Judgment

JAGANMOHAN REDDY J.: - The first respondent gave on lease to the appellant his cinema theatre known as "Sivananda Theatre" which was later known as "Moviland Theatre" by a registered lease deed dated September 2, 1946. Earlier, this same theatre was leased to respondent 2 on December 29, 1941, for five years commencing from March 1, 1942 ending with February 28, 1947. Clause 14 of the lease deed provided:

"After the expiry of the period of five years fixed under this lease, the lessees shall have the option and liberty to renew or extend the lease for another period of 5 years but subject only to such terms and conditions as may be mutually agreed upon."

On May 2, 1946, counsel for respondent 1 on instruction issued a notice intimating respondent 2 that as the lease will expire at the end of February 1947 he should take such action as may be necessary to give effect to the same and deliver possession". Respondent 2 was also informed that under clause 3 of the lease deed he will cease to pay rent six months prior to the above date of termination of the tenancy in adjustment of the advance paid by him. Respondent 2 replied on May 13, 1946, that he wished to exercise his optio