Delhi High Court
M/S Gesture Hotels And Food Pvt. Limited vs The New Delhi Muncipal Council on 9 May, 2014
Equivalent citations: AIR 2014 DELHI 143, 2014 (5) ADR 206, (2014) 141 ALLINDCAS 329 (DEL), (2014) 210 DLT 359
Author: Rajiv Sahai Endlaw
Bench: Chief Justice, Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 9th May, 2014.
+ FAO (OS)219/2014
M/S GESTURE HOTELS AND FOOD
PVT. LIMITED ..... Appellant
Through: Mr. Arvind K. Nigam, Sr. Adv. with
Mr. Abhijat, Mr. Manish Sangwan &
Mr. Mayank Wadhwa, Advs.
Versus
THE NEW DELHI MUNCIPAL COUNCIL ..... Respondent
Through: Mrs. Rachna Golcha & Ms. Monisha
Handa, Advs.
CORAM :-
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
Caveat No.397/2014
1. The counsel for the respondent NDMC / caveator appears.
2. The caveat stands discharged.
CM No.7825/2014 (for exemption)
3. Allowed, subject to just exceptions.
4. The application is disposed of.
FAO (OS)219/2014 & CM No.7824/2014 (for stay)
5. We have, with consent, heard the counsels finally at the stage of
admission only.
FAO (OS) No.219/2014 Page 1 of 12
6. The appeal impugns the order dated 22.04.2014 of the learned Single
Judge of this Court (exercising Ordinary Civil Jurisdiction) of dismissal of the
application filed by the appellant / plaintiff for interim relief in CS(OS)
No.1914/2012. The suit filed is, a) for the relief of specific performance by
directing renewal / extension of the licence granted by the respondent /
defendant to the appellant / plaintiff vide Licence Deed dated 24.09.2002; and,
b) for declaration of the letter dated 28.06.2012 issued by the respondent /
defendant to the appellant / plaintiff of rejection of the request of the appellant /
plaintiff for renewal / extension of the licence as void ab-initioI; and, c) for
permanent injunction restraining the respondent / defendant from dispossessing
the appellant/plaintiff from the licenced premises or from creating any
impediments to the use by the appellant / plaintiff thereof. Interim relief of
restraining the respondent / defendant from dispossessing the appellant /
plaintiff or from causing any impediments to the use by the appellant / plaintiff
of the licenced premises was claimed.
7. The appellant / plaintiff being the highest bidder in a tender floated by
the respondent / defendant for grant of licence aforesaid, was on the terms and
conditions contained in the Licence Deed dated 24.09.2002 granted licence to
use space ad-measuring 9657 sq. ft. at ground / lower ground floor at Akbar
FAO (OS) No.219/2014 Page 2 of 12
Bhawan Annexe, behind Akbar Bhawan, Chanakya Lane, Chanakya Puri, New
Delhi for a period of 10 years and on the terms and conditions contained
therein. As per the said deed, the respondent / defendant as a licensor, was
entitled to re-enter the premises on the expiry of the period of the licence and
assume exclusive charge thereof and deal with it in the manner deemed fit and
to auction the belongings if any remaining of the appellant / plaintiff in the said
space, unless claimed within one month of assumption of such possession by
the licensor. Clause 1 of the said Licence Deed is as under:
"1. That the licence shall be for a period of 10 years
ending upto 11-7-2012 and thereafter it shall be entire
discretion of the licensor to extend or not to extend the
period of licence. In case it is decided by the licensor that
the licence be renewed / extended, it shall be renewed /
extended for a further period as decided by the licensor
from the day following the date on which the term of the
licence expires at a monthly licence fee payable under the
present licence plus its 5% (or by the percentage as
applicable under the policy of the council for the time
being in force) as monthly licence fee of the renewed
licence provided the licensee exercises his / her option for
renewal of licence in writing for another term of 10 years
within 60 days before the date of expiry of the present
FAO (OS) No.219/2014 Page 3 of 12
licence and the licensee completes all the required
formalities for renewal of licence within the stipulated
period of 60 days. In case the option for renewal is not so
exercised and / or the formalities are not completed
within the stipulated period to the satisfaction of the
licensor, it shall be presumed that the licensee is not
interested in further extension / renewal of his / her
licence beyond the date of expiry of the term of the licence
and in the event of the licensee not surrendering the
vacant possession of the shop within the stipulated period
under this deed, the licensee shall render himself / herself
liable for action for eviction and recovery of damages
under the Public Premises (Eviction of Unauthorized
Occupants) Act, 1971."
8. The appellant / plaintiff claims to have exercised the option for renewal
of the licence as per the terms aforesaid and to be ready and willing to perform
its part of the terms and conditions of such renewal.
