, therefore, do not find any infirmity with the impugned judgment of the Writ Court and direction passed by it. Consequently, we dismiss this Appeal being devoid of any merit with cost quantified at Rs. 25,000/- to be paid by Appellants within one month. They are directed to hand over, the premises to the NDMC and pay all arrears of the fee paid by them presently without prejudice to the respondent’s claim for mesne profits within three months from today.