9. The learned Single Judge has declined interim relief to the plaintiff
finding / observing / holding:
(i) that the appellant / plaintiff in the plaint selectively extracted
the portion of the clause aforesaid, to convey that the
FAO (OS) No.219/2014 Page 4 of 12
respondent / defendant was bound to renew the licence when
as per the actual clause it is not so;
(ii) that under the aforesaid clause in the Licence Deed between
the parties, the discretion of the respondent / defendant,
whether to extend or not to extend the term of the licence is
absolute and unfettered and it is only if the respondent /
defendant decides to exercise the discretion of renewing the
period of the licence that the other formalities as stipulated in
the said clause are to be performed by the licensee;
(iii) that the reference in the clause aforesaid to the policy of the
respondent / defendant is only to the policy as to the
percentage of increase in the licence fee and not to the policy
for renewal and all the policies of the NDMC are not made
ipso facto applicable;
(iv) that the reliance by the appellant / plaintiff on the policy /
guidelines dated 30.08.2000 of the respondent / defendant is
unfounded as the said policy refers to a decision that in case of
renewal of shop / kiosk/ thada/ office unit / restaurant, the
licence would be renewed for a period of 10 years on a year to
FAO (OS) No.219/2014 Page 5 of 12
year basis; the said clause of the policy comes into play only in
cases where there is a decision to renew the licence and that
where renewal is decided to be granted, the renewal has to be
for a period of 10 years; the said policy does not stipulate or
lay down that in every case irrespective of its facts and
circumstances, renewal has to be granted; where the NDMC
decides not to renew, the said policy would have no
application;
(v) there was thus no obligation on the respondent / defendant to
grant renewal, of which specific performance could be sought
by the appellant / plaintiff;
(vi) it is also not as if the respondent / defendant had not
considered the request of the appellant / plaintiff for renewal;
The Chairman of the respondent / defendant had appointed a
Sub-committee to consider the request of the appellant /
plaintiff and which Sub-committee submitted a report dated
22.02.2012 and for the reasons recorded wherein the request of
the appellant / plaintiff for renewal of the licence was rejected;
FAO (OS) No.219/2014 Page 6 of 12
(vii) Even otherwise, under Section 141(2) of the NDMC Act, 1994,
it is lawful for the respondent / defendant to try to get
maximum profits from its properties; reliance in this regard
was placed on Aggarwal & Modi Enterprises (P) Ltd. Vs. New
Delhi Municipal Council (2007) 8 SCC 75;
(viii) that there is no merit in the claim of the appellant / plaintiff of
discrimination as there was no policy whereunder such renewal
was / is mandatory;
(ix) that even otherwise, the dispute between the parties are purely
contractual and there is no allegation of personal bias against
any of the officers of the respondent / defendant.
10. We have at the outset invited the attention of the senior counsel for the
appellant / plaintiff to Section 64 of the Indian Easement Act, 1882 which
provides that where a licence has been granted for a consideration and the
licensee, without any fault of his own is evicted by the grantor before he has
fully enjoyed under the licence the right for which he contracted, he is entitled
to recover compensation from the grantors and have enquired from the senior
counsel whether not the same is indicative of an agreement, even if any of the
renewal of licence, being incapable of specific performance and even if the
FAO (OS) No.219/2014 Page 7 of 12
licensee has a right of renewal and the licensor wrongfully denies such renewal,
the claim if any of the licensee would be for damages /compensation only.
11. The only answer forthcoming is that the respondent / defendant has not
raised such a defence and the respondent / defendant having failed to raise a
defence available to it, the same is not so available.
12. Even if that be so, this Court is bound by the law and cannot pass any
order in oblivion thereof.
13. Reference in this regard can be made to The Corporation of Calicut Vs.
K. Sreenivasan AIR 2002 SC 2051 laying down that under Section 64 even if a
licensee is evicted, though grounds for revocation of licence do not exist, or
forcefully evicted, his only remedy is to recover compensation from grantor and
not to resume occupation. The same view is also taken by a Division Bench of
the Kerala High Court in FAO No.63/2013 titled as Trivandrum Golf Club Vs.
State of Kerala. One of us (Rajiv Sahai Endlaw, J.) also in M/s Keventer Agro
Ltd. Vs. M/s Kalyan Vyapar Pvt. Ltd. MANU/DE/1479/2013 and FAO(OS)
No.278/2013 preferred whereagainst was dismissed by a Division Bench of this
Court on 30.05.2013, has taken the same view and which was subsequently also
taken in Ashok Kumar Vs. Paramjeet Kaur MANU/DE/3900/2013.
FAO (OS) No.219/2014 Page 8 of 12
14. In view of the aforesaid legal position and when in terms of the same the
appellant/plaintiff has no chance of succeeding in the claim for specific
performance, the question of protecting the possession of the appellant/plaintiff
in the interregnum does not arise.
15. The senior counsel for the appellant / plaintiff has contended that the
learned Single Judge has erred in holding that there was / is no policy of
renewal and has invited our attention to a document at page 213 of the paper
book, referring to a Resolution / policy dated 30.08.2000 of the respondent /
defendant in this regard. The recital to the said Resolution, though in the
context of increase in licence fee, records that a decision is necessary inter alia
to bring uniformity of renewal made after every 10 years for shops / stalls /
kiosks/ thada / office unit etc. and one of the recommendations approved by the
Chairman is that in case of shops / stalls / kiosks/ tharas / office units /
restaurant etc., licence will be renewed for a period of 10 years on year to year
basis subject to enhancement in licence fee at the uniform rate by 7% per
annum and that hotels, cinemas and similar projects etc. be governed as per the
mutually agreed terms and conditions as entered into by the Council from time
to time. Attention is also invited to Resolution No.3 (xxi) dated 30.08.2000
titled "Estate Policy / Guidelines for dealing with Estate Matters" but we fail to
FAO (OS) No.219/2014 Page 9 of 12
see as to how the same come to the rescue of the appellant / plaintiff. The
same, rather are against the appellant / plaintiff. The respondent/defendant
NDMC vide the said Resolution resolved that on expiry of "present term of
licences" of all hotels/cinemas and other similar commercial complexes, the
licenses shall not be renewed and the fresh licence shall be as per the provisions
of Section 141(2) of the NDMC Act.
16. Faced therewith, the senior counsel for the appellant / plaintiff states that
the appellant / plaintiff be allowed to continue in the premises and the electric
supply to the said premises which has been disconnected after the impugned
order of the learned Single Judge be ordered to be restored, till the respondent /
defendant re-auctions the licence with respect to the premises and a right be
given to the appellant / plaintiff to match the highest bid.
17. The counsel for the respondent / defendant states that a decision has been
taken to allow the use of the premises by government departments / public
sector undertakings which are in dire need of space. The same is also borne out
from the record.
18. Be that as it may, the aforesaid takes the wind out of the claim of the
appellant / plaintiff of specific performance. It is not the case of the appellant /
plaintiff in the plaint that the appellant / plaintiff has a right to match such
FAO (OS) No.219/2014 Page 10 of 12
subsequent highest bid received by the respondent/defendant. The case with
which the appellant / plaintiff has come before the Court is of being entitled to
renewal at an enhancement of licence fee by 5%.
19. We, on a reading of the renewal clause aforesaid in the licence are
satisfied that the renewal thereof was in the sole discretion of the respondent /
defendant. The appellant / plaintiff thus cannot force the respondent / defendant
to renew the lease.
20. Reference in this regard may also be made to the judgment of the
Division bench of this Court in Kirloskar Brothers Ltd. Vs. Life Insurance
Corporation 191 (2012) DLT 575 where the guidelines notified by the
Government of India on 30.05.2002 providing that in case of public premises
where eviction is sought on the ground of the term for which the premises was
allowed to be occupied having lapsed / expired, eviction should be sought
through ordinary Civil Court and not by resorting to the provisions of the Public
Premises (Eviction of Unauthorized Occupants) Act, 1971 were held to be not
binding and merely directory and to be not an impediment to action under the
PP Act. The said Guidelines dated 30.05.2002 are found to be similar to the
resolutions / decision of the NDMC relied upon in the present case.
FAO (OS) No.219/2014 Page 11 of 12
21. We may record that the senior counsel for the appellant / plaintiff has
also argued that one of the reasons given for rejecting the request of the
appellant / plaintiff for renewal of licence is the FIR registered against the
officials of the respondent NDMC relating to the grant of licence to the
appellant / plaintiff but which reason is misconceived owing to the said FIR
having been quashed. However the counsel for the respondent / defendant has
contended that the same has not been quashed against all the accused and
appeal is pending.
22. However, in view of the above, we do not deem it necessary to go into
the aforesaid aspect, as we find the entitlement of the respondent / defendant in
the matter of renewal, to be in the absolute discretion of the
respondent/defendant whether for right or wrong reasons.
23. There is thus no merit in the appeal which is dismissed with costs of
Rs.20,000/- payable to the respondent / defendant.
CHIEF JUSTICE
RAJIV SAHAI ENDLAW, J.
th MAY 9 , 2014 „gsr‟ FAO (OS) No.219/2014 Page 12 of 12